PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

SBE Council Releases New Study Revealing Significant Contributions of Business Partnerships to the U.S. Economy

By at 18 March, 2024, 8:16 am

NEWS

For Immediate Release

Washington, D.C. – Today, the Small Business & Entrepreneurship Council (SBE Council) released a new study conducted by Ernst & Young outlining the significant economic value that business partnerships provide to the U.S. economy. The study found that the total economic contribution of partnerships in the core living expenditures sector in 2023 was an estimated 10.6 million workers earning $779 billion in wages and benefits and generating $1.3 trillion of GDP in the United States. Moreover, as noted in a SBE Council analysis, business partnerships are predominately small to mid-size businesses and serve as the foundation of regional and local economies. These small businesses drive innovation, job growth and vibrancy across key sectors of the U.S. economy.

The data confirms the critical and dynamic role of business partnerships, and subsequently raises more concerns about the Biden Administration’s aggressive plans to further leverage the Internal Revenue Service (IRS) to target partnerships with audits. SBE Council president & CEO Karen Kerrigan noted, for example, the revelations regarding the leaking of confidential tax information by a former IRS contractor, which paints a disturbing picture of a weaponized tax system being used for political purposes and gain. Kerrigan observed:

“The Biden Administration has secured massive new funding for the IRS. As a result, business partnerships are increasingly under attack by some politicians and regulators bent on increasing taxes on individuals and businesses to pay for inflated government spending or even to punish political opponents. IRS attacks on business partnerships will cause economic harm and further enable weaponization of the tax system for those who seek retribution on political opponents. Members of Congress must speak out against the Biden Administration’s efforts to increase taxes on and extract more money from business partnerships in this manner. Again, local economies, jobs, and U.S. competitiveness are at risk. The fallout goes further as these costs will be passed down to consumers, which is certainly not needed right now given volatile inflation and high prices for consumer goods and services.”

Raymond J. Keating, chief economist for SBE Council, observed, “This study illustrates the interconnectedness of our economy by making clear the important role that partnerships play in serving American consumers. In fact, the impact that partnerships have on the economy even goes well beyond what’s explored here. For good measure, when we’re talking about partnerships, we’re talking small businesses, as, for example, 97 percent of partnerships across industries have fewer than 100 employees. Therefore, efforts by elected officials to hamper partnerships, whether through tax hikes, increased regulatory intrusions and/or political attacks, make no economic sense, and wind up being counted among the many unwarranted and unproductive assaults on small businesses.”

Keating added, “Politicians often pretend that their actions, like raising taxes and increasing regulatory burdens and intrusions, somehow don’t affect the economy. That, however, is a political fantasy that ignores the economic realities of increased costs and altered incentives. Again, small businesses are disproportionately harmed by these type of government intrusions. Furthermore, taxes and compliance red tape on partnerships will increase costs in various ways for the Americans at all income levels in terms of their expenditures on core living expenditures.

Topline highlights of the study include:

● The total economic contribution of partnerships in the core living expenditures sector in 2023 was an estimated 10.6 million workers earning $779 billion in wages and benefits and generating $1.3 trillion of GDP in the United States.

● Partnerships in the core living expenditures sector employed 4.9 million workers earning $339 billion in wages and benefits and generating $566 billion of GDP in the United States. The average worker at a partnership in the core living expenditures sector earned approximately $69,000 in wages and benefits in 2023. Wages and benefits are components of GDP.

● Suppliers to partnerships in the core living expenditures sector supported 2.4 million workers throughout the US economy earning $202 billion in wages and benefits and generating $324 billion of GDP in the United States. The average wages and benefits of workers supported by related supplier activity was approximately $83,000.

● The consumer spending of workers at partnerships in the core living expenditures sector and the sector’s suppliers supported 3.3 million workers throughout the US economy earning $238 billion in wages and benefits and generating $421 billion of GDP in 2023. The average wages and benefits of workers supported by related consumer spending was approximately $73,000.

● Partnerships in the core living expenditures sector generated tax revenue through their businesses and employees. In 2023, the partnerships in the core living expenditures sector generated $108 billion of federal, state, and local taxes. Roughly two-thirds of these were federal taxes ($74 billion) with the remaining taxes paid to state and local governments ($33 billion).

To access the full report click here.

CONTACT:

Karen Kerrigan, kkerrigan@sbecouncil.org

Raymond Keating, rkeating@sbecouncil.org

SBE Council is a nonpartisan advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship. For nearly 30 years, SBE Council has worked on and advanced a range of private sector and public policy initiatives to strengthen the ecosystem for strong startup activity and small business growth.

Visit www.sbecouncil.org for additional information. Twitter: @SBECouncil

###

 

News and Media Releases