PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Letter to House and Senate Republicans on the Economic Value of Business Partnerships

By at 28 March, 2024, 3:13 pm

RE: Contributions of Business Partnerships to the U.S. Economy

Dear House and Senate Republican Members of Congress:

For 30 years, the Small Business & Entrepreneurship Council (SBE Council) has advocated for policies that lead to a more favorable environment for strong startup activity and small business growth. Today, I am writing you about a new study commission by SBE Council that highlights the significant value and role that business partnerships play in the U.S. economy and in local economies nationwide.

The pivotal study, conducted by Ernst & Young, finds that in 2023, partnerships in the core living expenditures sector alone contributed to the employment of 10.6 million workers, who collectively earned $779 billion in wages and benefits. Furthermore, these partnerships were responsible for generating $1.3 trillion of GDP.

Despite the clear and compelling economic benefits of business partnerships, the Biden Administration and some lawmakers in Congress have proposed targeting these entities with increased scrutiny and costly bureaucratic hurdles. Such actions not only threaten the vitality of these partnerships but also undermine the very foundation of economic opportunity and prosperity.

IRS Commissioner Danny Werfel admits that the agency is using funds from the Inflation Reduction Act to hire an army of new agents and turn them against business partnerships. Engulfing local businesses with unwieldy and unnecessary audits would significantly harm investment and disrupt economic activity. Such activity would disproportionately affect small partnerships like family farms, local restaurants, and small retailers. In fact, our study found that small businesses with fewer than 100 employees constitute 97 percent of partnerships across the country. Moving forward with the Biden Administration’s strategy could jeopardize the viability and success of these firms, their employees, and their communities.

Moreover, these regulatory efforts seem to be less about solving actual fiscal discrepancies and more about leveraging IRS expansion to pay for excessive government spending and weaponizing the tax system to punish political adversaries.

Considering these findings and the potential adverse effects of increased IRS targeting of business partnerships, we urge you to take action to protect business partnerships by increasing oversight and transparency within the IRS. The agency’s aggressive actions against business partnerships will only increase costs for consumers at all income levels in terms of their expenditures on core living costs. By safeguarding the interests of these partnerships, we can protect the jobs and livelihoods of millions of Americans and ensure the continued prosperity of our nation.

Thank you for considering our views on this matter. We believe that with your support, we can foster an environment where entrepreneurship thrives, small businesses and jobs grow, and punitive government actions do not stifle economic growth.

Sincerely,

Karen Kerrigan, President & CEO

 

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