It’s go time for tax relief in Congress. After months of negotiations, Republicans in the House and Senate have both introduced plans providing significant tax cuts.
There’s a lot to sort through in a short period of time, but one thing ought to be crystal clear: Lawmakers should follow President Donald Trump’s lead and lift the unfair tax burden on small businesses that’s holding our economy back.
The White House understands that small businesses are getting soaked at a time when their outsized contribution to stable, reliable economic growth is essential. Under the current tax code, which hasn’t been updated since the 1980s, many small businesses pay the highest applicable individual rate. It can clock in as high as 40 percent, plus state and local taxes, bringing the grand total to almost half of all a small firm’s annual income.
Of course, it can be hard to enjoy the fruits of your labors if you don’t even get to see 50 cents of every dollar you make. That reality is made even bleaker if, like America’s 29 million small businesses, you’re dedicated to investing large chunks of revenue into jobs, wages, and additional facilities.
But knocking that 40 percent rate down to 25 percent, as the president supports, isn’t just about putting a smile on the face of small business owners. Many Main Street businesses have a hard time doing more than tread water under today’s tax burden. To stay competitive, they need to do more. And to reward their customers and their communities, polling shows they want to do more — staffing up, hiking pay, and expanding operations.
Maine shares the same economic profile that so many states do across the nation, with small firms making up the lion’s share of jobs and businesses. In fact, just shy of 100 percent of our businesses are small ones, putting to work over half of all employees in the private sector.
And like lots of states, our small businesses drive economic productivity across all our geographical regions. Maine’s cities, suburbs, towns, and rural areas all benefit from the investments the owners of small firms make to grow their businesses.
Voters know they do well when small business thrives. Most agree individual rates top out way too high and Main Street firms need a break. Even larger majorities support small business relief than cuts for their very own families.
It’s essential that Congress doesn’t squander the opportunity to treat small businesses wisely and fairly. Right now, optimism on Main Street is at a high, with one big exception: Anxiety over a tax fumble on the one yard line. The new Small Business Index measured by Wells Fargo and Gallup shows the biggest boost in outlook over the past decade.
“But in terms of accomplishments,” as National Small Business Association President Todd McCracken cautioned, “they had higher hopes on the policy front” this year. Meanwhile, almost 40 percent of small businesses say they’re in a better financial position than last year, but about 50 percent warn that taxes and regulations are driving their confidence down.
The message is simple: If legislators come through with a win before the holidays, small business will be off to the races. It’s late enough in the game that there’s no excuse for a loss.
Bruce Bickford of Auburn, a Republican, represents the District 63 in the Maine House of Representatives.
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