NFIB State Director Leah Long writes about what’s at stake if lawmakers let it lapse
this morning, The Lawyer newspaper published a guest editorial by NFIB State Director Leah Long on why it’s important for Congress to make the 20% small business deduction permanent.
By LEAH LONG
Running a small business is not easy, even in good times, and these are not good times. Inflation is driving up the cost of everything from raw materials to wages. It’s also changing people’s spending habits, making it even harder for small businesses to pay their bills and stay open.
Unless Congress moves quickly, it will be even harder for local businesses to stay afloat.
Congress passed a bill in 2017 called Tax reductions and employment law. It included a section that allows small businesses to deduct 20 percent of qualified income from their federal income taxes. It was the largest deduction for small businesses in US history. It has had a huge impact on communities by making it easier for Main Street businesses to grow and create jobs.
However, this 20 percent deduction was not permanent. It is scheduled to expire on January 1, 2026.
If that happens, nine out of 10 small businesses across the country will see a massive tax increase. They won’t have as much money to run their businesses or invest in their communities.
Small businesses operate on notoriously tight profit margins anyway. So, with the cost of doing business already going through the roof, a 20 percent tax increase could be enough to put some companies out of business.
That’s why Congress has to approve Main Street Fiscal Security Act. This bill, which has the support of both Democrats and Republicans, would make the 20 percent small business deduction permanent.
Small business owners are nervous right now. The NFIB Small Business Optimism Index rose 1 point in June to 91.5, which was good, but June marked the 30th consecutive month that the index was below the 50-year average.
Congress included the 20 percent business deduction in the 2017 tax bill to give local businesses a fighting chance against their big corporate competitors. If the small business deduction is allowed to expire, that means the 2017 tax bill would almost entirely help Wall Street, not Main Street.
Making the 20 percent deduction permanent is not simply about giving local businesses a tax break. It is about stopping the cycle of uncertainty caused by temporary extensions. It’s about ensuring owners can afford to grow their businesses and support their communities without the fear of financial instability.
Most of Louisiana’s congressional delegation is already on board. Senators Bill Cassidy and John Kennedy are co-sponsoring the Senate version Main Street Fiscal Security Act. House Speaker Mike Johnson and Reps. Garrett Graves, Clay Higgins and Julia Letlow are co-sponsors of the version pending in the House.
Small business is the engine that drives Louisiana’s economy. Small businesses make up the majority of businesses in the state and employ nearly half of Louisiana’s private sector workforce. Small businesses buy ads in our children’s yearbooks and support local charities.
passing the Main Street Fiscal Security Act it would make these local companies financially stronger. It would alleviate much of the financial uncertainty by making it harder for Louisiana small businesses to plan ahead. If we can do that, we can help ensure a brighter economic future for everyone.
Leah Long is the Louisiana director of the National Federation of Independent Business.
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