U.S. Small Business Sentiment Improving From Main Street: Pro-Growth Tax Policy Is Vital for Small Business (Content is adopted from an article by U.S. Chamber of Commerce, Rachel Ledbetter, July 30, 2024 (uschamber.com) Extending the soon-to-expire 2017 federal tax reforms is critical for future small business growth. When businesses have a competitive federal tax code, employers invest, local economies grow, and workers benefit from higher pay and more jobs. In 2017 during the Trump Administration, Congress passed the Tax Cuts and Jobs Act (TCJA), a comprehensive tax reform that fosters small business. The TCJA significantly reduced and simplified the federal income tax burden for American small business and workers, while modernizing taxation of business income. However, many of the TCJA’s key reforms were temporary and are set to expire at the end of 2025. Recent polling from the U.S. Chamber of Commerce shows that a majority (80%) of voters are concerned that increasing taxes on U.S. businesses will lead to higher consumer prices. Ninety-three percent think American families and businesses already pay enough taxes. The Chamber’s Small Business Council opposes Congress letting the 2017 tax reforms expire in December 2025. What does a competitive tax code mean for small business? A competitive tax code means small businesses like Kaddas Enterprises, a plastic fabrication company in Utah, can invest in their operations and workforce. “For us to make an investment in robotics, it’s over a $1 million investment. That’s substantial for a small business; and having a tax policy that helps us write that off quickly and use accelerated depreciation helps us reinvest back into our organization,” says CEO Natalie Kaddas. The U.S. small business confidence in July jumped to its highest level in over two years, another indication that fears of a recession are likely overblown. The National Federation of Independent Business (NFIB) reported August 13 that its Small Business Optimism Index rose 2.2 points to 93.7 for July, the highest reading since February 2022. The NFIB survey found that businesses continued to worry about inflation impacts. NFIB’s report concurs with an early-August survey from Institute for Supply Management, which showed a rebound in its Purchasing Managers Index, easing prior concerns about the economy beginning a downturn. The NFIB survey said 25% of owners reported that inflation was their single most important problem in business operations, up 4 percentage points from June. That, together with policy uncertainty ahead of November’s presidential election, contributed to keeping the NFIB index below its 50-year average of 98 for the 31st consecutive month. A net 33% of owners reported raising employee compensation. That was the lowest reading since April 2021 and was down 5 points from June. A net 2% of owners planned inventory investment in the months ahead, up 4 points from June. The last time inventory investment rose was October 2022. Although the labor market is slowing, workers remain in short supply, especially in transportation, construction, and retail. The NFIB report noted that job openings in construction were up 4 points from June, and that 55% of construction firms had a vacancy they could not fill. Thirty-eight percent of all business owners reported job openings they could not fill in July, up 1 point from June. • “Owners are heading towards unpredictable months ahead, not knowing how future economic conditions or government policies will impact them,” said NFIB chief economist Bill Dunkelberg. 4 The Mainline From Executive VP Rex Storm Executive Vice President [email protected]
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