The feel-good media coverage of corporate bonuses and raises tied to the new tax law overlooks one important question: what tangible economic impact is the law having on the country’s 30 million small businesses and the people they employ?
It could be that the dearth of news coverage is due to the fact that the byzantine new rules for small-business owners make it hard to calculate the law’s impact. It could be because the meager tax savings small-business owners may receive are temporary and unremarkable when compared to the permanent 40 percent tax cut their corporate brethren were gifted. Or, as a new poll by Businesses for Responsible Tax Reform suggests, it could be that there is not much to report because small-business owners don’t expect the law to help them grow their businesses or invest in their employees.
We conducted a public opinion poll of small-business owners in the battleground states of Arizona, Nevada, Maine and Tennessee with the express purpose of learning what the tax cuts will mean for their business growth. What we found is most small-business owners don’t think the possible benefits of new law will enable them to invest in their businesses and believe it further tilts the playing field in favor of big corporations:
- Seven in 10 small-business owners said they would not hire a new employee as a result of the new tax law.
- Six in 10 small-business owners said they would not be giving their employees raises.
- 54 percent of small-business owners say the tax law favors large corporations over small businesses.
- 55 percent of respondents do not believe the law puts small businesses on a level playing field with big businesses.
- Importantly, given the partisan nature of the law, 41 percent identify as Republican, 31 percent as Democrat and 28 percent as independent or something else.
Clearly the new law-which has come under fire for heavily favoring large corporations-is not going to do much to help small-business owners grow their businesses. Nor is it going to allow them to invest in the millions of people they employ. That is a travesty, considering the size and economic importance of our country’s small-business sector and the focus on jobs and the economy since the 2016 election. These poll results show a law policymakers promised would reinvigorate the entire economy instead leaves half of it behind, widening the gap between the haves and the have-nots.
Small-business owners are at the center of American life and prosperity and employ half the country’s private workforce. They represent 99.9 percent of all firms in the country, employ nearly 60 million people, generate 33 percent of the country’s export value and have created 62 percent of the country’s net new jobs since 1993, according to the Small Business Administration. Since the Great Recession they have been even stronger in job creation. Since 2008, they created two out of three private-sector jobs, putting America back to work after the biggest economic slump we’ve had since the Great Depression.
How was their economic might rewarded? With a convoluted tax law that gives every advantage to their wealthy corporate competitors rather than supporting small-business growth.
The bottom line is this tax law doesn’t treat small businesses like the job creators they are. Small-business owners may get a nominal and temporary tax cut, but they clearly think it won’t be enough to invest in employees or grow their businesses. Meanwhile, their corporate competitors will rake in billions that they can use to compete for quality employees, undercut prices of their small-business competitors and feather their nests. Policymakers hope that, with a few extra bucks in their pockets, small-business owners will forgive and forget that corporations and the wealthy are getting the vast majority of the benefit from this $1.4 trillion tax bill.
That’s pretty shabby treatment for the companies that are the economic engine of our country. And as the media continues to report on one corporate windfall after another, it’s a snub every small-business owner will feel.
Frank Knapp is the co-chair of Businesses for Responsible Tax Reform and president and CEO of the South Carolina Small Business Chamber of Commerce.