Why Lower Taxes for Small Businesses Are Crucial for America’s Future

Imagine a time just seven years ago when family-owned businesses across America exhaled a collective sigh of relief as the Tax Cuts and Jobs Act (TCJA) breathed new life into their operations. This landmark reform marked the first significant overhaul of our tax system in three decades, a much-needed change that not only simplified the tax code but also offered substantial relief to hardworking families and businesses of all shapes and sizes.

Thanks to the TCJA, today’s small, family-run businesses are better equipped to navigate the stormy seas of economic challenges that have plagued us recently. This legislation delivered a treasure trove of benefits, including lower marginal tax rates for everyone, the lifting of the burden of estate tax (“death tax”) for more families, a brand-new 20% deduction for small businesses, immediate expensing of business equipment, and a reduced corporate tax rate. Altogether, the TCJA stands as the largest tax cut in American history, but this vital lifeline could vanish all too soon.

If Congress chooses to sit on its hands, most provisions of the TCJA will expire at the end of 2025. This inaction translates to a looming tax increase for small businesses and middle-income families alike. The rollback of essential business tax cuts, including the small business deduction and estate tax relief, would strike small enterprises at a time when many are still struggling to regain their footing.

As marginal tax rates climb, working families will find themselves grappling with higher tax bills just as the prices of groceries and energy soar. And let’s not forget the expiration of the doubled standard deduction, a change that simplified tax filings for millions. If Congress fails to act, it’s a recipe for financial strain.

Another silver lining of the TCJA was the equitable tax treatment for C-corporations and pass-through entities like S-corporations, LLCs, partnerships, and sole proprietorships. But allowing the individual tax cuts to lapse next year would disrupt this balance, accelerating the trend of family-owned Main Street businesses being swallowed up by corporate giants.

Moreover, proposed corporate tax hikes do not just impact the big players on Wall Street; they would also burden small and mid-sized companies. According to 2021 Census Bureau data, a staggering 97.3% of the 1,328,981 C-corporations in the U.S. had fewer than 100 employees, and an incredible 90.1% employed fewer than 20. Raising taxes on these businesses in the name of taxing “the rich” simply makes no sense.

In the wake of the TCJA, hundreds of businesses nationwide responded positively—they increased wages, expanded benefits, distributed bonuses, and planned for growth by hiring more employees. The aftermath saw the U.S. enjoying stronger GDP growth, faster job creation, and rising wages.

Even through the pandemic and its aftermath, our economy showcased resilience that outpaced many industrialized nations, largely thanks to those tax cuts. Now is the time for Congress to roll up its sleeves and work to extend the Tax Cuts and Jobs Act. We cannot afford to reverse the critical corporate or individual tax relief that has proven so beneficial.

Family-owned and operated businesses—the backbone of our communities—are counting on Congress to stave off an automatic tax hike next year. The stakes are high, and the time to act is now!