Throughout President Trump’s first administration, Congress handed the Tax Cuts and Jobs Act (TCJA), which helped supercharge the economic system and strengthen companies of all sizes, together with the smaller ones serving rural communities nationwide.
Now, nonetheless, the tens of thousands and thousands of small companies that benefited from the decrease charges, tax cuts, reductions and different reforms made by the TCJA face a looming tax hike if Congress doesn’t act quickly. That’s as a result of most of the 2017 tax legislation’s most important cuts and deductions run out on the finish of the yr, and others already must be restored.
A few of the provisions of the TCJA, scheduled to sundown on the finish of 2025 or which have already expired, embody the 20% certified enterprise revenue deduction, which many small companies have benefited from, in addition to the fast expensing of analysis and growth and gear. For farmers, the flexibility to expense these investments in the identical yr that they’re made and introduced on-line makes an enormous distinction, supporting innovation within the agricultural economic system.
Moreover, the TCJA lowered the company tax price from 35% to 21%, bringing the tax burden on companies extra in keeping with different international locations.
Not solely did that assist strengthen American competitiveness in an more and more international economic system, however it additionally supplied much-needed assist for rural suppliers, farming households, producers, and a spread of different companies.
Opposite to well-liked perception — or maybe intentional misinformation — the decrease company tax price doesn’t profit solely “massive enterprise.” Most conventional “C-corporations” are small enterprises, with practically 85% of them having fewer than 20 staff. The TCJA supplied extra incentives for a lot of small companies to restructure themselves as C-corporations to benefit from the decrease tax charges.
That makes it vital for lawmakers to keep away from calls to extend the company tax price to assist pay for the much-needed extensions of the TCJA’s economy-growing tax cuts. Reverting to a excessive company tax price could be akin to elevating taxes on Fundamental Road and rural companies that wrestle to maintain their doorways open after years of excessive inflation. It might additionally weaken innovation, threat competitiveness, and erase the financial progress we have now seen because the passage of the TCJA.
On the marketing campaign path, Trump made a direct attraction to rural communities nationwide, promising to revitalize Center America. Now, these small companies and communities that have been helped in 2017 are those that may see essentially the most positive aspects worn out if these tax cuts are usually not prolonged and made everlasting.
The White Home labored with Republicans within the Home of Representatives to introduce and cross laws that may guarantee full and fast gear expensing and prolong R&D credit — key parts of the 2017 tax legislation — whereas preserving a low company tax price that helps maintain rural companies sturdy.
Robert Majerus is a member of the Group Enterprise Alliance and a small-business proprietor in Montana.
