House Small Business Committee Republican Leader Rep. Blaine Luetkemeyer (R-MO), Ways and Means Republican Leader Rep. Kevin Brady (R-TX), and Budget Committee Republican Leader Rep. Jason Smith (R-MO) issued the following statement applauding the passage of Senator Steve Daines’s (R-MT) amendment protecting against tax hikes on small businesses, and preserving the Tax Cuts and Jobs Act’s 20 percent small business tax deduction:

“Republican tax reform’s 20 percent small business deduction allowed Main Street businesses to keep and invest more of their hard-earned money in their workers and to expand in their communities.

“Even though this deduction created $66 billion in savings for small business owners in 2019, Democrats proposed gutting it.

“The Senate’s passage of Senator Daines’s amendment is a clear rebuke of this approach and shows that a bipartisan majority supports protecting small businesses against Democrats’ runaway spending and crippling tax hikes.”

KEY TAKEAWAYS:

The Tax Cuts and Jobs Act Supported Local Job Creators:

  • The Tax Cuts and Jobs Act (TCJA) created the first-ever 20 percent deduction for small businesses, which has allowed local job creators to keep more of their hard-earned money to hire, invest, and grow in their communities.
  • According to the NFIB, more than 80 percent of its members say this deduction is important to their business, and more than 90 percent want it to be made permanent.
  • More than 21 million small businesses claimed this deduction on their income in 2019 according to IRS data.
  • Individual and family-owned businesses are the backbone of the American economy – they employ the majority of private-sector workers and represent 95 percent of all businesses.

The Tax Cuts and Jobs Act Boosted Workers’ Paychecks:

  • This provision contributed to the strongest small business economy in a generation and the resurgence of American manufacturing pre-pandemic.
  • In an op-ed for theChicago Tribune, a manufacturing job creator shared how the provision allowed her to “provide employees with bonuses, wage increases, and 100% paid health care.”

Democrats Proposed Eliminating the Small Business Tax Deduction:

  • President Biden had said repeatedly he wants to repeal the Tax Cuts and Jobs Act, including the small business deduction.
  • The lead Democrat on the Senate Finance Committee offered legislation to repeal this specific deduction.
  • Democrats are still pursuing other approaches to raising taxes on small business including a supercharged second death tax, raising the corporate tax rate that will impact 1.4 million small businesses, and eliminating the individual tax cuts for those who file business taxes as individuals.
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