As lawmakers return to Washington, D.C., after a long and competitive election season, they will begin setting priorities for the next session of Congress. The economy and inflation remain top concerns for Americans and small businesses. We need to ensure we adopt policies that help them thrive. The 2017 tax law extension is an important step toward providing small businesses with the security they need.
The 2017 tax law changed the game for small businesses, allowing owners to reinvest more of their profits back into their businesses. This encouraged job creation, investment in new equipment, and the launch of new businesses. By reducing the tax burden on small businesses, the law spurred historic wage increases and pushed unemployment to record lows.
Lawmakers can increase the uncertainty by raising taxes or negotiate in good faith, building on the 2017 reforms.
Policy makers should always aim to support economic growth and stability. The roadmap established by Congress six years ago remains clear. Neither Congress nor the next president should immediately undo these reforms, especially while high inflation and interest rates are straining entrepreneurs. Lawmakers need to carefully assess the potential consequences. If there is no agreement on reducing tax rates, why not maintain the current tax rates?
During our time at the U.S. Small Business Administration's Office of Entrepreneurial Development, we helped thousands of entrepreneurs across the country launch and grow their businesses. Washington's economic policies played a key role in our success. Today, I worry that lawmakers are too eager to raise taxes on small businesses instead of finding ways to help entrepreneurs invest more in their employees.
tax foundation latest research They show that avoiding corporate tax increases could increase U.S. economic output by 1.7 percent, wages by 1.5 percent, and full-time employment by 381,000 jobs. These benefits would come at about half the cost of the Inflation Reduction Act's green energy tax credits and the CHIPS and Science Act's tax credits, grants, and spending programs.
I understand where the new incumbents and candidates for Congress are coming from. Most were not involved in negotiating the 2017 law, and many believe that reshaping the U.S. tax code will fight inequality for generations. But the reality is that the taxes Washington is considering raising are likely to hurt the middle class the most. A narrow-minded “tax increase” approach will not solve America's spending problems or help it compete in the future global economy.
As the next Congress debates whether to maintain or increase the corporate tax rate, we face an important decision. Lawmakers can increase the uncertainty by raising taxes or negotiate in good faith, building on the 2017 reforms. Allowing entrepreneurs to reinvest in their workforce benefits the economy far more than raising taxes.
Politicians must remember that voters have the real choice in deciding who should pay taxes and how much. By reviewing data from the past six years, lawmakers should recognize the successes of 2017's tax policy. Maintaining current tax rates and extending key provisions will provide the greatest long-term benefits for the economy and the middle class.
