The Case for Small-Business Tax Cuts | Eastern NC Now

Press Release:

    With only about a month of legislative days left in 2017, Congress needs to unite together on an issue that should have bipartisan support: Small business tax cuts.

    Small businesses constitute a major force for both the economies of North Carolina and the entire nation. Nationally, small businesses employ 58 million people, which amounts to nearly 50 percent of the overall workforce. Similar statistics are found in North Carolina where there are over 871,000 small businesses.

    Unfortunately, small businesses across this country are struggling. According to a recent study from JPMorgan Chase, most small businesses lack enough emergency cash on hand to survive an economic downturn or disruption. Current tax rates are a culprit for this economic distress. Roughly half of all small businesses fail before their fifth year of operation, and when they are forced to close, both jobs and money are lost. These businesses deserve better.

    Much of modern society has been shaped by ideas that began as small business start-up companies, from Henry Ford to Steve Jobs. North Carolina knows this story well with the celebrated narrative of Krispy Kreme, founded in 1937 in Winston-Salem, North Carolina. A business that began selling its doughnuts through a hole in the wall in its original building now has over 1,000 stores worldwide.

    Tax cuts helped this iconic business grow. Many of its current stores opened after the implementation of President Reagan's 1981 Economic Recovery Tax Act, stimulating the economy through job creation and business expansion. Other businesses in North Carolina and across the country merit the same opportunity. That sentiment is echoed by the American public. A recent poll released by the American Action Network determined 73 percent of voters consider passing tax reform a top priority for Congress, and lowering the middle-class tax rate is the most important aspect of the plan.

    Nearly all small businesses, upwards to 95 percent, are taxed as pass-through entities, meaning a business's tax burden is levied at the individual owners' highest marginal rate. On the federal level, this currently reaches almost 40 percent. After state and local taxes are added in, some small businesses could expect to see rates around 50 percent.

    I was in the General Assembly when North Carolina's tax code was reformed and simplified, reducing the burden on citizens and businesses. Our state has first-hand knowledge of the economic benefit provided by tax cuts.

    After both individual and corporate income taxes were cut in 2013, almost 400,000 jobs were created with an almost 50 percent reduction in unemployment. We also experienced a budget surplus of over $400 million.

    The tax cut plan recently released by Congress and the White House provides pass-through entities with a 40 percent tax cut, paving the way for success stories similar to the ones of Krispy Kreme and the North Carolina economy.

    Those who will benefit most under the proposed tax reform plan are the main street businesses that make our country great. It is now up to Congress to pass tax cuts.

    Jon Hardister is the current state representative from the 59th district of North Carolina.

• Contact: Kayla Gowdy
•     (740)-644-7657