Small businesses fight for fairness

Tax reform should ease their burden and level the playing field on which they compete with big corporations, argues advocate KEVIN SHIVERS

Every hardworking American feels the pain of taxes. Just the process of filing taxes can be frustrating, confusing and costly. For small-business owners, the complexity is an incredible burden.

Last year, the National Federation of Independent Business asked our members to rank their top problems and priorities. Half of the top 10 were related to taxes. Small businesses struggle with federal taxes, tax complexity, frequent changes in federal rules, property taxes and state taxes.

President Donald Trump and congressional Republicans have vowed to make tax reform one of their highest priorities this year. Small-business owners are extremely pleased by the president’s plan, which would slash tax rates, simplify the tax code and put Main Street firms on an even playing field with large corporations.

Since November, the NFIB Small Business Optimism index, which measures small-business sentiment and economic activity, rose to its highest level since 2004. But the rise in optimism was built on the expectation that the new administration, working with Congress, would reduce the burden of taxes, regulations and sky-high health care costs.

Small business is an incredibly important part of the American economy. Over the past two decades, small businesses created two-thirds of net new jobs. Nearly half of private-sector workers are employed at a small business. Firms with fewer than 500 employees represent 99.7 percent of all commercial enterprises in the United States. In Pennsylvania, they account for 46.9 percent of jobs.

During the last years of the Obama administration and even now, there are some in Washington who think that only corporate tax rates should come down. That would be a grave mistake. Threequarters of small businesses are “pass-through entities” that are taxed at the individual rate. Ignoring these businesses in tax reform not only would be unfair to small business but also could hurt small firms important to their communities.

Small businesses fund the local sports teams. Small-business owners know their employees and help them during difficult times. Small businesses get passed from generation to generation. Owners don’t just think about the bottom line.

For many small businesses, their biggest competitors are big corporations. NFIB members don’t

want special treatment; they just want to compete on an even playing field.

When it comes to taxes, corporations already have certain advantages. Big companies employ a legion of accountants, lawyers and compliance specialists to make sure they pay the lowest rates. Multinational companies keep money away from the IRS by holding it overseas.

Right now, there is a gap between the highest corporate tax rate and the highest individual rate. That means some smaller businesses pay a higher share of their income than big corporations. If corporate tax rates come down and individual tax rates stay the same, that gap would widen. Wall Street would have another advantage over Main Street.

Companies both large and small can benefit from tax reform if we get parity in tax rates. Fair tax reform wouldn’t give businesses of one size or another an advantage. During the campaign, Mr. Trump committed to parity. If he works to keep this promise, he could unlock incredible smallbusiness growth that would help him keep his promises on jobs and economic growth.

The optimism index shows that small businesses are primed to grow. What they need to make that happen are new resources, not just confidence. By lowering tax rates and simplifying the filing of taxes, small-business owners could have more money in their pockets and more time to focus on their businesses. Tax reform has to start with small business.