As a law firm that specializes in small businesses (and as one ourselves), we know that small businesses do best when our communities thrive. That’s why I went to Congress last week to tell lawmakers that the new federal tax cuts aren’t working for real Main Street small businesses and families like the ones we are honored to work with every day.
Here are three highlights from my testimony to the House Committee on Small Business on how the Tax Cuts and Job Acts (TCJA) is affecting small businesses:
- The majority of small businesses are not seeing consequential gains from the TCJA and it’s 20% pass-through deduction. At last measurement by the Small Business Administration, the median income for self-employed individuals who own pass-throughs last year was $49,204 a year. These are the bodegas, auto mechanics, and small farmers who would have to pay more to an attorney like me or an accountant to figure out the new law than they would ever gain from the new tax cuts.
- The new tax laws are needlessly confusing. The TCJA turned the tax treatment of pass-through entities completely on it’s head, and now two businesses making the same amount of money may have two completely different tax situations. We are also still waiting for IRS regulations about what specifically will constitute things like qualified business income or specified trades, making it nearly impossible for these businesses to do any tax planning.
- Businesses are not hiring new employees because of the new tax law. A recent poll by Businesses for Responsible Tax Reform found that the majority of small business owners will not be able to hire new employees or give raises because of the new tax law.
Small businesses have created nearly two-thirds of private-sector jobs since the Great Recession—but the new law doesn’t treat them like the crazy-good job creators they are. At DLO, we believe in the power of small business and will show up every day to help them reach their full potential.
And ICYMI (or want to re-watch it), you can view the hearing below, and catch my full testimony starting at 37:30.
And as always—we’re here to help! Please reach out if you have questions or concerns about the new tax law.