Small-business owners have a lot to be thankful for next week.
The recently introduced tax-reform bills in the House of Representatives and Senate make small-business tax cuts a centerpiece. This long overdue relief would finally address the overtaxation that most small business owners say is the biggest hurdle they face.
At the moment, small businesses, the vast majority of which pay tax at individual rates, face a marginal federal tax burden of 39.6 percent. When state and local taxes are factored in, this figure can rise to 50 percent. This puts small businesses at a competitive disadvantage with their big business and international competitors, whose tax burdens are much lower.
Partially as a result of years of overtaxation, American small businesses — like the communities where they locate — have not recovered from the Great Recession. New business formation remains at historic lows. Boarded-up shops dot Main Streets throughout the country. I believe that if The Home Depot started today, overtaxation would have prevented it from achieving its current success.
Proposed tax cuts can change this by allowing small businesses to keep a little more of their earnings necessary to survive and thrive in today’s competitive business environment.