On May 23, the House Ways and Means Tax Subcommittee held a hearing (“Growing Our Economy and Creating Jobs”), which focused on the (many) benefits of the Tax Cuts and Jobs Act (TCJA)—aka, tax reform—for Main Street small businesses, the hardworking Americans they employ, and the communities they serve.
Subcommittee Chairman Vern Buchanan provided a great overview of the purpose and impact of the tax reform legislation, which was passed by Congress and signed into law by President Trump late last year. He noted in his statement that the TCJA “lowered tax rates across the board,” including for small businesses, and “introduced full and immediate expensing for most capital expenditures by firms of all sizes.”
The law also includes several small-business-specific provisions, such as “expanded availability for cash accounting, and flexibility for choosing between pass-through and corporate taxation.”
Buchanan rightly notes that these reforms benefit businesses of all sizes, drive economic growth, and are already producing results. “Back in 2016, CBO [the Congressional Budget Office] projected that GDP growth in 2018 would slow from 2.3 percent in the first quarter down to 2.1 percent in the fourth quarter,” Buchanan said. “Now, after growing 2.9 percent in the first quarter of 2018, GDP growth is projected to accelerate to 3.3 percent in the fourth quarter.”
But that’s not all. At the same time, “unemployment forecasts are being revised down,” with the CBO expecting the unemployment rate “to drop to 3.5 percent by the end of this year—the lowest unemployment rate since 1969.” Additionally, investment growth is “exceeding expectations”—capital spending S&P 500 companies “grew by 24 percent in the first quarter of 2018—the fastest pace since 2011 and the best first quarter since 1995.”
There’s also plenty of good news that is specific to Main Street businesses: “The National Federation for Independent Business reported small business profit growth at a 45-year high. The percentage of small businesses that are expanding their employment is at its highest level since 1999. And the percentage of small businesses reporting plans for expansion, increased hiring and higher wages, is at or near record highs.”
Despite the ongoing negative spin by tax reform naysayers, the facts are clear. The TCJA is proving to be good for Main Street—helping to produce job creation, economic growth, and prosperity for our local communities.