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OP/ED
The National Federation of Independent Business (NFIB), the nation’s leading small business advocacy organization, released two new impactful reports regarding the 20% Small Business Tax Deduction, which is scheduled to expire at the end of next year. The reports illustrate what will happen to the small business economy if Congress makes the 20% Small Business Deduction permanent or if it fails to act.
The Ernst & Young macroeconomic analysis, released in conjunction with NFIB, measured the impact on small businesses of permanently extending the 20% Small Business Deduction. The analysis concluded that small businesses would flourish by making the deduction permanent, creating 1.2 million new jobs each year for the first ten years and 2.4 million annually every year thereafter. It would also result in a $750 billion GDP increase in the small business sector over the first ten years, and a $150 billion increase annually after that. Without an extension, those benefits to small businesses and the broader economy would be lost.
Specifically in Texas, the analysis estimates that making the deduction permanent would create 104,000 new jobs each year for the first ten years, and 201,000 annually every year thereafter.
The analysis also found that 33 million small pass-through businesses employ more than 68 million workers in the United States. Of those 33 million small passthroughs, 25.9 million claimed the deduction in 2021.
The 2024 NFIB Tax Survey assessed small business owners’ biggest tax challenges, implications of potential changes to the tax code, and how tax policy impacts business operations. Most notably, 59% of small business owners reported that eliminating the 20% Small Business Deduction would have a negative impact on their business, with 61% reporting they would likely raise prices, 44% reporting they would postpone or cancel capital investments, and 36% reporting they would postpone or cancel hiring additional employees.
“These studies underscore just how crucial the 20% Small Business Deduction is to our Main Street employers,” NFIB State Director Jeff Burdett said. “Small businesses are the foundation of our national and local economy. The 20% Small Business Deduction has made it easier for small, and family- owned businesses here in Texas to raise wages, purchase new equipment, and expand their operations. In this challenging economic environment, Congress must stop the massive tax hike on small businesses and pass the Main Street Tax Certainty Act.”
“By allowing small business owners to keep more of their hard-earned money, the 20% Small Business Deduction empowers middle class small business owners to grow their businesses, hire employees and raise wages, and give back to their communities,” said NFIB President Brad Close. “If the deduction is allowed to expire at the end of next year, millions of small businesses will face a massive tax hike. It is crucial that Congress and the Administration take a strong stand for local small businesses and make the Small Business Deduction permanent.”
