While the Kavanaugh hearings have dominated national news, the biggest story not being told is the resurgence of American small businesses. They are driving historic economic growth and low unemployment both here in Colorado and across the nation.
Small businesses are the beating heart of local economies. Together they fuel the national economy, creating two-thirds of all new jobs. Aside from the military, they are the most trusted institution in the country, according to Gallup polling.
But small businesses have been under threat for many years now. The rise of e-commerce, big business, and increased taxes and regulations have made succeeding as a small business owner more difficult than ever.
Until now. President Trump and congressional Republicans have significantly helped matters with their small business tax cuts that took effect this year. Though rarely mentioned in the media coverage surrounding their passage and implementation, the tax cuts have numerous provisions that help small businesses like mine.
Prior to tax cuts, small businesses faced a top marginal tax rate of 40 percent, not including state and local levies. With roughly one out of every two dollars going to the government, it was very difficult for small businesses to thrive, hire and raise employee wages.
Tax cuts changed that. One provision creates a new 20 percent small business tax deduction, effectively lowering the top marginal rate to 30 percent. With the ability to protect one-fifth of my earnings, I’ve been able to upgrade equipment, hire a new employee, and give raises to existing ones.
Hundreds of other small businesses across the state and country are making similar moves. Here in Colorado, for instance, SALUS, a beauty product manufacturer in Manitou Springs, is using its tax cut savings to hire a new engineer. The energy company Canary LLC is using its savings to significantly expand and hire. And they’re helping the 88 Drive-in Theater in Commerce City cover the costs of Colorado’s increasing minimum wage.
The tax cuts also give small businesses the ability to immediately expense capital goods. This provides a strong incentive to economic growth. It also means the end of confusing and time-consuming depreciation schedules. President Trump has indicated that this provision might be the most growth-inducing aspect of the tax cuts.
As a result of these tax cuts, small business sentiment is at a record high. According to a survey of small business owners conducted by Bank of America, most call the tax cuts a “game changer.”
Buoyed by small businesses, economic growth in the country is currently above 4 percent. And the current national unemployment rate is below that figure. That hasn’t happened since the turn of the century.
Ignoring these small business effects, critics are dismissing these tax cuts as a gift to the rich. I’m living proof that this narrative is incorrect. The vast majority of small business owners benefiting from these tax cuts are ordinary Americans, even if they do play an extraordinary role in local economies. In fact, the 20 percent small business deduction is off-limits to white-collar businesses earning more than $315,000.
While public policy that is actually helping Americans always takes a backseat to the news of the day, never has the discrepancy been so great as it is today. As voters head into election season, they should look beyond the headlines to see how public policies are fueling a small business resurgence that is buoying the economy to historic heights.