Just a few months after President Donald Trump's tax reform passed, small businesses are pushing back against Republican claims that the law will bolster their ability to hire new employees and give out raises to workers—as corporations reap the vast majority of the benefits of the legislation.
Large corporations made clear even before the plan was passed in December that they would use the $1.3 trillion they expect to save as a result of the law to line the pockets of their shareholders—not invest in their employees and new hires as Republicans claimed. Now, small businesses are saying that their workers aren't benefiting much from the tax law either.
The advocacy group Businesses for Responsible Tax Reform polled entrepreneurs in Maine, Arizona, Tennessee, and Nevada and found that seven in 10 had no plans to hire new employees as a result of the tax plan, while 60 percent said their workers would not be given raises.
More than half of the owners said the law favored large businesses over small ones and did nothing to put smaller companies on a level playing field with big corporations.
"Clearly the new law—which has come under fire for heavily favoring large corporations—is not going to do much to help small business owners grow their businesses," wrote Frank Knapp, co-chair of the group, at The Hill. "That is a travesty, considering the size and economic importance of our country’s small business sector and the focus on jobs and the economy since the 2016 election. These poll results show a law policymakers promised would reinvigorate the entire economy instead leaves half of it behind, widening the gap between the haves and the have-nots."
As Republicans including Trump promoted the so-called Tax Cuts and Jobs Act last fall, they promised they would cut the income tax rate for "Main Street job creators to no more than 25 percent" and offer other benefits that would trickle down to working families.
But since most small businesses' incomes are taxed as owners' "pass-though" personal income, says Businesses for Responsible Tax Reform, the benefits are expected to be phased out by 2025 while large corporations see a permanent 35 percent tax cut.
Small businesses make up most companies in the U.S., wrote Knapp on Monday, and were responsible for two-thirds of new jobs created after the 2008 economic meltdown and recession.
"This tax law doesn't treat small businesses like the job creators they are," wrote Knapp. "Small business owners may get a nominal and temporary tax cut, but they clearly think it won't be enough to invest in employees or grow their businesses. Meanwhile, their corporate competitors will rake in billions that they can use to compete for quality employees, undercut prices of their small business competitors and feather their nests...That's pretty shabby treatment for the companies that are the economic engine of our country. And as the media continues to report on one corporate windfall after another, it's a snub every small business owner will feel."