This week, small business owners will gather on Capitol Hill as part of the National Federation of Independent Business’ annual Fly-In. They’ll come from states across the country, communities of all sizes, and from diverse industries. But their message to members will be the same: Congress needs to act now to help Main Street.
Small businesses face numerous major challenges, and Washington isn’t making it easier. Three years after the pandemic started, the entrepreneurial spirit that drives independent business owners is still bearing the brunt of a mismanaged response. The resulting inflation, worker shortages, and supply chain issues have left many small businesses pessimistic about the economy and struggling to create jobs, invest in their employees, and grow.
This stands in stark contrast to what Main Street wants to do — create more jobs, help their communities and lead our economy forward. Small businesses created two out of every three new jobs in the past 25 years, and they stand ready if Congress will listen to them and enact policies to unleash the small business economy.
There are dozens of common-sense and bipartisan policies that small businesses need Congress to pass. Yet three key actions are especially important.
First and foremost: Main Street needs Congress to pass the Main Street Tax Certainty Act, making the Small Business Deduction permanent. With no action, the deduction will disappear in just two years, and if it does, Congress will be responsible for one of the largest tax hikes ever on Main Street.
The Small Business Deduction is a historic federal tax cut for Main Street. It lets mom-and-pop shops deduct 20 percent of their business income, giving them more to reinvest in their employees and operations. This simple policy is designed to bring small businesses closer to tax parity with their large corporate competitors. This deduction empowered small businesses to drive the great economic comeback of the late 2010s. More recently, it helped Main Street come through the worst of the pandemic.
Small business owners are deeply worried about what will happen if Congress fails to make the deduction permanent. Wall Street already received a permanent tax cut to 21 percent. Congress needs to give Main Street something similar by making the Small Business Deduction permanent.
The second reform Main Street needs is real competition in the credit card industry.
This is a bipartisan issue that hasn’t received nearly enough attention. Right now, small businesses have no choice in the credit card processing networks they must use or the swipe fees they must pay to big banks. There’s no real competition — and no real chance of negotiating a better deal.
Congress can right this wrong by passing the Credit Card Competition Act. It would give small businesses meaningful competing options, letting them choose what’s best for them. This reform won’t just lower costs. It will also give small businesses more money to create jobs and give back to their communities.
The third big thing that Congress needs to do is get the IRS off Main Street’s back.
Right now, the IRS is targeting small businesses for audits and investigations using a staggering $80 billion in new taxpayer funding. This is the same agency that can’t process small business tax returns in a timely manner or give small business owners the relief they’re owed by law. Congress needs to claw back that $80 billion and force the IRS to focus more on education and assistance, instead of treating small businesses like the enemy.
The small business owners coming to Capitol Hill this week need Congress to listen. And Congress needs to hear them out — and then act. Small businesses need more than lip service about their importance to job creation and our nation’s economy. They need Congress to help Main Street survive and thrive.
Brad Close is president and CEO of the National Federation of Independent Business.