True to his word, President Donald Trump got a landmark tax bill on his desk for Christmas. And now that the Tax Cuts and Jobs Act is law, 2018 couldn’t look brighter.
That’s especially true for small businesses, which have hung tough through good times and bad, hoping that tax savings were on the way. Their perseverance has paid off.
For too long, crushing federal rates as high as 40 percent hit up to half of business income after state and local levies. This year, they’ll be replaced with lower rates and significant deductions. The new law’s tax savings will generally deliver small businesses a 20 percent deduction, leaving job creators more resources to invest in local communities.
As basic economics demonstrate, when small businesses keep more of their own money, they use it — in President Trump’s words — as rocket fuel to create jobs and look into expansion opportunities. All small businesses want to grow. But the outgoing tax code applied harsh rules indiscriminately. Not only did it make expanding your business a challenge. It also effectively penalized businesses that were growing and planned to keep doing so by imposing the same level of tax even as payroll increased.
This year, we can expect a turnaround for small business. As a proud representative of Michigan’s builders and contractors, I know just how massive a turnaround we can see. I’ve already spoken with small business owners who plan to add staff, increase pay, and pursue expansion opportunities because of President Trump’s tax bill. Some of them even gave their employees heftier Christmas bonuses because of their expected tax savings.
When small business owners are optimistic, the economy reaps the benefits. Michigan may be known for its largest corporations, but small businesses actually provide half of all employees in the private sector with a job. Nearly two million Michigan workers depend on small business for financial security and professional development. Altogether, small businesses account for nearly 100 percent of all firms in-state.
Numbers like these pop up again and again all around the country. There are roughly 30 million small businesses nationwide, employing tens of millions of workers.
Small businesses are so plentiful and diverse in America that, wherever you look, you’ll see them at the center of our local communities.
Not only do they form backbone of the economy, but America’s smallest firms are also an economic ladder, allowing employees to experience upward mobility. The more small businesses grow in terms of size and investment, the more opportunity opens up for new job-seekers.
This is especially transformative for parts of the country still struggling to regain their footing in the wake of the Great Recession. At a time when our lawmakers understand that revitalization in industry and infrastructure must be a top priority, Congress has delivered the small business tax cuts that help do just that.
Just imagine what we can accomplish in 2018.
Jimmy Greene is president and CEO of the Greater Michigan Chapter of Associated Builders and Contractors.