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Small Business Owners: Tax Reform Will Help Us Grow & Create New Jobs

July 13, 2017

Today, the Ways and Means Tax Policy Subcommittee – chaired by Rep. Peter Roskam (R-IL) – held a hearing with small business owners from Main Streets across the country, who testified that tax reform will help them expand their operations, hire more workers, and invest in their local communities. As Members and witnesses discussed, small businesses represent the vast majority of all businesses in the United States and employ nearly half of America’s private sector workforce. Tax reform is critical to their success, and their success is critical to growing our nation’s economy.

Highlighting the challenges entrepreneurs and small business owners face, Chairman Roskam said at the start of the hearing:

“This basic premise of the American dream – that anyone with a good idea and hard work can start a successful business – is under attack, in part, from an antiquated and bloated tax code.”

But, as Chairman Roskam noted:

There’s good news. This tax code is not a natural disaster … This is not an event we can’t avoid. It is a problem created by law and can be changed just as simply by law. And in the Ways and Means Committee we are proposing a simplified tax code that works with, instead of against, small business.”

As the Ways and Means Committee moves forward with bold, pro-growth tax reform, witnesses made clear today that lower tax rates, a simpler tax code, and certainty are critical for the success of their businesses.

On lowering tax rates:

Scott VanderWal – owner of VanderWal Farms and a third-generation farmer from South Dakota – explained: “Reducing effective tax rates is the most important thing that tax reform can do to boost farm and ranch businesses…Every dollar that we pay in taxes is a dollar that could be reinvested back into the farm to replace and upgrade our equipment, improve our feedlot, expand our crop production or hire farm workers. Any investment made will not only be good for our farm business but will lift my community and contribute to a robust agricultural economy.” 

Teresa Meares – a retired patrol officer who now runs a uniform and work apparel business in Florida – described how lower rates will help her business: “With my current projections, a 10% reduction alone over the next two years would allow me to contribute $10,500 in the first year and then $50,000 in the second year. This will allow for me to reinvest in my company …Lowering taxes and incentivizing small business ownership can increase jobs and support the continued growth of small businesses.”

On simplifying the tax code: 

Rebecca Boenigk – CEO of a family-owned chair manufacturing business in Texas – shared how the burdensome tax code penalized her business as it started to grow and become more successful: “We owed an additional $86,000 in taxes on top of what we had already paid. It wasn’t because of ill intent or carelessness. It was because our complex, outdated tax code appears engineered to prevent small businesses from starting and growing here in the United States. In our case, the tax bill was a penalty for taking the necessary steps to make our company successful.”

Ms. Meares discussed how the tax code’s complexity hurt her ability to grow her business: The complicated nature of the tax code led to misunderstandings and confusion. I lacked the ability to understand or use certain deductions in order to generate cash back into my company. As a result, I overpaid in taxes during those critical years when I needed cash flow to support the growth in my company. When I finally stopped and questioned why I had no cash, while having to pay so much back out, I had to spend $20,000 in legal and CPA fees to understand if I could or could not use certain items as a tax deduction … Having a simplified tax code that focuses on lower and straightforward tax laws would benefit and reward small business owners instead of scaring them away and penalizing those who cannot afford to hire a tax attorney/advisor.”

On delivering certainty:

Ms. Boenigk said: “If Washington is serious about strengthening the American economy, it is time to enact a plan that will level the playing field for American businesses by encouraging investments and job creation. Piecemeal efforts won’t get us where we need to go. We need comprehensive, permanent tax reform, and we need it now.”

Mr. VanderWal spoke about the importance of certainty for farmers and ranchers: “Even with agriculture’s great diversity, all family-owned farms and ranches share several things, including that they operate in a world of uncertainty. From unpredictable commodity and product markets to fluctuating input prices, from uncontrollable weather to insect or disease outbreaks, running a farm or ranch business is challenging under the best of circumstances … Farmers and ranchers need a permanent tax code that recognizes the financial challenges they face.”  

Ways and Means Members will continue listening to Americans across the country about how tax reform will improve their lives. Next week, the Tax Policy Subcommittee will hold another hearing focused on how lower tax rates and simplifying the tax code will help individuals and families.

CLICK HERE to learn more about today’s hearing.

CLICK HERE to learn more about next week’s hearing.

CLICK HERE to watch our new video with local job creators.