Don’t let partisan politics impede Texas’ economic recovery
Every year, small businesses create 1.5 million jobs and account for 64 percent of all new jobs in the U.S. They are the backbone of the American economy, yet, some lawmakers in Congress appear to be more interested in playing partisan games than supporting our small business workers.
A newly proposed small business investment tax (H.R. 1068 & S.1598), supported by progressives in Congress like Rep. Alexandria Ocasio-Cortez (D-NY) and Sen. Bernie Sanders (I-Vt.), targets “carried interest,” a form of capital earned through sweat equity. It would raise taxes on the very investments that our small businesses rely on to create high-quality jobs for individuals and families in communities just like ours.
The COVID-19 pandemic was more than just a public health crisis. It was an economic catastrophe that devastated small businesses throughout Texas and across the country.
According to the Federal Reserve, an estimated 200,000 small business were forced to close their doors for good during the first year of the pandemic. There were 5.7 million fewer jobs in July 2021 than there were in February 2020. Those numbers are just as dire here at home, with nearly 209,000 Texans still reportedly out of work. These business closures hit retail, food service, and live event sectors especially hard since many had to navigate and survive mandatory capacity limits.
Now, the news is not all bad. Texas has been recovering at remarkable rates in the way of job growth. According to The Texas Workforce Commission, Texas has gained 714,800 jobs from July 2020 to August 2021. Unemployment is down to 6.2 percent. Businesses are working hard to recover, but we are not out of the woods, and this bill would hammer our progress.
When you consider these numbers and the fact that many Texans are still struggling, it is that much more inconceivable that members of Congress would seriously consider including this small business investment tax in the upcoming $3.5 trillion spending bill.
Now more than ever, Texas businesses need sensible economic policies that allow them to build back, grow, and thrive. A small business investment tax would do just the opposite.
This legislation would hurt workers and small businesses alike, ultimately punishing people who are still struggling. Nearly 14,000 small businesses rely on investments to hire new workers, open new locations, and even pay salaries during the COVID-19 economic slowdown. This tax hike directly targets those investments, which hurts 11 million workers, and would also make it harder for startups to receive the funding they need to grow — and real estate companies to build affordable new housing.
According to a 2019 report from the U.S. Small Business Administration, small businesses accounted for two-thirds of net new jobs and 44 percent of all U.S. economic activity. My organization, the Texas Association of Business (TAB), represents companies of all sizes and industries, that along with our 200 local chamber partners, employ thousands of men and women throughout the Lone Star State and produce $8 billion annually in business. From corner bars and restaurants to construction firms and local real estate companies, small businesses like the ones we represent are critical to driving the economic recovery from the COVID-19 pandemic.
While we may not know how long this pandemic will last, we do know that leaders in Washington must focus on rebuilding our economy. That starts with promoting investments that create jobs and spur economic growth for hardworking Texans, not taxing them. This is why I am publicly urging U.S. Reps. Vincente Gonzalez (D-Texas), Colin Allred (D-Texas), Lizzie Fletcher (D-Texas), Henry Cuellar (D-Texas), and Filemon Vela (D-Texas) to side with Texan small businesses by opposing the unnecessary and harmful business investment tax hike. Hundreds and perhaps thousands of local jobs depend on it.
Glenn Hamer is the president and Chief Executive Officer of the Texas Association of Business.