Small business chief touts early impact of tax cuts as other firms looks for benefits
The chief of the Small Business Administration (SBA) on Wednesday touted the early impact of the 2017 tax cuts, citing a spike in loan applications to her agency.
SBA Administrator Linda McMahon said Wednesday that early savings and optimism spurred by the GOP tax bill has boosted small business across the U.S.
McMahon, the former CEO of World Wrestling Entertainment (WWE), said the SBA has seen a 20 percent increase in loan applications between the first quarters of 2017 and 2018.
She also cited several small business owners who’ve told her about their plans to expand and invest in their businesses with savings from the tax law.
“When consumers have more money, they’re going to buy more goods and services, which means we need to produce more goods and services,” McMahon said an event hosted by The Hill entitled “Small Businesses, Big Ideas: Entrepreneurship in Action.”
“I expect to see that continuing for a while.”
The impact of the 2017 tax cuts will be one of the key factors influencing the November midterm elections. Republicans are touting the tax plan and regulatory rollbacks as they defend a vulnerable House majority, while Democrats insist the bill amounts to little more than handout for big corporations.
Republicans pitched the tax plan, which cut the corporate income tax rate from 35 percent to 21 percent and created a 20-percent deduction for income of non-corporate businesses, as major boon for small businesses.
But critics of the bill insist that smaller firms, which do not typically file under the corporate rate, won’t see much benefit. The law includes a number of rules about what income qualifies for the 20-percent deduction that are complex and unclear.
“I don’t think the relief is there. I think it’s very difficult for small business owners to get through the tax laws,” said Sen. Ben Cardin (D-Md.), the ranking Democrat on the Senate Small Business Committee.
“The law did not simplify, nor did it make more predictable, our tax code, so from a small business perspective where they don’t have a large staff to deal with the tax issues, I think it has not been helpful.”
Several entrepreneurs at the event, sponsored by Paychex, added that the tax cuts had little impact on startups still searching for profits and expansion. Such firms can take several years to make money beyond the initial investments from bankers and lack enough staff to take advantage of the new code.
“What you see here a huge difference between small businesses and entrepreneurs in terms of policy effects,” said Jeff Reid, a professor director of Georgetown University’s entrepreneurship program.
“Small businesses are great, they create a lot of jobs, do a lot of great things for economy. But it’s a different set of policies, and challenges and priorities than you have for early-stage entrepreneurs.”
Naomi Jagoda contributed.
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