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Opinion: Tax cuts fueling small-business optimism

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Small-business owners are seeing a new hope on the horizon.

Last week, lawmakers in the U.S. House of Representatives passed what they are calling “Tax Reform 2.0” – a permanent extension of tax law changes for individuals. These tax cuts are slated to expire after 2025 under current law. The U.S. Senate is expected to consider this extension after the midterm elections.

Some of the favorable responses so far to the temporary individual tax rate changes – one being a new 20 percent deduction that affects “pass-through-income” small businesses, such as partnerships, S corporations and sole proprietorships – became apparent in recent small-business surveys and reports. Another impactful change is the nearly doubling of the amount small businesses can expense, now up to $1 million under IRS code Section 179 in 2018.

Small-business “optimism” is reported to have reached its third-highest level since the National Federation of Independent Businesses started its annual survey 45 years ago. The 2018 National Association of Manufacturer’s Outlook Survey reports a “positive outlook” by 93 percent of their businesses – a near-record level of optimism, with tax reform cited as a major reason. Considering the number of job openings are surpassing the number of job seekers for the first time on record, and it’s easy to see the positive effects of the tax reform.

Over many years, traveling across Missouri as a congressional small-business representative, I heard from small-business owners that individual and pass-through business tax rates were stifling. This year, as the U.S. Small Business Administration’s regional administrator, I have had the privilege of traveling around the region extensively myself, as well as with SBA Administrator Linda McMahon. I have heard numerous first-hand accounts of how the 2017 individual tax rate cut has allowed small businesses to plan more effectively, hire new employees and raise wages. Some businesses have planned expansions and others are considering expanding.

This is positive news, not only for small businesses, but because the individual tax rate reductions mean Americans can spend more money on Main Street and for additional products and services. This local commercial activity helps not only our country but also our local communities to thrive and grow.

These tax cuts should definitely be made permanent. In our region, the reward would be the growth and the sustainability of our many small communities.

Tom Salisbury is the regional administrator of the U.S. Small Business Administration Region VII, which covers Missouri, Kansas, Iowa and Nebraska. He previously worked as the small-business liaison for U.S. Sen. Roy Blunt and in lending for UMB Bank. Salisbury can be reached at thomas.salisbury@sba.gov.

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