The Republicans released the details of their tax reform plan yesterday and – amazingly - many small business owners aren't happy about it.
"It doesn't go far enough," one client complained to me. "The big companies are getting more of an advantage," said another.
Their sentiment was summed up by a statement from the National Federation of Independent Businesses, an association representing 325,000 small businesses around the country. The organization lamented that it is "unable to support" the plan in its current form.
“This bill leaves too many small businesses behind," said NFIB President and CEO Juanita Dugga. "We are concerned that the pass-through provision does not help most small businesses. Small business is the engine of the economy. We believe that tax reform should provide substantial relief to all small businesses, so they can reinvest their money, grow, and create jobs.”
Can you believe this? After almost a decade of rising taxes we're finally getting a tax cut. And people are complaining? Really?
I'm a fan of the NFIB - they do great work for small business owners like me. But do I agree with them and all the other small business owners who are disappointed with the GOP's proposal? Nope. As a small business owner (and advocate) here’s what I say: quit your griping.
Sure, it would be nice if the proposed 25 percent rate on "pass-through" income - which affects many of us who run S-Corporations or partnerships - were as low as the proposed corporate rate and wasn't limited to just 30 percent of earnings. I get it that this reduction won't affect as many small business owners as hoped. But even so, it's still a tax reduction, people! Oh, and combine that with the GOP's proposals for lower individual rates, a doubling of the standard deduction and the elimination of both the alternative minimum and estate tax and we're all looking at a cut in our taxes.
Are big companies getting a better deal? Yes, it's true that the GOP is proposing to reduce the corporate tax rate to 20 percent from its current 35 percent level and is offering a very sweet deal on a one time, low tax rate for companies that choose to repatriate the billions of dollars of cash they're holding overseas back to the U.S. Some of my smaller clients are disappointed because these rules wouldn't really affect them.
But actually…they do.
That's because, many small businesses like me provide services for other small businesses and, more importantly, for a few large corporate clients that generate a significant percentage of our yearly profits. The more that big companies can save on taxes the more they will spend on other things. Things that we are providing - technologies, maintenance, parts, cleaning, painting, accounting, landscaping, consulting, legal, pizza, office supplies, limousines - and countless other products and services that big companies buy from their smaller vendors, freelancers and independent contractors.
And wait a second…what about all those years when I heard small business owners complain about the billions in annual deficits and trillions being added to our national debt under the Obama administration? While I will never complain about getting a tax break, the current tax reform proposals could add even more debt over the next decade. What, suddenly we don’t complain anymore?
The good news is that GOP leadership seems to be aware. Sure, it would be fantastic to have even more tax cuts. But given the high levels of debt we’re already leaving to our children one could argue that any tax cuts aren't just unrealistic but downright selfish. But hey, I'll take what I can get.
So to my fellow small business owners I say this: stop whining. Be grateful. After the past eight years of rising taxes we're finally getting a tax cut! That's in addition to a loosening of regulations and a more pro-business environment in Washington. Let's take what we can get and appreciate it.
Gene Marks is an author, columnist and President of The Marks Group, a ten-person technology consulting firm near Philadelphia. Gene is also a Certified Public Accountant and a small business expert.