Buried in the most recent Indiana unemployment report are some startling numbers. Private sector employment in the state grew by 4,400 workers in a month, and in the last year, that number surged by 40,400 people. As state director of NFIB in Indiana, an association representing over 10,000 small businesses in the state, I can tell you the biggest problem these business owners face today is finding qualified workers.
Nationally, there have been record job openings, plans to hire, pay raises and other indications that the small business economy is on fire. Federal tax reform is, in large part, responsible for this optimism. That legislation created the Small Business Tax Deduction, a 20% deduction on business income which will save small businesses across the country an estimated $414 billion in 10 years. Almost all of Indiana’s 509,000 small businesses are better off this tax season than they were last year.
The Tax Cuts and Jobs Act also encouraged small businesses to make purchases, like buying new equipment or bigger buildings, by broadening IRS expensing rules. And the law spared thousands of small business owners from the costly federal death taxes by exempting many smaller estates. That means that shops or restaurants you know and love in towns all over Indiana are much less likely to close when the owner passes away.
When small businesses succeed, Indiana succeeds. They are the engine our economy, and thanks to the federal tax cuts, that engine is roaring back to life. But, beware; it might not last. Under the law, the Small Business Tax Deduction expires in less than eight years, but corporation tax cuts do not.
A bipartisan bill called the Main Street Tax Certainty Act has just been introduced in Congress which would change that, making sure small businesses permanently benefit from tax reform just like larger corporations. If passed, that will create stability and small businesses will continue to grow and prosper all over Indiana. It is important that Congress pass this legislation.