Cape News

Permanently extending the 20 percent deduction for small businesses, part of the 2017 Trump tax cuts, could result in the creation of at least one million new jobs annually over the next decade. This is according to a study conducted on behalf of the National Federation of Independent Business.

The report suggests that making this deduction permanent would not only boost job creation but also stimulate economic growth. The study projects an increase in GDP by $75 billion each year for ten years, followed by an annual increase of $105 billion.

The findings counter claims that the deduction does not benefit small businesses. In 2021, 77 percent of households claiming this deduction had an adjusted gross income below $200,000.

Jason Smith, Chairman of the Ways and Means Committee, emphasized the importance of extending this deduction. He stated: “President Trump and Republicans in Congress are fighting for small businesses and the 81 million Americans they employ. Rebuilding our economy requires helping small businesses and giving them the certainty needed to quickly start investing in their companies and hiring more Americans."

Smith further warned about potential consequences if Congress fails to act: "The 26 million small businesses who rely on this deduction need the confidence that in less than 12 months their tax rates will not go up to over 43 percent."

During recent hearings, various small business owners have urged Congress to extend this tax benefit. Alison Couch, a Georgia-based entrepreneur, highlighted its significance: “If 199A expires, it will feel like a tax increase on small business owners... I think it is that impactful.”