Saturday will mark President Trump’s first year in office and just under a month from the time he signed the Tax Cuts and Jobs Act of 2017 into law.
For the most important sector of Nebraska’s economy, both dates have been a boon, with expectations for continued business growth and job-creation. That sector comprises the 99 percent of Nebraska’s businesses that are small businesses.
For the last 45 of its 75 years as America’s voice of Main Street, mom-and-pop enterprises, the National Federation of Independent Business has published its Small Business Optimism Index, taking the pulse, over 10 variables, of those who sign the front of a paycheck -- the largest, longest data set on small business economic conditions in the world.
The index released Jan. 9 showed “the most remarkable year in the 45-year history of the NFIB Optimism Index,” according to Juanita Duggan, NFIB’s president and CEO. “With a massive tax cut this year, accompanied by significant regulatory relief, we expect very strong growth, millions more jobs, and higher pay for Americans.”
Added William Dunkelberg, NFIB’s chief economist: “We’ve been doing this research for nearly half a century, longer than anyone else, and I’ve never seen anything like 2017. The 2016 election was like a dam breaking. Small-business owners were waiting for better policies from Washington, suddenly they got them, and the engine of the economy roared back to life.”
I want to give a whole lot of credit for the continued optimism found on the Main Streets of Nebraska to our congressional delegation for its heroic effort in passing the Tax Cuts and Jobs Act into law.
Small businesses owe a debt of gratitude to Sens. Deb Fischer and Ben Sasse and Reps. Don Bacon, Jeff Fortenberry, and Adrian Smith for their steadfastness in doing the right thing for the people who give the vast majority of Americans their first rung up the ladder of the working lives, know all their employees and their families by name and provide someone a second chance to regain the self-respect only work can deliver.
Around 95 percent of small businesses are organized as pass-through entities, not as corporations. These include sole proprietorships, partnerships, LLCs, S-corps. The Tax Cuts and Jobs Act:
• gives a 20 percent passthrough deduction for all businesses below $315,000 in taxable income with certain limitations and exclusions phased in over the next $100,000.
• doubles for eight years the standard deduction to $12,000 for individuals and $24,000 for joint filers.
• raises for small-business owners thinking of buying new equipment Section 179 expensing to $1 million per year from $500,000. Business expansion is a vital step toward more hiring.
• provides Nebraska’s family farmers with some assurance they can pass their life’s work on to their children by keeping from the taxman’s grasp roughly $11 million per individual filer and $22 million per joint-filers.
• expands the ability of small businesses to use the cash method of accounting.
• increases the threshold for those wanting to use the Alternative Minimum Tax to $500,000 for an individual filer and $1 million for joint-filers.
It’s hard to make a case for this being a giveaway to the rich at the expense of the middle class. Sens. Fischer and Sasse didn’t buy the argument, and neither did Reps. Bacon, Fortenberry, and Smith.
What all five did was walk arm in arm with small business toward tax reform, not step on the backs of small business to get there.