President Donald Trump’s choice forl running mate, Senator J.D. Vance of Ohio, succinctly personalized Joe Biden’s runaway inflation when he said that “Joe Biden’s inflation crisis is really an affordability crisis. And many of the people I grew up with can’t afford to pay more for groceries, more for gas, more for rent and that’s exactly what Joe Biden’s economy has given them. So prices soared, dreams were shattered so China and the Cartels sent fentanyl across the border adding addiction to the heartache.”
It's an affordability crisis for those who live paycheck to paycheck, work two jobs just to try to keep up, and for those on fixed incomes. But this affordability crisis is a chain reaction car wreck of Biden’s making. Small, local businesses get caught in the vice between their customers who are being squeezed and rising costs due to Bidenflation. While large, national or multi-national competitors have the means to ride it out, Main Street gets hollowed out with more and more commercial vacancies and empty storefronts.
As those local, small, and mid-sized businesses tighten their belts, and the owner/entrepreneurs who have built them find themselves having to choose between laying off employees or suspending their own pay, the very pulse of towns like Middletown weakens.
The federal government tax code contributes to this crisis.
According to the Small Business Administration, 33 percent of all small businesses fail in the first year, 50 percent have failed after two years, and 66 percent have failed after five years. Yet the U.S. tax code imposes a 21 percent tax rate on all businesses – small, medium, or large.
The Small Business Administration’s report titled, “Small Business Profiles for the States, Territories, and Nation” tells us on page 4 that there are 6.1 million small businesses employing between 1 and 499 employees. Small businesses employ more than 61 million Americans in fields ranging from legal and accounting firms to restaurants and machine shops.
Ending the federal tax liability on small businesses through a simple standard deduction would allow 6.1 million small businesses to keep billions of dollars of the money they have earned to reinvest right into the bloodstream of towns like Vance’s hometown of Middletown, Ohio, and thousands of other communities just like it.
Whether that money is spent on hiring a new employee, giving people a raise, refurbishing the retail outlet, advertising, or buying another lathe so you can handle more orders is not the government’s business. That is for the individual owners to decide based upon their own vision. But imposing a 21 percent tax on those businesses which are the backbone of America is economically stupid and runs counter to the focus of rebuilding America.
Another way to accomplish the same mission with a twist would be to end the federal corporate income tax for every business that employs only American citizens and those who are legally able to work in America. This would incentivize domestic business expansion rather than having companies like General Motors invest tax windfalls into expanding their presence in China rather than re-opening their closed plant in Flint, Michigan.
The mechanics of implementing this type of tax system is more challenging, but it could be utilized to incentivize businesses of all sizes to prioritize building their next factory in the United States rather than China.
President Trump’s regulatory agenda is clearly designed to unleash American prosperity. His energy policy is a proven path to make America energy dominant, as well as unburdening our public utilities from green energy mandates that are making our electrical grid more and more unreliable. His trade policies will encourage domestic production and growth. If the administration adopted a corporate tax policy which ended the corporate income tax stranglehold on small businesses, tax policy would be in alignment with Mr. Trump’s overall economic renewal agenda.
It is time to give Main Street, USA a fighting chance against the corporate behemoths. Ending the small business corporate tax would allow those without lobbyists in D.C. to compete with the big boys who do.
And that is just one more way to meet the ‘affordability’ crisis created by Bidenomics. Unleash small business entrepreneurs from federal income taxes and just watch them compete, grow, and expand opportunities for everyone. Employing more of their neighbors and pouring money back into the community through Little League sponsorships, charity donations, and all those activities that make a town actually home.
As Vance pointed out in his speech, under the presidency of Donald J. Trump, the bottom 40 percent of earners in America saw their salaries grow well beyond inflation and at a faster clip than the top 60 percent of earners. Letting those small businesses which employ many of these lower-wage workers free from federal corporate income tax will accelerate this wage growth while helping heal our community’s, and that is making America great again.
Rick Manning is the president of Americans for Limited Government.