The Republican tax plan cuts the federal small business tax rate from nearly 40 percent to a much fairer 25 percent. Under the current tax code, the overwhelming majority of small businesses (95 percent) are considered “pass-through” entities, which means their owners are taxed at the highest individual marginal tax rate. The federal pass-through tax rate stands at 39.6 percent, while state and local taxes often bring the small business tax burden to 50 percent.
This is not only unacceptable, but destructive to job creation, business expansion and America’s economic activity. The U.S. tax system hasn’t been changed since the 1980s, when Democrats and Republicans banded together for the common good. Pro-growth tax relief is long overdue, and Washington, D.C. has no excuse not to get the job done.
Just imagine the economic impact of tax cuts. I’m a pastor in the great state of Florida, where there are 2.3 million small businesses, employing over 3 million workers — roughly half of Florida’s workforce. In my state, small business accounts for more than 95 percent of all exports. Nationwide, there are nearly 30 million small businesses, employing about 60 million workers. And small business generates over $470 billion in exports every year.
As the founder of G2G Ministries, Inc. just outside Tampa, I know the tremendous value of small businesses. When they succeed, America succeeds. Lower taxes would leave small-business owners with more of their hard-earned money, allowing them to reinvest in their businesses and local communities. They could hire new employees, raise wages and lift millions of people up the career ladder.
This is especially true for America’s minority entrepreneurs and the people they serve. In Florida, there are nearly 930,000 minority-owned businesses, which make up almost half of the state’s small businesses.
Nationwide, their impact is even more profound. According to the most recent data, America is home to 8 million minority-owned businesses. And minority business ownership is on the rise: From 2007 to 2012, minorities increased their share of overall business ownership from 22 percent to nearly 30 percent — an inspiring increase. All in all, minority business owners contribute more than $1 trillion in revenue and 7.2 million jobs.
Our government needs to reward these life-changing entrepreneurs with a tax code that helps them help others, rather than impeding them at every turn. For too long, our nation’s most devoted job creators have been overburdened by the heavy hand of Big Government. When that burden is removed, small-business owners — minorities and others — will guide us to economic prosperity more passionately than ever before. This prosperity will stretch from our inner cities to our farmland and beyond.
It’s time to try something new. Since the Great Recession, the U.S. economy has only averaged a few percentage points of growth. Jobs are not being created as often they could be.
This is a matter of right or wrong. When job creators struggle, their employees struggle. Will Uncle Sam keep erecting barriers on the road to professional development? Will Uncle Sam continue blocking Americans as they climb the career ladder? Or will our government — of, by and for the people — help them climb to unprecedented heights?
My state is a shining example of good government. Earlier this year, Gov. Rick Scott signed a $180 million tax cut package to help small businesses grow. The new law cut taxes charged on business rent, saving our state’s small businesses more than $60 million a year. Job creation and business expansion will surely follow.
And now it’s time for the federal government to follow suit. Cut taxes. Help small businesses.
Congress, our economy is in your hands. Do the right thing for your constituents.
Pastor Aubrey Shines is the founder of G2G Ministries, Inc. in Florida.