Great Lakes Wire

The National Federation of Independent Business (NFIB), known for its advocacy work for small businesses in Michigan, published a report concerning the potential effects of a change in the Small Business Tax Deduction. The focus of the report is the possible benefits of making the 20% deduction permanent, alongside the risks if Congress does not act to maintain it.

The report suggests that Michigan's 945,000 small businesses may face higher taxes if this tax deduction is not sustained. The report warns of possible severe repercussions for Michigan's small businesses and the U.S. economy if the deduction expires. Potential consequences include an economic slowdown and increased financial pressure on local businesses.

Differences in tax rates between small businesses and larger corporations are highlighted in the report. If the deduction lapses, it predicts a significant rise in the tax rate for small businesses compared to C-Corps in Michigan. The C-Corp tax rate would be 27%, while small businesses might see a rate increase to 43.85%.

Retaining the deduction could provide notable economic advantages for the state. The NFIB forecasts the creation of 37,000 new jobs annually in Michigan over the next decade. Additionally, the state's GDP could grow by $1.92 billion annually over the first ten years, and potentially $3.96 billion per year beyond 2035.

Amanda Fisher, NFIB Michigan State Director, stated, “The 20% Small Business Deduction is a great benefit to Michigan’s small businesses, and owners are concerned about a potential tax increase if it’s not made permanent. If Congress allows the 20% Small Business Deduction to expire, a massive tax hike on Michigan’s small businesses will take effect and stifle growth. This Tax Day, Congress should provide certainty to small businesses and act quickly to make this federal deduction permanent.”

This particular tax deduction was part of the Tax Cuts and Jobs Act of 2017 and has supported numerous small business owners in expansion efforts, hiring, and salary increases. Without legislative action to secure its permanence, nine out of ten small businesses could face heavier tax obligations, potentially endangering jobs and the economic stability across the nation.

For further details regarding NFIB's advocacy work and the report, visit their website at www.nfib.com/stopsmallbiztaxhike.