THE VIEW FROM MAIN STREET

Tax Bill Falls Short for Small Business

April 2018
 INTRODUCTION

L
ate in 2017, mere hours before Congress went into recess,
Changes to Pass-Through Income
Republicans were popping champagne. Without a single vote
The most significant change in the law that directly impacts small
from Democrats, their party had finally accomplished with taxes
businesses is the creation of a new 20 percent deduction for owners
what they could not with healthcare – a legislative win, made possible
by the rules of reconciliation rather than regular order. With the Tax of “pass-through” businesses such as S-corps, partnerships, and LLCs.
Cuts and Jobs Act (TCJA),¹ the GOP passed the largest overhaul of the The income from these businesses “passes through” to the business
tax code in decades. owners and is taxed at the individual tax rates of the owners. A wide
variety of businesses are structured as pass-through entities, ranging
For months leading up to the bill’s passage, Republicans and their from mom-and-pop shops to law firms to hedge funds.
donors had been pushing hard on the message that its central
characteristic – massive tax cuts that will cost the nation $1.5 trillion² While this provision has been lauded as a boon for small business,
– would give small businesses and the middle class long-sought tax in practice, it’s another major tax cut for very wealthy individuals.
relief, creating jobs and economic growth. Nationally, the median income of a typical business owner is
approximately $50,000.4 These businesses are the bodegas, auto
In practice, the GOP’s chief accomplishment with this tax law is to
mechanics, family restaurants, and small farmers who would have to
accelerate US income inequality by funneling the vast majority of
the law’s benefits directly to the wealthiest households and large pay more to an accountant to figure out the new law than they would
corporations, which received trillions from a dramatic and permanent reap in tax cuts, or who are seeing increases in health insurance
cut to their tax rate from 35 percent to 21 percent.³ In order to offset premiums that outweigh any small tax cut they might receive.
the cost of those tax giveaways to their donors and the denizens
of Wall Street, Republican legislators sacrificed those they claimed Overall, however, income from pass-through businesses skews heavily
to champion. In the coming years, small businesses and low- and to the very wealthy, with 70 percent of pass-through income accruing
middle-income taxpayers will be the ones who bear the brunt of a to the top 1 percent of income earners.5 Wealthy business owners
law that redistributes wealth upwards. stand to benefit far more from this new deduction than real small
business owners.
This report is an initial investigation into how small business owners
are being impacted by the new tax code, and how well it meshes Republicans claim they built guardrails into the law that keep the
with their priorities for building local economies and creating jobs. investment bankers and Wall Street lawyers from using the tax break
In the climate of uncertainty created by a hastily written tax bill, Main once their income reaches a certain level. But savvy, highly-paid
Street Alliance reached out to thousands of small business owners
accountants are already figuring out how to game the system and
across the country to start to piece together the pragmatic and policy
restructure their clients’ businesses to claim the maximum benefit
implications of the law for Main Street, both now and in the future.
from the new law,6 while real small businesses are left uncertain and
struggling to understand the changes.

Moreover, the tax law gives owners of real estate holdings an easy
way around the guardrail, effectively creating a new tax loophole
for large landlords and real estate developers, people like President
Trump.7 President Trump himself could see more than $11 million in
tax breaks from the pass-through deduction.8

| 2 THE VIEW FROM MAIN STREET: TAX BILL FALLS SHORT FOR SMALL BUSINESS
 KEY FINDINGS

T hrough working with thousands of small business owners

nationwide, Main Street Alliance found:
decisions based on tax cuts. On the contrary, they cited the following as
a few of the drivers of growth: consumer demand; high-quality, stable,

1
affordable healthcare; certainty in the market; and infrastructure
The total impacts of the tax law on small businesses’
spending that creates a virtuous cycle in local economies.
bottom lines far outweigh the nominal tax cuts most

3
anticipate receiving. [see Section 1: Small Business Impacts]
To ensure an equitable economy that works for small
businesses, large corporations and wealthy individuals
Republicans have touted their tax law as a driver of economic
must also pay their fair share of taxes. This means we must
growth and a win for American businesses, but those who stand to
close corporate tax loopholes, not skew the tax code even
benefit most from the law are those with the most to begin with.
more in their favor. [see Section 3: Real Support for Small Business]
Meanwhile, small business owners and the rest of the middle class
are being saddled with higher healthcare premiums and looming
As tax policies in Kansas have demonstrated, tax cuts starve, not
cuts to other essential services that far offset the nominal cuts
sustain, local economies over time.9 Small businesses prioritize strong
average income earners are seeing from the tax law. Ultimately,
public investment that spurs the development of local economies,
small businesses are likely to see a decline in consumer demand as
and the first steps in generating more revenue is closing corporate
the full impacts of the tax law are realized.
loopholes and penalizing offshoring.

2 The view from Main Street is very different than the

view from Wall Street. The majority of small business
owners surveyed say they need more customers, not tax
The sections that follow address each of these key points by
highlighting real life experiences of Main Street business owners.
cuts, in order to hire and expand, calling for stability and
strong public investment as the way to sustainably grow a
business. [see Section 2: The View from Main Street]

In conversations with nearly 1,800 small business owners across the

country, it became clear that few business owners make business

6%

13%

Makini Howell, owner of Plum Restaurants in Seattle, Washington

| 3 THE VIEW FROM MAIN STREET: TAX BILL FALLS SHORT FOR SMALL BUSINESS
 SMALL BUSINESS IMPACTS

How Will The Trump-Republican Tax Law Impact Small Business Owners?

1. Small business owners will struggle to afford healthcare costs in an unstable market, while 13 million Americans will
lose access to healthcare and health insurance premiums will increase by an average of 10 percent.10
The repeal of the individual mandate will cause healthcare costs to increase for small business owners already struggling to afford insurance
for themselves or their employees. Small businesses fund their expenditures from month to month, and need predictability to make business
decisions. Erratic premium increases undermine their ability to project expenses. Additionally, as healthcare costs increase for millions of
Americans, customers will have less money to spend at local businesses.

“ My bookstore is already dealing with instability with the ever-growing

competition with online book sellers. Now with rapid and unpredictable
healthcare cost increases, it makes it really hard to operate my shop. Just
this year, we’ve had a 20 percent increase in employee healthcare costs.
This pre-ACA level increase is not sustainable for me or my employees.

- Dorothea von Moltke, co-owner of Labyrinth Books, Princeton, NJ

”

“ Access to healthcare through the ACA, and programs like Medicare and
Medicaid, have enabled entrepreneurs like me to have the stability to
13%
venture out on our own. Strong public programs facilitate innovation and
business development. Cutting trillions of dollars from critical public
programs to finance tax cuts for the rich makes it harder for entrepreneurs
to go out on their own.
- Nate Barr, owner of Zootility Co. in Portland, ME ”

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2. Tax breaks for the wealthy are unlikely to increase
consumer demand on Main Street.
In order to prosper and grow, the single most important thing small
business owners consistently say they need is more customers, and it’s
unlikely that this tax law will spur consumer spending on Main Street.

Studies have shown that putting money into the hands of working
15%
families does more to stimulate local economic growth than putting
more money into the hands of the wealthy. This is because working
“ It makes me angry when Republicans say that
tax cuts for the wealthy and big business will
families are especially likely to spend increased earnings in their
communities. Each dollar going to working families represents a larger create jobs and help small businesses like mine.
share of their total income as compared to those with higher incomes.11 That’s just not true. I don’t have any millionaires
However, the majority of the tax breaks under the Republican plan accrue coming in to buy sandwiches at my deli – the
to the very wealthy.12 The non-partisan Tax Policy Center estimates that
majority of my customers earn between $40,000
millionaires will receive an average tax cut of nearly $70,000 this year—
more than 100 times the amount of the average tax cut for the bottom to $80,000. The Republican tax plan will hurt the
80 percent of income earners (families earning less than $150,000 per
hard-working middle class families that make
year).13 According to a study by the Federal Reserve Bank of Chicago,
increasing disposable income for working families through policies my customer base, causing demand for my
like raising the minimum wage would stimulate local economic growth
more than income increases to wealthy households.14
business to decrease.
- Tara Kleca, owner of Lighthouse Market in Tacoma, WA ”
“ The negative domino effect of this tax law is so
patently obvious. We have again raided the treasury
and cut basic, necessary services just so we can give
our hard-earned tax dollars to corporations that need
it the least. If we keep pretending that tax breaks are
a substitute for true demand, my customers will have
less flexibility with their spending, which will lower
demand for our services. Tax breaks do not create jobs.
Demand creates jobs.

- Ian Levitt, owner of Studio Americana in Minneapolis, MN ”

| 5 THE VIEW FROM MAIN STREET: TAX BILL FALLS SHORT FOR SMALL BUSINESS
3.The tax law will not enable small business owners to create
new jobs or expand their businesses.

Evidence shows that tax cuts do not lead to job creation or business
growth. In 2012, Kansas enacted aggressive tax cuts, including
exempting pass-through income from state income taxes. Far from
growth or job creation, the results were so disastrous that lawmakers
were forced to repeal the tax cuts in 2017.15

Businesses hire more people only when there is enough demand

“ Tax cuts to the top don’t help the middle. We’ve
seen this numerous times -- trickle-down
to warrant more employees. This is underscored by a recent poll by
Businesses for Responsible Tax Reform, which found that 69 percent of economics doesn’t work. The GOP tax cuts won’t
small business owners do not plan on hiring a new employee because provide a boost to small businesses or create
of the new tax law, and 59 percent do not plan to give current employees
raises.16 jobs. Above all else, small businesses need more
customers. And that requires a government that
Main Street’s ability to create jobs is particularly important to economic
growth because small businesses employ nearly 50 percent of the invests in our communities and local economies
country’s private sector workforce.17 A recent report by the Small Business
to boost the standard of living for everyone. The
Administration found that small businesses, not large companies, led
the way out of the Great Recession by creating most of America’s jobs. Republican tax plan doesn’t do that in any way.

”
Since then, small businesses have created 2 out of 3 private sectors
jobs.18 - Alan Haghighi, co-owner, FruitCraft, San Diego, CA

“
I don’t make business decisions based on tax cuts. I don’t
operate like that. My business decisions are based on
customer demand. When demand increases, I expand
business operations and hire more employees. If vital
government programs are cut, middle-class families in
Seattle have less disposable income to buy an ice cream
cone to treat their families and kids, and demand at my ice
cream stores decreases. That’s not good for anyone.

- Molly Moon, owner of Molly Moon’s Homemade Ice Cream in Seattle, WA ”

| 6 THE VIEW FROM MAIN STREET: TAX BILL FALLS SHORT FOR SMALL BUSINESS
4. The GOP tax law further skews the federal tax code to benefit large corporations, exacerbating their unfair advantage
over small business.
While large corporations are reporting record profits, tax revenue from corporate income has drastically decreased since 1950.19 That means
that even while corporations are benefiting from public services, they’re also failing to pay their fair share in taxes, which shifts their tax
responsibility onto small businesses and other taxpayers. Unimaginably, the new tax law gives the likes of Walmart, Apple, and Exxon $1.4
trillion in tax cuts20– tilting the playing field even further in favor of big businesses who have been dodging paying their fair share for decades.
The majority of the tax cut windfall is not being spent giving employees permanent raises or more benefits. Instead, corporations are using the
money for stock buybacks that pad the pockets of investors. Wall Street has announced $171 billion of stock buysbacks so far this year, more
than double the amount over the same period last year.21

“ While Republicans are selling their plan as benefiting small business,

it is really just another corporate tax break. Corporations like AT&T and
Apple are using their trillion dollar tax cut to pad the pockets of their
wealthy shareholders and increase what CEOs make. West Virginia
continues to have one of the highest poverty rates in the nation, and small
businesses and average people will get little or nothing from these tax
changes — except the reductions in services that come from handing out
over one trillion dollars in corporate tax giveaways.

- Martha Ehlman, owner of Tenfold Fair Trade Collection, Harper’s Ferry, WV ”

“ The Republican tax plan is a huge giveaway to the rich. The estate
tax does not impact me or any other small farmers I know; we don’t
make nearly enough to benefit from getting rid of the estate tax. Not
only that, a lower corporate tax rate gives more power and profits to
the big corporations who are destroying small family farms. It provides
large corporations with an unfair edge over small farmers and creates

”
a rigged economy where small farmers are set up to fail.
- James Berge, owner/farmer of Berge Farms a 144-year-old, 153-acre farm in Kensett, IA

| 7 THE VIEW FROM MAIN STREET: TAX BILL FALLS SHORT FOR SMALL BUSINESS
5. The GOP tax law is breeding uncertainty and confusion across Main Street.

The tax changes add new, unnecessary levels of complexity to the tax code that only accountants can untangle. The average Main Street small
business owner does not have a tax accountant on retainer, and many cannot afford to consult or employ an accountant to fully understand the
implications of the new tax law, nevermind restructuring their business to take full advantage of the new changes. For many small businesses,
the cost of an accountant alone would offset any marginal decrease in tax liability. With armies of lawyers and accountants on retainer, big
corporations don’t have the same problem.

“ The new tax law is so confusing that tax accountants and

lawyers are the only ones who are going to grow their business
and hire more employees as a result of it. Even then, there’s
so much uncertainty in the law that it’s really hard to find an
accountant who can give you a simple yes or no answer about
whether you should restructure your small business into an
S-corp or an LLC.

Our law firm sits in a very privileged position when it comes

to this tax law because we are attorneys who advise small
businesses. We decided to restructure our business, and we
had to spend a great deal of money to figure out the details with
our accountant. That means that, in the first year at least, what
we will save in taxes will be pretty much outweighed by what
we spent to figure it out. I would double what we spent for any
other small businesses because they will need to talk to their
attorneys as well.

- Davis Senseman, founder of Davis Law Office in Minneapolis, MN ”

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 6. The tax law incentivizes offshoring of domestic jobs by giving tax preferences to foreign profits earned abroad compared
to domestic and small business earnings.

Small businesses create jobs and spur economic activity right here in the US. Main Street businesses are the backbone of their communities.
Not only do they rely on their neighbors as their customers, many have deep roots in their communities and would never leave them for a lower
tax rate.

But, by creating a lower corporate tax rate on foreign profits compared to domestic profits, this tax law incentivizes multinational companies
to shift profits, investments and jobs out of the US. This results in lost tax revenue, needed for critical11%
economy-boosting investments, but also
destabilizes communities by offshoring jobs.

8%

“ Multinational corporations are paying far below their fair share through aggressive tax avoidance.
They set up shell companies in countries with lax tax rules and shift profits into tax havens, thereby
avoiding US taxes. Now, thanks to the GOP tax plan, large multinationals won’t even have to set
up shell companies. Tax avoidance is baked into the tax code and incentivized. A lower tax rate on
foreign profits incentivizes companies to shift profits, investments and jobs offshore to get the lower

”
rate.
- Kelly Conklin, owner of Foley-Waite Associates in Kenilworth, NJ

“
The creation of overseas subsidiaries has long enabled corporations to engage
in offshore tax dodging, regardless of the fact that these subsidiaries have no
retail operations and have few, if any employees. The ‘Panama Papers’ leak
exposed international offshoring and tax avoidance at a scale few believed
existed and with political figures at the highest levels of government. Some of
the same institutions involved in this scandal were also major players in the
financial collapse of 2008. Congress should have reformed the tax code so that
multinational corporations would be required to pay taxes on all overseas
earnings, but instead they capitulated to their donors and effectively eliminated
taxes on future offshore profits.

- Matt Birong, owner of 3 Squares Cafe in Vergennes, VT ”

| 9 THE VIEW FROM MAIN STREET: TAX BILL FALLS SHORT FOR SMALL BUSINESS
 7. Tax breaks for the wealthy and large corporations will be paid for by cutting trillions of dollars from critical services that
small businesses and our communities need.22
Deep cuts to Medicare, Medicaid, Social Security, education, infrastructure, as well as food, rental and energy assistance, and other critical public
programs would cause basic living expenses to skyrocket and destabilize local economies. As families are forced to pay more for vital services,
they will have less money to spend at local businesses, devastating Main Streets across the country.

Crumbling and outdated infrastructure has caused small business owners to experience increased transportation costs as well as a variety
of health and safety issues. The lack of broadband internet connectivity in many rural communities has hampered business growth and
development. Robust public investment in sustainable and resilient infrastructure would help increase business efficiency, widen the consumer
base, and ensure safe and healthy communities.

Furthermore, a lack of adequate investment in the public education system has led to shrinking school budgets, increased class sizes, shortened
school years, and the loss of many school programs. Small business owners rely on a strong public school system to ensure a well-educated,
prepared workforce for the future.

“
President Trump has claimed that eliminating the estate tax
will help small business owners and farmers. Well, I own a
8%

small business and a farm and let me assure you this won’t
help me or any Maine small business owners or farmers that
I know. In fact, according to the Center on Budget and Policy
Priorities, only an average of 20 ultra-wealthy Maine estates
pay the tax each year. I’m not one of them. And yet, nationally,
the tax generates over $260 billion a year and helps pay for
things like Medicaid, Medicare, Social Security, and Pell “ For my small business to be successful, I need to be able
to hire and retain skilled employees. A big part of that is
Grants, which Eastern Mainers need. These programs are
ensuring that Oregon has a high-quality public education
what Maine’s economy – and the small business owners that
system. As a business person, I see clearly that when you
support it – need, not tax cuts for rich people.
”
- Amy Grant, owner of Good Karma Farm & Carrabassett Soap Company in Belfast, ME
invest in kids8%and education, you get an amazing return
through engaged citizens and dedicated employees. But,
Oregon kids aren’t getting the education they deserve
because our education system is vastly underfunded. Large
corporations aren’t paying their fair share in taxes, which
has led to a revenue shortfall. Cutting taxes even further
for big corporations will only deepen Oregon’s deficit and
education crisis, making it harder for small businesses
like mine to find qualified employees and run successful
businesses.
- Rob Cohen, owner of Falling Sky Brewing in Eugene, OR ”
| 10 THE VIEW FROM MAIN STREET: TAX BILL FALLS SHORT FOR SMALL BUSINESS
 THE VIEW FROM MAIN STREET

M
ain Street Alliance talked with nearly 1,800 small business owners from across the country to find out more about their thoughts on the
economy. When asked what they need most to create jobs and strengthen the economy, more than half of the business owners who responded
said above all, they need more customers, not lower taxes or fewer regulations. Fewer than 1 out of 3 of the respondents called for lower taxes.
In fact, when asked specifically about corporate taxes, almost 3 out of 4 business owners surveyed felt that large corporations are currently paying less
than their fair share of taxes.

However, as small business owners call for increased investment and tax fairness, President Trump and Republicans in Congress continue to celebrate
their tax giveaway – gutting critical social programs to give massive tax breaks to big businesses and the very wealthy.

These stories further highlight the real impacts of these regressive policies on small businesses – here’s the view from Main Street:

Jim Houser, co-owner of Hawthorne Auto in Portland, Oregon

Over the last 35 years of running my auto shop, I’ve learned a thing or two about what it takes to build a strong business and create
good jobs in my community. Since my wife and I opened our shop in 1983, we’ve gone through our ups and downs, but we’ve always
put our employees and our customers first. We know that without our dedicated employees, we couldn’t take care of our loyal
customers, and without our customers, we wouldn’t have a business. We depend on the stability of our local economy to drive our
business. When our customers have more money in their pockets, they can afford to maintain and fix their cars in our shop. For us to
grow and create more jobs, we need more customers.
No matter how they spin it, when you kick the tires of the Republican Tax Law, it’s clear that it is not going to help us grow our
business, hire more technicians, or give raises to our current techs. The single most important thing we need to grow our business is
more customers. But the Republican Tax Law does nothing to spur consumer demand on at our shop.
The overwhelming majority of the tax law goes to millionaires. That money isn’t going to get spent in my shop, it’s going to get
invested on Wall Street. My customers and my community need real public investment. We need to stop having to choose between
paying the rent, going to the doctor or getting that new set of tires.

Hawthorne Auto Clinic is a full-service auto clinic that has been in business for 35 years and employs 11 people.

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 Maurice Rahming, co-owner of O’Neill Construction Group in Portland, Oregon
At O’Neill, we strive to create quality, living-wage careers in construction for all our
employees, especially people of color who have been traditionally shut out of careers in
construction.
A large part of our business comes from public contracts. But the recent tax changes
reduce the state and local tax (SALT) deductions, putting pressure on public budgets,
which are already stretched thin. Not only does this mean fewer public construction
projects and less business for our company, but at a time when our infrastructure is in
dire need of repair, this harms the health and safety of my community. In Oregon, and
all across the country, we have crumbling and decrepit infrastructure like the Marquam
Bridge. We need more public investments in construction and infrastructure, not less.
If that’s not bad enough, the rollbacks to the SALT deduction also make owning a home
more expensive. This will lead to fewer new home purchases and renovation projects,
depressing the housing market and hurting small contractors like us, and our crews of
electricians, carpenters, painters, and masons.
O’Neill Construction Group is a general contracting company that has been in business for nearly 20 years and employs over 50 people.

Nancy Sobin, owner of Professional Paperwork Services in Princeton, New Jersey

I started my business three years ago. At the time, because of the ACA, I was able to get
a solid healthcare plan through the marketplace for about $400 a month with subsidies.
That was quality, affordable insurance – I didn’t have high deductible, the co-pays were
manageable, and I could purchase prescription drugs at a reasonable price.
This year, my business grew enough that I no longer qualify for a subsidy. That’s understandable.
But, in addition to losing the subsidy – which I may have been able to absorb – the premium
shot up 40 percent from just 2017 to 2018 on the same healthcare plan I had before. All of
a sudden, if I wanted to keep my insurance, I would have had to pay $1,025 a month. It was
totally out of reach.
I debated going without health insurance altogether in 2018, but decided to settle on a plan
that is $800 a month for bare-bones, emergency coverage only.
Clearly, Republicans didn’t understand basic math when they repealed the ACA’s individual
mandate provision. Healthy people are needed in the insurance pool to make the system
work, or premiums increase. The tax law was another attempt by Republicans to sabotage
the ACA, and now I’m living with the consequences.
Professional Paperwork Services offers expertise and assistance with financial management, bill-paying, and paperwork.

| 12 THE VIEW FROM MAIN STREET: TAX BILL FALLS SHORT FOR SMALL BUSINESS
 Deborah Field, co-owner of Paperjam Press PDX in Portland, Oregon
The GOP tax plan doesn’t help me or many other small businesses. I used to be a corporate
tax accountant, so I am very comfortable with numbers. I calculated my tax based on the
new changes, and I end up paying more than last year. I wanted to see what this would
mean for some of my neighboring businesses, so I went out and talked to them. They
didn’t even pause, they all laughed and said this isn’t for us -- this tax plan is a giveaway
to the biggest corporations who aren’t paying their fair share in taxes already.
Too many big corporations take advantage of all America has to offer, but then refuse
to pay their fair share in taxes. Corporate loopholes are already so large that some
multinational corporations pay less in taxes than I do. There is something deeply wrong
with that.
If Republicans really want to focus on supporting small businesses like mine, they
should invest in policies and programs that expand access to credit and capital for small
businesses. That would really help small businesses grow – trillion dollar tax breaks to
large corporations will not.
Paperjam Press PDX is a boutique stationery and printing company employing 3 people.

ReShonda Young, owner of Popcorn Heaven in Waterloo, Iowa

I’ve run a logistics company, a retail shop, and have turned a single popcorn
store into a franchise in five states. I’ve learned a lot as a business owner over
the years, but across industries, there’s one thing in common: strong consumer
demand drives my business decisions and my business growth.
The Trump tax cuts make me worried more than anything – worried about
customer demand in the future. The deep cuts to health care, education, and
food and rental assistance that Republicans are proposing to pay for tax breaks
for the wealthy will end up increasing basic expenses for my customers.
And that means working families will have to make tough spending decisions.
For some people, that will mean choosing between putting food on the table or
keeping the heating on during cold Iowa winters. For others, it will mean fewer
dinners out, and fewer extras like gourmet popcorn. Popcorn is a niche good. If
people can’t afford basic living expenses, they definitely won’t be buying any
popcorn.
And yet, Iowa Republicans are looking to double down on the deceptive federal law with a state law of their own. Senate Republicans
have proposed $1 billion in annual corporate and individual tax breaks. This would drastically reduce the amount of public revenue the
state could collect, forcing even deeper cuts to government programs and services.23
The Republican tax giveaway has set the economy up for a downward spiral, and Iowa Republicans are looking to put the nail in the
coffin.
Popcorn Heaven is headquartered in Waterloo, IA with locations in Des Moines, IA, Kansas City, MO, Peoria, IL, Charlotte, NC and soon in Waldorf, MD.

| 13 THE VIEW FROM MAIN STREET: TAX BILL FALLS SHORT FOR SMALL BUSINESS
David Borris, co-owner of Hel’s Kitchen in Chicago, Illinois
My wife and I opened a homemade food store in 1985, and over the years have
expanded it into a full-service catering company with 33 full-time employees and
80 part-time and seasonal workers. We haven’t grown because of tax cuts, we’ve
grown because of consumer demand. It’s simple: the more customers we have, the
busier we are, and the more staff we need to deliver. We make business decisions
based on experience and evidence, and that’s what small businesses like mine need
from our federal government – evidence-based policies that keep overall consumer
demand strong.
The health of my business is tied to a thriving economy that has money circulating in
a cycle of rising wages, consumer demand, and job creation. Tax breaks for wealthy
Republican donors and big corporations – like those in the GOP tax scam – do not put
money in the hands of my customers. We need investments in public programs like
Medicaid, Medicare, Social Security, education, and infrastructure.
When people in my neighborhood don’t have enough to keep up with the basics –
like paying bills, purchasing food and school supplies, and making car repairs – then
they definitely aren’t calling us to cater a party. The entire local economy becomes
unstable. That’s bad for small business, and bad for the economy as a whole.
Hel’s Kitchen is a full service catering company serving Chicagoland.

Gale White, owner of Lubec Brewing Company in Lubec, Maine

It sickens me to see a company like General Electric make a huge profit, but pay very
little in taxes. What Congress should do is tighten loopholes so big companies like
GE pay their fair share. With huge tax cuts for the wealthy and big business, I fear
we won’t have the federal revenue needed to fix our nation’s critical infrastructure.
At my brewery and restaurant, I use only Maine-grown hops and grain for my beer,
but I can’t get them delivered because the roads are so bad. I have to drive to Bangor
myself every month to pick them up from my suppliers. On my 88-mile drive from
Lubec to Bangor, the road was down to one lane in eight places due to potholes!
Broadband is another critical infrastructure issue – internet in Washington County
is spotty and slow at best. In the summer, when we have an influx of tourists who
want access, our systems shut down entirely. Not only does this make it impossible to run my business, but it’s a missed opportunity
for economic growth. If our elected officials really want to help small businesses and Main Streets like mine, they’d make sure the
wealthy and big businesses paid their fair share of taxes to keep our communities and infrastructure strong.
Lubec Brewing Company is a micro brewery and tap room at the easternmost point in the US offering raw, unfiltered beers and food made with organic, local ingredients.

| 14 THE VIEW FROM MAIN STREET: TAX BILL FALLS SHORT FOR SMALL BUSINESS
 REAL SUPPORT FOR
SMALL BUSINESS

What Do Small Business Owners Need In A Tax Plan? subsidies bring sustainable economic growth to our communities.
An alternative is prioritizing smaller, Main Street-scale economic
In order to create a more equitable economy with broadly shared
development efforts. This includes tax incentives to encourage the
prosperity on Main Streets across the country, it’s imperative to
growth and development of small businesses, and targeted technical
reform the tax and transfer system, and ensure wealthy corporations
assistance and mentorship programs throughout the stages of
and individuals pay their fair share of taxes by closing corporate tax
business development.
loopholes and creating a more balanced income tax structure.
Additionally, economic development subsidies that go to large
1. Eliminate the tax incentives given to US multinationals to corporations should have stringent job creation requirements,
shift profits and jobs overseas. including requirements that jobs be newly created (not moved from
The TCJA enables multinational corporations to receive a lower tax rate a nearby region) and offer family-sustaining wages and benefits. They
on foreign profits over domestic and small business profits. Instead should also include strong claw back provisions so that corporations
of having to pay the 21 percent rate owed on domestic earnings, are held accountable to our communities for benefiting from our
multinational companies will only have to pay an effective tax rate public tax dollars.
between zero and 10.5 percent on their offshore earnings, with the 3. Create an equitable tax structure that guarantees
rate decreasing as their offshore operations increase. The nonpartisan
sustainable revenue streams to fund robust, transformative
Institute for Taxation and Economic Policy estimates that many
companies will end up paying nothing in US taxes on their foreign public investments in health care, education, infrastructure,
earnings.24 child care and other vital programs that small business
owners and our communities need.
This incentivizes multinational companies to artificially shift profits
offshore, or actually shift investments and jobs offshore to take CEOs often use profits to pay off shareholders and increase their own
advantage of a lower tax rate. It gives corporations with international bonuses instead of increasing worker salaries or investing to expand
operations and expensive tax advisors an unfair tax advantage over business operations. In order to reverse this trend, we should raise tax
domestic and small businesses. Real tax reform would require rates on high-income individuals. This includes: creating additional tax
multinational companies to pay the same tax rate on their foreign brackets for millionaires and billionaires; converting all deductions to
earnings as they do on their domestic earnings, ensuring they abide tax credits and limiting the use of credits; and raising taxes on capital
by the same rules as domestic and small businesses. gains, carried interest, and stock dividends, which are taxed at much
lower rates than earned income. Additionally, we should raise the
2. Prioritize targeted, Main Street economic development estate tax, which prevents wealthy families from escaping tax through
efforts over corporate welfare. inheritance.

Economic development subsidies often provide tax breaks for large

corporations to relocate within the US, despite little evidence that these

| 15 THE VIEW FROM MAIN STREET: TAX BILL FALLS SHORT FOR SMALL BUSINESS
 CONCLUSION

S
mall business owners are problem solvers by necessity. The
success of their businesses often depends on their ability to
navigate the inevitable ups and downs in the economy. Even the
most creative entrepreneur, however, is not equipped to withstand
large-scale policy changes that stack the deck against them.
“ These big business tax cuts are paid for
by cutting public services that benefit my
When he signed the Tax Cuts and Jobs Act, President Trump made business and my community. Atlantic County
economic inequality the law of the land. He and the GOP made a
trade-off when they voted to cut trillions in taxes for the rich: the next can’t afford these cuts. Our transportation and
generation of public school students will pay for Apple’s tax cuts. telecommunications infrastructure need an
Our grandparents on Medicare will pay for Walmart’s tax cuts. Sick
children on Medicaid will pay for the Koch brothers’ tax cut, and small upgrade. Many of our residents rely on programs
business owners will pay a far greater share in tax than Amazon ever
will. like Medicaid for health care. We need to invest
in education and workforce training to attract
Over time, starving the Treasury of tax revenue will be felt on Main
Street. People are already paying more for increases in health care more companies to the area. My small business
premiums than they’re getting back in tax cuts. While the rest of
the world speeds ahead on broadband and bullet trains, our aging can only survive and thrive if we invest in our

”
infrastructure is crumbling, costing business owners and consumers community.
more for everyday necessities like shipping and internet, and making
it harder to do business in rural areas. Though corporations may grow - Mike Price, owner of Price Communications in Pleasantville, NJ
richer, the increased cost of living will cause the average taxpayer to
become poorer, diminishing their spending power and eroding local
economies.
“ The rural economy is struggling in Iowa and
If lawmakers are the champions of small business they claim to across the nation, and we won’t benefit from the
be, they must ensure that our tax code prioritizes strong public
investment over corporate profits. For the vast majority of small Republican tax law. What we need is access
business owners, temporarily paying slightly less in taxes has little to affordable healthcare, well-funded schools
benefit when compared with a good, affordable healthcare system;
sufficient retirement funds; and high-quality jobs that sustain a in our communities, and maintained farm to
strong customer base.

”
market roads.
Moreover, in order for small businesses to have a better shot at
competing with large corporations with innumerable advantages, - Chris Petersen, Family Farmer in Clear Lake, IA
loopholes that enable tax evasion and incentivize offshoring have
to be eliminated. Congress has its work cut out for itself to fix these
significant challenges.

| 16 THE VIEW FROM MAIN STREET: TAX BILL FALLS SHORT FOR SMALL BUSINESS
 ENDNOTES

1. Brady, and Kevin. “H.R.1 - 115th Congress (2017-2018): An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolu-
tion on the Budget for Fiscal Year 2018.” Congress.gov. 22 Dec. 2017. Web. 16 Mar. 2018.

2. Jagoda, Naomi. “Cost of GOP Tax Plan Could Exceed $2 Trillion.” The Hill. 18 Dec. 2017. Web. 17 Mar. 2018. <http://thehill.com/policy/
finance/365446-analyses-cost-of-gop-tax-plan-could-exceed-2-trillion-if-made-permanent>.

3. Brady, and Kevin. “H.R.1 - 115th Congress (2017-2018): An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolu-
tion on the Budget for Fiscal Year 2018.” Congress.gov. 22 Dec. 2017. Web. 16 Mar. 2018. <https://www.congress.gov/bill/115th-congress/
house-bill/1/text>.

4. SBA Office of Advocacy. “2017 United States Small Business Profile.” (2017): n. pag. Small Business Administration, 2017. Web. 13 Mar. 2018.
<https://www.sba.gov/sites/default/files/advocacy/United_States_1.pdf>.

5. Krupkin, Aaron, and Adam Looney. “9 Facts About Pass-Through Businesses.” Brookings. Brookings, 15 May 2017. Web. 10 Mar. 2018. <https://
www.brookings.edu/research/9-facts-about-pass-through-businesses/>.

6. Browning, Lynnley. “Rich Professionals Can Exploit Tax Break for Farms, Small Firms.” The Washington Post. WP Company, 06 Mar. 2018. Web. 13
Mar. 2018. <https://www.washingtonpost.com/0e3b36ac-2132-11e8-946c-9420060cb7bd_story.html?utm_term=.a328517ae531>.

7. Keefe, Josh, et al. “Last-Minute Real Estate Tax Break In GOP Bill Will Benefit Trump.”International Business Times, 17 Jan. 2018, <www.ibtimes.
com/political-capital/last-minute-real-estate-tax-break-gop-bill-will-benefit-trump-2629381>.

8. Drucker, Jesse, and Audrey Carlsen. “Trump Could Save More Than $11 Million Under the New Tax Plan.” The New York Times, The New York Times,
22 Dec. 2017. <www.nytimes.com/interactive/2017/12/22/us/politics/trump-tax-savings.html>.

9. Mazerov, Michael. “Kansas Provides Compelling Evidence of Failure of “Supply-Side” Tax Cuts.” Center on Budget and Policy Priorities. 25 Jan.
2018. Web. 20 Mar. 2018. <https://www.cbpp.org/research/state-budget-and-tax/kansas-provides-compelling-evidence-of-failure-of-supply-side-
tax-cuts>.

10. Congressional Budget Office. “Repealing the Individual Health Insurance Mandate: An Updated Estimate.” Nov. 2017. Web. 13 Mar. 2018.
<https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/53300-individualmandate.pdf>.

11. Aaronson, Daniel, and Eric French. “How Does a Federal Minimum Wage Hike Affect Aggregate Household Spending?” Federal Reserve Bank of
Chicago, Aug. 2013. Web. <www.chicagofed.org/publications/chicago-fed-letter/2013/august-313>.

12. TPC Staff. “Conference Agreement: The Tax Cuts and Jobs Act; Baseline: Current Law; Distribution of Federal Tax Change by Expanded Cash
Income Level.” Tax Policy Center. N.p., 18 Dec. 2017. Web. 12 Mar. 2018. <www.taxpolicycenter.org/model-estimates/conference-agreement-tax-
cuts-and-jobs-act-dec-2017/t17-0311-conference-agreement>.

13. TPC Staff. “Conference Agreement: The Tax Cuts and Jobs Act; Baseline: Current Law; Distribution of Federal Tax Change by Expanded Cash
Income Level.” Tax Policy Center. N.p., 18 Dec. 2017. Web. 12 Mar. 2018. <www.taxpolicycenter.org/model-estimates/conference-agreement-tax-
cuts-and-jobs-act-dec-2017/t17-0311-conference-agreement>.

14. Aaronson, Daniel, and Eric French. “How Does a Federal Minimum Wage Hike Affect Aggregate Household Spending?” Federal Reserve Bank of
Chicago, Aug. 2013. Web. <www.chicagofed.org/publications/chicago-fed-letter/2013/august-313>.

| 17 THE VIEW FROM MAIN STREET: TAX BILL FALLS SHORT FOR SMALL BUSINESS
15. Mazerov, Michael. “Kansas Provides Compelling Evidence of Failure of “Supply-Side” Tax Cuts.” Center on Budget and Policy Priorities. 25 Jan.
2018. Web. 20 Mar. 2018. <https://www.cbpp.org/research/state-budget-and-tax/kansas-provides-compelling-evidence-of-failure-of-supply-side-
tax-cuts>.

16. Businesses for Responsible Tax Reform. “Poll: Tax Law Won’t Help Small Businesses Grow.” Businesses for Responsible Tax Reform, 1 Mar. 2018.
Web. 10 Mar. 2018. <www.businessesfortaxreform.org>.

17. Small Business Administration. “Frequently Asked Questions about Small Business.” Mar. 2014. Web. 12 Mar. 2018. <www.sba.gov/advocacy>.

18. Headd, Brian. “Small Business Facts: Small Business Job Creation Deconstructed.” Sept. 2017. Web. 12 Mar. 2018. <www.sba.gov/advocacy>.

19. Blair, Hunter. “Corporate Profits Are Way Up, Corporate Taxes Are Way down.” Economic Policy Institute. 22 Sept. 2016. Web. 29 Mar. 2018.
<http://www.epi.org/publication/corporate-profits-are-way-up-corporate-taxes-are-way-down/>.

20. Joint Committee on Tax Fairness. “Estimated Budget Effects Of The Conference Agreement For H.R.1, The “Tax Cuts And Jobs Act”.” 18 Dec. 2017.
Web. 12 Mar. 2018.

21. Egan, Matt. “Tax Cut Scoreboard: Workers $6 Billion; Shareholders: $171 Billion.”CNNMoney. Cable News Network, 16 Feb. 2018. Web. 18 Mar.
2018. <http://money.cnn.com/2018/02/16/investing/stock-buybacks-tax-law-bonuses/index.html>.

22. Friedman, Joel, Chye-Ching Huang, Paul Van De Water, and Sharon Parrott. “Proposed Senate Budget Is Likely to Leave Millions of Americans
Worse Off.” Center on Budget
9% and Policy Priorities. Center on Budget and Policy Priorities, 3 Oct. 2017. Web. 10 Mar. 2018. </www.cbpp.org/
14%
research/federal-budget/proposed-senate-budget-is-likely-to-leave-millions-of-americans-worse-off>.
10%
23. Petroski, William. “Iowa Senate GOP Proposes $1 Billion in Annual State Tax Relief.” Des Moines Register. The Des Moines Register, 21 Feb. 2018.
Web. 17 Mar. 2018. <https://www.desmoinesregister.com/story/news/politics/2018/02/21/iowa-senate-gop-proposes-1-billion-annual-state-tax-
relief/356978002/?from>.

24. Institute on Taxation and Economic Policy. “New Legislation Would End Tax Incentives to Move Jobs and Profits Offshore.” ITEP, 27 Feb. 2018,
<https://itep.org/new-legislation-would-end-tax-incentives-to-move-jobs-and-profits-offshore/>.

| 18 THE VIEW FROM MAIN STREET: TAX BILL FALLS SHORT FOR SMALL BUSINESS