The good economic news just keeps coming, as today’s release of NFIB’s monthly Small Business Economic Trends (SBET) report revealed. Not so widely reported, however, is the small bit Montana played in keeping the state’s economy on the sunny side.
“NFIB and other business groups were able to kill most of the bills in the 2019 session of the Montana Legislature that would have increased taxes or would have created new taxes,” said Riley Johnson, Montana state director for the National Federation of Independent Business. “These included a tax on fireworks, carbon taxes, luxury sales taxes, and local-option sales taxes. When small-business owners know they will not be burdened with any more levies and regulations from the state, this frees them to expand their enterprises by, first, hiring more people. Are we claiming a huge credit for keeping our nation’s Main Street economy humming? No. But every little bit helps those whose profitability is always on the margins.”
Last Thursday, NFIB’s monthly Jobs Report showed that despite finding qualified workers as their top difficulty, small-business owners were still creating jobs at a steady pace. The very next day, the U.S. Labor Department showed the unemployment rate at a 50-year low. Today’s SBET report followed with more good news on continued job creation, capital spending, and inventory investment. The SBET is a national snapshot and is not broken down by state.
In the main, Johnson attributed the continued good national numbers to the December 2017 Congressional passage of the Tax Cuts and Jobs Act and in particular the 20 percent small business deduction (Section 199A) contained within it.
“It’s important for everyone to know that while the new corporate tax rates contained in the Tax Cuts and Jobs Act were made permanent, the small business deduction expires Dec. 31, 2025,” said Johnson. “That’s why I’m delighted to see Sen. Steve Daines take a leading role in making small businesses’ deduction permanent with his Main Street Tax Certainty Act. America’s small businesses deserve the same tax certitude as Wall Street and Silicon Valley get.”
In another recently released poll conducted by NFIB, The Tax Cuts and Jobs Act, One Year Later, Part II, it found, “The vast majority of small business owners (82 percent) think the new tax law has had a positive impact on the general economy. Seventeen percent said ‘very positive’ while another 66 percent said ‘positive.’” And, “The provision that is most frequently viewed as important to small business owners and their businesses is the creation of the Small Business Deduction, with up to 20 percent of qualified business income as an allowable tax deduction.”
Johnson said the finding that most stood out for him in the NFIB poll on the Tax Cuts and Jobs Act is that small-business owners are not pocketing their new-found savings. To quote from the poll, ‘A quarter of small business owners who reported a tax saving raised spending on employee compensation. The second most frequently reported increase in spending was on business investment and expansion. Tax savings motivated 16 percent of small business owners to hire additional employees and another 20 percent to pay down debt obligations.’”