Weekly Column: Tackling Tax Complexity For Idaho's Small Businesses

Small businesses drive our economy, and are particularly essential to Idaho’s economy.  More than 99 percent of Idaho’s businesses are small businesses, employing over 347,000 Idahoans and spurring local innovation.  Therefore, Congress must extend and build on tax relief that emboldens these economic engines to grow U.S. jobs, manufacturing here at home and higher wages for hardworking families.  

Unfortunately, despite all that small businesses do for the American economy, the federal government does not always return the favor in kind.  Too often, the impact on small businesses is not properly evaluated before misguided government policies are enacted.  The financial burden of increased taxes and compliance costs resulting from a complicated tax system and regulatory environment make it hard for small businesses to make sound financial decisions.  When coupled with uncertainty about future tax policy changes and Internal Revenue Service (IRS) enforcement, those decisions become nearly impossible. 

According to the latest National Federation of Independent Business (NFIB) annual tax survey, nearly two-thirds of small business owners reported that the administrative burden of the federal tax code is significant.  Further, 90 percent of small business respondents hired an outside tax professional to prepare and submit their tax returns.  “Compliance” and “complexity” were determined to be the leading factors in a small business’s decision to hire a tax professional.  While the amount due is not the only tax concern, American small businesses and workers continue to face elevated inflation, as well as workforce and supply-chain challenges. 

An Idaho small business owner recently shared directly with Congress the importance of tax relief to local businesses and workers.  As Senate Finance Committee Ranking Member, I invited Stephanie Camarillo, co-owner of Molly Maid of Boise and the Treasure Valley, to participate in a Committee roundtable discussion about the challenges small businesses face navigating the federal tax code.  Stephanie, whose small business has prioritized helping its employees understand how to become financially sound through important steps such as paying off debt and saving for college and retirement, highlighted an experience that illustrates how federal tax deductions (in this case the Small Business Deduction (Section 199A)) have enabled her business to make a meaningful investment in an employee named Jasmine:

“Jasmine is a single mom who felt trapped and unable to advance in her life.  She started working for us as a housecleaner about 6 years ago.  She cleaned during the day and at night she worked to finish her GED.  Because of the tax savings through the Small Business Deduction (Section 199A), we were able to give Jasmine the raise and promotion she had earned and now she is on our management team.  She has continued to spread her wings and is bound to be promoted again.  

Tax relief saves jobs and elevates working families.”

To give small businesses certainty and incentive to grow and compete in the domestic and international economies, we should preserve the pro-growth policies in Republicans’ 2017 tax law, like the Small Business Deduction, and explore additional opportunities to promote growth, increase investment, and encourage research and development in the United States.  We need to get the government out of the way of the small business engines of our economy.  Removing the disincentive of complex and high taxes and costly regulations will allow small businesses to go out and do what they do best--create jobs and growth in the economy by providing valuable goods and services to their customers.   

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