Family businesses across the country that have been hit hard over the past two years still face a number of challenges which now include economic headwinds from inflation. But instead of reaching out to family businesses and taking their advice on providing a predictable tax and regulatory environment, many in Congress and across federal agencies continue to peruse job-killing tax hikes and harmful regulations.
Family businesses provide irreplaceable value in the communities they call home. These businesses do not operate to maximize a share price like publicly traded corporations do. Many family businesses have multiple generations of employees that have worked for them over the years and when times get tough, everyone tightens their belts, versus immediately thinking about how many jobs should be cut to maintain a share price. These family businesses across the country sponsor the local little league teams and help build the new wing of the children’s hospital. In this way, family businesses provide much more than just jobs to their communities and are worth protecting.
Unfortunately, family-owned and operated businesses are too often indirectly the collateral damage of tax increases on the “wealthy” or regulations aimed at achieving some unrelated end. Senators Sinema and Manchin have stood up so far against small business tax increases of all shapes and sizes. The Administration and Democrat tax-writers proposed a number of potentially harmful tax hikes for small businesses including things like taxing unrealized capital gains (annually and at death). If enacted this tax, much like the estate tax, could pose problems for inventory and land-heavy small businesses and farms that simply do not have the cash on hand to pay taxes on imaginary gains. In total, nearly $4 trillion in tax hikes still sits on the table as the legislative calendar flips by.
On the regulatory front, small businesses from manufacturers to distributors may face new challenges from the Treasury Department that could artificially inflate the value of their small business, forcing them to pay far more in taxes. In other cases, agencies not acting to provide national standards through regulation has created confusion. For example, manufacturers now face potential blowback from well-intentioned but overbearing efforts to ban certain chemicals used in making important products like medical devices. Voters tend to favor a reasonable, incremental approach to any issue where small businesses may be adversely affected. The heavy-handed PFAS Action Act, which currently sits in the Senate, would set national standards and industrial use limits on select PFAS groups without a basis in scientific findings or input from those in the industry.
If passed by the Senate, this bill will put additional strain on local economies already buckling under today’s historic inflation rates and will put strict limitations on the production of these chemicals, which will not only cause supply chain disruptions but will completely terminate the production of countless products because no alternatives to PFAS exist.
Representative Larry Buschon (R-IN), himself a heart surgeon, criticized the effort in the House for not at a minimum exempting medical devices. A well-thought-out national standard would be much more welcome in this case while Congress returns to the drawing board.
On taxes and regulatory efforts, policymakers must be careful not to entangle America’s main job-creating engines. As small businesses work to lead the country towards recovery, now is not the time to be increasing taxes or unintentionally banning life-saving products from being manufactured. The first step to increasing small business confidence which currently sits at record lows is to assure these businesses that a predictable tax and regulatory environment is ahead. That starts with halting current efforts still underway that would increase red tape and hike taxes on the small businesses we all depend on.