America’s tax bet on small business is a sure thing: Tsarpalas

On his recent trip to Nevada, Vice President Mike Pence joined Senator Dean Heller to praise a new Las Vegas workspace focused on technology, industry and small business. It’s just one example of the way our state’s small firms sit at the heart of our state’s economic future.

More:Senate bill delivers tax relief for Nevadans: Heller
More:Congress' inaction on budget goes back decades: Randi Thompson
More:Yerington officials' inaction made a bad situation far worse: RGJ Editorial Board

And for small businesses in Nevada and around the country, the White House’s big win on tax cuts is already promising a breakthrough 2018.

The old, unfair rates, which topped out around 40 percent, are toast — replaced with big relief like the new 20 percent deduction, calibrated so businesses aren’t punished with crushing taxes for beefing up the jobs, wages and facilities that Main Street need to thrive.

It only makes sense that nationwide, most respondents are optimistic about the new year, with two-thirds expecting a higher economic bounce or a lower household bill. 

Anticipating the boost, small businesses have ramped up productivity this year. Confidence is at record highs. Between 60 and 80 percent of firms looking forward to tax relief say they’re planning to invest in new tech and tools or increased wages. Last month, American small business was responsible for creating 94,000 new jobs, according to payroll processor ADP.

Just over 99 percent of businesses in Nevada are small businesses. As a whole, they employ more than 40 percent of all our state’s private sector workers. Those kinds of numbers crop up again and again around all the regions of the country.

And, surprisingly, small business makes an outsized contribution to U.S. exports, too. As important as growing the domestic economy and keeping American jobs surely is, it can’t be done in a bubble. Trade is a big multiplier of customers and business expansion.

In Nevada, almost 87 percent of state exporters are small businesses. In fact, according to the U.S. Chamber of Commerce, 98 percent of America’s 300,000 exporting companies are small-to-medium-sized businesses, with smaller firms supplying a full third of all merchandise exports. Small firms may fill storefronts, but that’s not all. They also provide manufactures, agricultural products, personal services, and more.

With the old tax code, sky-high rates kept small businesses from growing into that massive economic opportunity. Today, the national SBA calculates that just 5 percent of small firms are currently exporting. Now, however, owners looking to expand have a tax code that’s on their side, making the U.S. more globally competitive at the same time it returns more hard-earned revenue for reinvestment. That means more revenue for business owners, better pay for their employees and greater opportunity, enjoyment and excitement for the Nevada community.

For years, economic research has proven out the common-sense idea that everyone benefits when hungry companies are allowed to spend the income they need to grow. Under the new tax code, small businesses are given exactly that, on a bigger scale than anything we’ve seen in generations.

Just a few weeks into the new year, we’re already seeing what the tax cuts can do. Just imagine how much we’ll achieve by the same time next year.

John Tsarpalas is the president of the Nevada Policy Research Institute.