‘Big, Beautiful Bill’ Balloons Deficit, Harms Small Businesses

“Small businesses are sounding alarm bells over the enormous new debt at the core of the ‘Big, Beautiful Bill’ because America’s entrepreneurs fear that this increased spending would create an environment in which it is much harder for their businesses to succeed. Small Business Majority’s research found that as the national deficit grows, most small businesses worry they would face increased inflation, devastating federal budget cuts in the future, and higher interest rates and borrowing costs. And what does the ‘Big, Beautiful Bill’ offer small businesses in return for $4 trillion in debt and a more challenging economic landscape? Devastating cuts to critical healthcare programs, and doubling down on tax policies skewed to the wealthiest businesses and individuals that would barely make a dent in what most Main Street small businesses owe each year.

Small businesses’ additional concerns about the ‘Big, Beautiful Bill’ include:

• Among the 17 million individuals projected to lose healthcare coverage as a result of the legislation, primarily due to deep Medicaid cuts, small business owners, their employees and their families would likely be disproportionately impacted. A new analysis from Small Business Majority and Georgetown University found that one-third of all people enrolled in Medicaid nationwide are connected to small businesses. In total, more than 21 million small business owners, employees and their dependents rely on Medicaid for affordable healthcare coverage, and in 2023, nearly half of working Medicaid recipients were employed at small businesses with fewer than 50 employees. 

• The ‘Big, Beautiful Bill’ also allows for the expiration of enhanced premium tax credits (PTCs) that have made healthcare more affordable for those who purchase plans through the Affordable Care Act (ACA) Marketplace. The ACA is critical to small businesses: More than half of all ACA Marketplace enrollees are small business owners, self-employed entrepreneurs or small business employees. That high percentage is one reason three-quarters (74%) of small businesses favor extending the credits rather than letting them expire, according to Small Business Majority's research. 

• The ‘Big, Beautiful Bill’ also makes permanent the current 20% deduction for pass-through entities under Section 199A. Although many have argued that the 2017 Tax Cuts and Jobs Act would help average Americans, 74% of the current Section 199A pass-through tax deduction benefit flows to the wealthiest 5% of businesses, while increasing the deficit by $737 billion. And while the highest earning pass-through entities claimed an average deduction of over $1 million in 2021 because of Section 199A, pass-throughs with adjusted gross incomes below $100,000 took home an average deduction of just $1,997. That’s why most small businesses support an amendment championed by U.S. Rep. Gwen Moore (Wisc.-04) and U.S. Sen. Ben Ray Lujan (N.M.) known as the Mom and Pop Tax Relief Act, which would reform Section 199A to permit pass-through entities to deduct the first $25,000 in qualified business income from their annual tax obligations. 

The ‘Big Beautiful Bill’ is now headed for the president’s desk without any policies that would benefit most Main Street small businesses and contains provisions that would harm numerous small firms. When this legislation leads to an uptick in small business closures and a slowdown in small business hiring in the coming years, lawmakers cannot say they weren’t warned. In their rush to cut taxes for the wealthy, Congressional leaders have made a grave mistake. The ‘Big, Beautiful Bill’ is nothing short of a disastrous ticking debt time bomb and a morally bankrupt policy failure. America’s small businesses will pay the price.”