Small Businesses Should Not Pay for Tax Cuts for the Wealthy

Paying for unnecessary and irresponsible tax cuts for the top 1% by gutting small business-focused programs, federal assistance and social safety nets will cause irreparable harm to Main Street businesses nationwide. Millions of small business owners rely on a wide array of federal programs across numerous agencies to support not only the growth and development of their business, but the health and economic wellbeing of themselves and their employees. As we noted in a letter to lawmakers today, the spending plan endorsed by Speaker Johnson and the House Committee on the Budget, alongside the upwards of $4.5 trillion in tax cut authority for the Ways and Means Committee, would lead to deep and unsustainable cuts to programs that we know can make the difference between success and shuttering for small business owners. These proposed cuts include:

• Reducing funds for healthcare that keep our nation’s job creators insured including Affordable Care Act subsidies, Medicaid and Medicare. Millions of small business owners and their employees rely on Medicaid, Medicare and the ACA marketplaces for affordable healthcare coverage. In fact, in the years following states’ implementation of the ACA’s Medicaid expansion, Medicaid coverage increased by 2.5 million for employees of small businesses and 1.3 million among self-employed entrepreneurs and small business owners. In fact, 53% of working Medicaid recipients are employed by a business with fewer than 100 workers. Additionally, over 2.7 million small business owners and self-employed entrepreneurs enrolled in marketplace coverage claimed the Premium Tax Credit (PTC) in 2022, which included nearly 300,000 individuals who would not have otherwise been eligible for the credit if not for the enhancements made to the PTC through the American Rescue Plan Act and the Inflation Reduction Act, which this budget proposes to eliminate. 

• $230 billion in cuts to U.S. Department of Agriculture (USDA) programs that would devastate millions of rural small businesses and farmers who depend on USDA loans and grants, such as the Business and Industry Loan Program, the Intermediary Relending Program, and the Rural Microentrepreneur Assistance Program (RMAP), to sustain and expand their operations. For example, between 2017 and 2023, $23.1 million in RMAP loan funding was leveraged to support over 400 small businesses and farmers with microloans and created/saved over 1,100 jobs in rural communities nationwide. 

Small businesses should not be forced to pay for tax policies that benefit the largest and wealthiest corporations and individuals. Instead, we should close tax loopholes that prevent big businesses from paying their fair share and raise the corporate tax rate. In fact, our recent polling found that 52% of small business owners support increasing the corporate tax rate to 28% to generate revenue. This change alone is estimated to raise roughly $1.3 trillion over the next decade. 

If Congress is serious about supporting small businesses through the tax code, lawmakers should start by addressing the current distributional disparities within the Sec. 199A pass-through deduction, which has allowed larger, wealthier businesses to reap the overwhelming majority of the rewards while leaving the smallest businesses with next to nothing. Instead, a simplified, bottom-up benefit that would allow small businesses to deduct a set dollar amount of $25,000, for example, of their qualified business income would not only provide more targeted relief to the smallest businesses, it would also significantly reduce the cost of the deduction by billions of dollars annually. 

Congress can do better when it comes to ensuring that programs that millions of small businesses utilize continue to remain an asset in their toolkit for empowering economic growth in their communities. The House must reject Speaker Johnson’s budget proposal and come back to the table with Senate budget leaders to reconcile a new resolution that prioritizes small business growth. The current resolution, as written, will do little more than further enrich the wealthy at the expense of small businesses, many of which are already struggling in the face of steep new tariffs, federal funding freezes and mass deportations that are impacting the workforce.”