Northern Nevada Business View
December 31. 2019
Reno, Vegas entrepreneurs say Trump’s 2017 tax law has not helped small businesses
By Kaleb Roedel
RENO, Nev. — Tonda Benge had plans to hire more staff, raise wages, and invest in better technology.
Benge, owner of Professional Dog Mom in Reno, assumed she’d be able to do all of this, and possibly more, following the enactment of President Trump’s 2017 Tax Cuts and Jobs Act, which reduced the corporate income tax rate from 35 percent to 21 percent.
She was wrong. Two years later, the Reno small business owner has three fewer employees and lacks the funds to replace them or boost current staff’s wages. Her goal of investing in a new booking system is also out of reach.
For these reasons, Benge on Dec. 18 joined experts from the Businesses for Responsible Tax Reform (BRTR) in Las Vegas for a roundtable event and press call to discuss how the Tax Cuts and Jobs Acts, according to the BRTR, “has failed to help small businesses.”
“Based on what the president was saying, I thought it was a tax reform for everyone across the board,” Benge said in a follow-up phone call with the NNBV. “Not just a tax reform for the billionaires.”
Benge pointed to the fact that Amazon, in 2018, paid zero dollars in U.S. federal income tax on more than $11 billion in profits before taxes. What’s more, the tech giant received a $129 million tax rebate from the federal government.
Amazon wasn’t the only large corporation with a small tax bill. In fact, 60 profitable Fortune 500 companies paid zero taxes on a total $79 billion of profits earned in 2018, according to an analysis by the Institute of Taxation and Economic Policy.
Meanwhile, as a small business owner, Benge said she had to pay her accountant twice as much to file her 2018 taxes compared to her 2017 taxes because the filing process was “more complicated,” adding that she “barely got money back — it was literally like breaking even.”
Ron Nelson, owner of Pioneer Overhead Door in Las Vegas, echoed Benge’s sentiments.
“My accountant is doing quite well,” Nelson quipped during the press call. “I had to shell out a little bit more money for legal and accounting advice to figure out the new tax law; money and resources that are tough for me to afford.
“The tax law certainly did not help me hire employees or give raises or anything else.”
Nelson and Benge are not alone. According to a poll conducted by the BRTR, 48 percent of small business owners say the new tax law has had no impact on the growth or profitability of their business, and 24 percent say it had a negative impact.
Moreover, two-thirds of small business owners want the 40 percent tax cut corporations received from the law to be partially rolled back to fund policies that will help small businesses.
“The more power we give to larger companies, the less power the little guys have,” said Benge, who opened Professional Dog Mom in September 2017 after a lengthy career in the pharma industry. “We need a healthy small business environment — we need that. I’m not anti-big business, but I think the larger a company becomes, the less they care about sustainability, giving back to the community. The power becomes overwhelming, maybe, and it falls into the wrong hands … and then there’s greed.”
All told, the tax cut failed to produce a permanent increase in economic growth, despite promises from Republican supporters. In all, the economy grew 2.9 percent last year — the same uptick as in 2015 — and is projected to grow only about 2 percent this coming year, according to an NPR report.
Frank Knapp, Jr., co-chair of the BRTR and CEO of the South Carolina Small Business Chamber of Commerce, said during the Dec. 18 press call that the tax savings rate created by the law should be equalized between small and large businesses.
“We need tax reform in Washington that is fiscally responsible and creates a level playing field for all businesses and works for our 30 million small business owners,” he said.
Tax reform ideas Knapp, Jr. suggested included: providing a tax credit for the first employee a business hires; making small businesses’ first $25,000 in profit tax-free; giving relief on payroll taxes; doubling the startup tax deduction; expanding the law to include entrepreneurs in all fields.
With that, Benge and Nelson are asking candidates and elected officials to support a tax reform that helps small businesses hire more people, increase wages and grow in Nevada and beyond.
“There are still quite a few people in this country who have the American dream of owning their own business and running their own business,” Benge told the NNBV. “That sort of vision and entrepreneurship that exists is just not considered as much as it should be by our leaders at a local level as well as a national level.
“People sometimes forget that small businesses make up 50 percent of our employees in this country.”
To that end, Nelson said just because small business owners are too busy to play the role of lobbyist, doesn’t mean they don’t want a fair shake from the tax code and transparency from policymakers.
“As citizens, taxpayers and business owners and entrepreneurs, we want to know what benefits are elected officials are deriving from the laws they pass,” he said. “After all, public servants are elected to serve the public, not create laws and loopholes that benefit themselves and their donors.”