ICYMI last week was National Small Business Week. Unfortunately, policy on Capitol Hill did not move in a pro-small business direction. Instead, tax increases were advanced in U.S. House committee work on the $3.5 trillion reconciliation bill, and the regulatory machine continues to crank across federal agencies. As SBE Council president & CEO Karen Kerrigan noted in a press release marking the week:
“At a time when many small businesses remain on the edge of closing, President Biden and Congress need to provide certainty in the business environment. Unfortunately, we see the opposite occurring via higher taxes, increased regulatory burdens, and massive new government spending. These types of policies are totally out of touch with what our economy and private sector need to dig out of the past year and a half, and to navigate the uncertain days ahead. We appreciate members of President’s party who have urged caution, restraint, and study on critical policy matters. These voices are most certainly aligned with those of America’s entrepreneurs and small business owners who are alarmed by the tidal wave of anti-growth policies coming out of Washington.”
The details of the $3.5 trillion spending package have generally been completed by all relevant House committees, which include a variety of tax hikes – over 40 – along with regulatory measures that will significantly impact Main Street businesses. See some of the business tax hikes here. There was a tiny bit of good news though – the elimination of step-up in basis is not included in the House bill (which SBE Council has vehemently opposed) and efforts to impose price controls on drugs was also defeated in committee. But supporters do not plan to give up on either of these measures. Also of note, the House bill will repeal the important increases in the death tax exemptions that were a part of the Tax Cuts and Jobs Act (which were set to expire in 2025), which will obviously impact many small businesses across various sectors of our economy.
Related Content: CBO Underestimates How Price Controls Would Devastate Entrepreneurship in Biopharmaceutical Industry
In a new analysis, SBE Council chief economist Ray Keating highlights the shortcomings of a new CBO study on the effects of price controls on the prescription drug industry. Keating points out that “the major missing piece in this study is lost innovation. The study effectively underestimates the impact on entrepreneurship and investment. In fact, small biopharmaceutical companies are ignored.”
Capitol Hill and Legislative Activity
Drug Innovation, Small Business and Price Controls: SBE Council joined a diverse coalition of small business organizations in sending a letter to congressional leadership, which expressed concern about price controls on drugs being pursued as a “pay for” in the $3.5 trillion reconciliation package. The letter spelled out concerns related to innovation, jobs, and small business suppliers and urged Congress to pursue bipartisan measures.
SBE Council also delivered a letter – Employers Do Not Want Price Controls on Drugs – to all members of Congress, which noted how innovative small bio-pharmaceutical companies will be impacted by these price controls. The letter cited a recent SBE Council-Morning Consult survey that showed price controls are the least supported policy strategy for lowering prescriptions drugs and health care costs. In addition, SBE Council joined a broad coalition of organizations reiterating similar concerns in a letter here.
Business Coalition Letter Opposing Changes to Stepped-Up Basis. In a letter to the House Ways and Means Chairman and Ranking Member, SBE Council joined more than 160 small business organizations and associations to reiterate opposition to any changes in current law that would eliminate or alter stepped-up basis. As noted in the letter:
“Stepped-up basis prevents family-owned businesses and farms from being hit with two significant and damaging tax bills when a family member passes away—the capital gains tax on any appreciated assets and the estate tax on whatever is left. The FBETC opposes any changes to stepped-up basis that would impose this double death tax and increase taxes on family-owned businesses and farms—including administratively unworkable “protections” that simply delay destructive tax hikes.”
Main Street Employer Letter Opposing Tax Hikes on Employers in Reconciliation Bill: SBE Council joined 120 of our allies in a Main Street Employers letter to House Ways and Means Chairman Richard Neal (D-MA) strongly urging him to “reject any measures that would raise taxes on Main Street employers as part of the upcoming reconciliation bill.” The letter cited specific tax hikes being considered, and concluded:
“Congress should avoid tax policies that harm Main Street employers at any time, much less at this difficult moment in our nation’s history. The Biden tax hikes pose a triple threat to the ability of these individually- and family-owned businesses to survive an uncertain future, and we urge Congress to reject them.”
Joint Letter to Congress Opposing Consumer Financial Accounting Reporting to the IRS: In a letter to House and Senate leadership, SBE Council joined business organization allies to express ongoing concerns and opposition “to any proposal that would require financial institutions to report to the IRS on transactions in business and personal accounts.” As noted in the letter, the groups support improving tax compliance, but certain proposals threaten the privacy of Americans and amount to “profiling.” Recent polling by Morning Consult shows that two-thirds of voters (67%) oppose proposals to transfer more banking data to the IRS.
Support Letter for Syed Confirmation as SBA Deputy Administrator: SBE Council sent a letter to all members of the Senate Committee on Small Business and Entrepreneurship in support of the confirmation of Dilawar Syed for the role of SBA Deputy Administrator. SBE Council’s Karen Kerrigan wrote: “Especially at a time when small businesses need to regularly ‘pivot’ in order to navigate a challenging economy and recovery, and when new business applications are exploding, SBE Council believes Mr. Syed’s exceptional experience and knowledge can help SBA increase the effectiveness of it programs and efforts to reach more small businesses.”
Procurement Opportunities Must Remain Open and Accessible to All Small Businesses: In a letter to all members of Congress, SBE Council expressed concern and opposition to an amendment that could have upended a federal ecommerce pilot project by disallowing the inclusion of small businesses that sell on the Amazon platform (which previously had been selected as part of the pilot program, and is getting positive results) The amendment could have been considered as part of NDAA reauthorization, and will not now be considered.
Global Markets and Small Business: SBE Council signed a coalition letter urging President Biden to pursue free-trade agreements that enhance America’s freedom, prosperity, and competitiveness. “The administration should prioritize achieving comprehensive agreements with the United Kingdom, Taiwan, and accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP),” as noted in the letter.
The contents of the $3.5 trillion reconciliation remain in flux, as measures may be added in the Rules Committee this weekend that may further impact small businesses, investment and future economic growth. Please continue to monitor the SBE Council website (www.sbecouncil.org) and our Twitter account @SBECouncil to stay up-to-date on breaking developments.