Pelican State News

NFIB, a prominent small business advocacy group, has unveiled a report detailing the potential benefits of solidifying the 20% Small Business Tax Deduction in Louisiana. The report also warns of the financial challenges that small businesses might face if Congress does not implement this as a permanent measure.

The findings highlight the predicament of approximately 498,000 small businesses in Louisiana, emphasizing an impending tax increase should the deduction expire. This situation could deeply affect not only local businesses but also the broader U.S. economy, with a risk of economic slowdown and increased financial pressure.

According to the report, the disparity in tax rates between small and large businesses could widen significantly if the deduction isn't preserved. Currently, Louisiana's C-Corp tax rate stands at 26.5%, potentially putting smaller businesses at a disadvantage with a tax rate increase to 42.6%.

Conversely, making the deduction permanent could equalize the tax landscape for small enterprises. Projections suggest that Louisiana might witness an annual creation of 18,000 new jobs over ten years, alongside an annual GDP rise of $940 million in the first decade and up to $1.94 billion per year after 2035.

NFIB State Director Leah Long remarked, “This deduction has meant a lot to local businesses. Main Street businesses already are contending with higher costs, a labor shortage, and uncertainty about what the future holds. If this deduction is allowed to expire at the end of the year, Main Street businesses would see a big increase in taxes that would make it even harder for them to compete with national chains, let alone grow, create jobs, and support their communities.”

A pivotal part of the Tax Cuts and Jobs Act of 2017, the 20% Small Business Tax Deduction has facilitated business expansion, hiring, and wage increases. Failure by Congress to make it a permanent feature could lead nine out of ten small businesses to face heavier taxes, posing a threat to job creation and economic stability.