Anyone who has ever owned a small business can tell you — the best environment to operate a business in is one with stability and certainty. The past four months have been anything but.
The roller coaster that began in mid-March was unprecedented in most of our lifetimes. Most businesses went from a position of strength and growth to a complete stoppage virtually overnight. The entire United States economy went dark, as it was necessary to control the spread of the pandemic. To say businesses were struggling is a misnomer — they were shut down indefinitely with zero income coming in the door.
Thankfully, a bipartisan bill came quickly from Congress that provided an immediate safety net to small businesses all over the country. The CARES Act provided immediate assistance to help small businesses meet payroll. Without its enactment, it’s possible this country could have seen over 20% unemployment instead of the 14.7% where we peaked in April.
That’s why a recent opinion column (Midlands Voices, “A reality check about the CARES Act changes”) fell so off the mark. Rather than providing “large state business tax cuts for some wealthy business owners and investors in the midst of a pandemic,” the bill provided ways for business owners to receive immediate liquidity to help their businesses survive the worst short-term economic impact this country has ever seen.
The truth about the tax provisions contained in the CARES Act is that they disproportionately benefit small businesses. In fact, most large corporations saw no advantages at all from the legislation. A majority of the CARES Act provisions were targeted at the individual income tax. It also aids agricultural producers whose operations are organized as limited liability companies or subchapter S organizations. Over 90% of PPP loans awarded in Nebraska were for amounts under $150,000.
Many small businesses who received PPP loans will tell you that the only reason they are able to continue to make payroll is the existence of PPP. And when the funding runs out and if the economy is not fully open, we are looking at an economic cliff which could make the unemployment numbers of April seem nostalgic. The decoupling approach suggested by the opinion column and being contemplated in the Legislature would make the tax code much more complicated and drive up expenses for both the government and individual businesses. Now is not the time to add further burdens to businesses that are in danger of closing.
The federal government threw a lifeline to small businesses at a time when they desperately needed it. Decoupling from the CARES Act would add uncertainty, complication and cost, not to mention a potential death sentence, to businesses at the worst possible time.
The writer is the former chairman of the Greater Omaha Chamber Public Policy Council.
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