Main Street needs Congress to make small-business deduction permanent

OPINION:

Is Washington going to hamstring my small business? Worse, will it give big business an unfair advantage over us?

I posed these questions to Congress on April 11. As the founder of Coal River Coffee Co. in West Virginia, I’d been asked to testify about the small-business deduction, which will disappear at the end of next year. My message to lawmakers was clear: Main Street mainstays like mine desperately need Congress to make this tax cut permanent.

My small business is living proof that the tax deduction works wonders and is key to economic revitalization. Congress passed it in December 2017, and it gave my wife and me the confidence to start our own business. We’d been roasting coffee in our garage for a few years, but in 2018, we took the plunge and opened our own cafe in St. Albans. We wanted to be part of the comeback in our beloved hometown of 10,000 people.

The small-business deduction made it possible. It lets us deduct 20% of our business income, which helps us compete with big businesses. Thanks to these savings, we’ve grown over the past six years. Today, we have not one but three permanent locations as well as a mobile shop. We’ve also been able to raise our workers’ wages while investing in new equipment to stay competitive.

But all our progress could soon melt away, and all future growth could be off the table. The moment the small-business deduction expires, we’ll face a massive tax increase that we can’t afford. And we’ll be at a huge disadvantage with big businesses.

With the deduction, we can compete with big chains like Starbucks and Tim Hortons. They pay a corporate tax rate of just 21%. But without the deduction, small businesses like ours will pay about 45% in taxes — more than double what our big competitors pay.

How can we possibly keep up when big business has such a big advantage? There’s a Tim Hortons just down the street. It will find it far easier to give raises and hire workers. But we’ll find it harder. Small businesses are the engine of the economy. We should be revved, not idled, much less thrown into reverse.

We don’t want special treatment. We just don’t want to be disadvantaged. In other words, we want basic fairness. And we want it now. While lawmakers may think that the small-business deduction’s expiration in 2025 is a world away, for small businesses, it’s basically tomorrow. We have to make long-term plans and decisions today, and every day there’s uncertainty, we’re more likely to make unfortunate choices.

It doesn’t have to be this way. We want to keep hiring workers, building our business, and revitalizing our community. Towns like St. Albans need small businesses like ours. Now, we need Congress to get our back. The sooner Washington makes the small-business deduction permanent, the sooner we’ll make a permanent difference in our hometown.

• Michael Ervin is a small-business owner in West Virginia.