Donald Trump has promised to create millions of new high-paying jobs.
One easy first step to doing that is to repeal Biden-regulations on America’s 4 million business partnerships (sometimes known as S-corporations) that are prolific job creators. The latest estimates find 10 million Americans employed by these business partnerships, with $800 billion paid in worker salaries and benefits.
For example, “95 percent of Microsoft’s commercial revenue flows directly through” its “partner ecosystem.” The profits from these enterprises are passed through to the 4 million partners, who make tax payments based on their share of those earnings.
These have been the tax rules governing partnerships for many decades. The Biden administration didn’t like the tax rules, so instead of asking Congress to change them, Biden’s Treasury Department worked through the back door to unilaterally modify the rules, as part of its “fairness” agenda.
The precise tax target is a technique used by partnerships to lower their tax liability called “basis shifting.” While technically complex (because everything with the U.S. tax code is complicated), it is also entirely legal and has been used by partnerships for decades to adjust the value of their assets during a transaction or transfer. Whatever one thinks of basis shifting, the Internal Revenue Service (IRS) doesn’t have the unilateral authority to change the tax laws — only Congress does.
The Biden crackdown treated business partners as tax cheats. When they hired 87,000 agents to harass companies and individuals, nearly 4,000 of these IRS tax collectors were hired to among other things, “expand enforcement focusing on complex partnerships.”
The more than four million business partnerships became an overnight suspect class, as did the tax returns of millions of partners.
To pry money out of these partnerships, the Biden team wanted to create a retroactive tax (which should be illegal) by changing the rules and apply them going back six years in time. So a tax structure that may have been perfectly legal in the past could now trigger investigations, fines, and litigation.
Biden Treasury Secretary Janet Yellen also created a new investigative office to oversee and harass partnerships. That should be shutdown.
So a tax structure that may have been perfectly legal in the past could now trigger investigations, fines, and litigation.
More than 90% of partnerships are small businesses, according to an Ernst and Young study prepared for the Small Business & Entrepreneurship Council (SBE Council) last year. The business partnership arrangement allows these firms to have ready access to needed capital to expand their operations. In all these companies generated $1.3 trillion to our GDP.
These partnership arrangements allow promising small companies to grow into large ones. This uniquely American business structure is a hallmark of U.S. entrepreneurial success — a path for businesses to go from good to great.
It isn’t broken. The system works. That’s why the Trump Treasury Department needs to immediately command the IRS to cease and desist the Biden witch hunt against these partnerships.
It’s a war on wealth. A war on U.S. businesses. And it’s a direct assault on the Trump promise to “make America great again.”
Stephen Moore is a contributor to The Daily Caller News Foundation, a senior fellow at the Heritage Foundation, and a co-founder of Unleash Prosperity. His latest book co-authored with Arthur Laffer is “The Trump Economic Miracle.”
The current state of the American economy continues to trouble small business owners.
This week, the National Federation of Independent Business (NFIB) released its latest Small Business Optimism Index, showing a drop of a half point during the month of September. The index now stands at 90.8, and it has not risen above the average mark of 98 for 21 consecutive months.
OUT TODAY: @NFIBResearch Released its September #SmallBusiness Economic Trends survey. The Optimism Index fell to 90.8, which marks the September reading as the 21st consecutive month below the 49-year average of 98.
NFIB Arizona State Director Chad Heinrich commented on the latest issuance of the index, saying, “It’s clear that small business owners remain deeply concerned about the economy. The pressure of inflation and the labor shortage are continuing to take a toll on our job creators, with little relief in sight.”
Bill Dunkelberg, NFIB’s Chief Economist, also weighed in on the recent numbers from his organization, writing, “Owners remain pessimistic about future business conditions, which has contributed to the low optimism they have regarding the economy. Sales growth among small businesses have slowed and the bottom line is being squeezed, leaving owners few options beyond raising selling prices for financial relief.”
The announcement from the Arizona arm of the influential business group stated that “twenty-three percent of owners reported that inflation was their single most important problem in operating their business, unchanged from last month and tied with labor quality as the top concern.”
NFIB highlighted some of the areas of emphasis from their index, including:
Small business owners expecting better business conditions over the next six months deteriorated six points from August to a net negative 43% seasonally adjusted, however, 18 percentage points better than last June’s reading of net negative 61% and definitely at recession levels.
Forty-three percent (seasonally adjusted) of owners reported job openings that were hard to fill, up three points from August and remaining historically high as owners can’t hire enough workers due to few qualified applicants.
Seasonally adjusted, a net 23% plan to raise compensation in the next three months, down three points from August.
The net percent of owners raising average selling prices increased two points to a net 29% seasonally adjusted, still a very inflationary level.
The net percent of owners who expect real sales to be higher increased one point from August to a net negative 13% (seasonally adjusted), still a very dismal posture.
Just last week, the Biden Administration boasted of a “record-breaking economy,” noting the increase of jobs, an unemployment rate below 4%, a low unemployment rate for women, and low unemployment for African Americans, Hispanic Americans, and Americans with disabilities.
Others see the economy in an entirely different light. Alfredo Ortiz, the president and CEO of Job Creators Network, recently said, “This accelerating inflation, which is nearly twice the Federal Reserve’s target rate, is another Bidenomics blow to ordinary Americans and small businesses dealing with rapidly rising prices that are lowering their real wages and living standards for two and a half years.”
"The Biden administration’s ongoing pattern of 'reckless spending and anti-energy policy' represents, in Alfredo Ortiz’s view, 'another Bidenomics blow to ordinary Americans and small businesses' grappling with persistently soaring prices." @Gingrich360https://t.co/wxFa9kUj19
The number of small business owners across America who expect business conditions to improve over the next six months dropped considerably in June, hitting the lowest level in the 48 years the National Federation of Independent Business has conducted the survey.
That was the dismal news released Tuesday by Chad Heinrich, NFIB’s state director for Arizona.
“With small-business-owner expectations dimming to a record low, it becomes even more important that we have state leaders focused on ways to improve business conditions for the small-business owner,” Heinrich said. “All Arizonans have benefited from state legislative and executive leaders who have adopted pro-small-business policies year-after-year.”
Heinrich’s statement drew attention to the NFIB’s Small Business Optimism Index for June which showed a drop for the sixth consecutive month. That means the expectations of small business owners for better conditions have worsened every month of 2022.
NFIB Chief Economist Bill Dunkelberg also addressed the pessimistic news revealed by the Small Business Optimism Index.
“On top of the immediate challenges facing small business owners including inflation and worker shortages, the outlook for economic policy is not encouraging either as policy talks have shifted to tax increases and more regulations,” Dunkelberg said.
Among the key findings in Tuesday’s report is that 50 percent of small business owners reported job openings that could not be filled, a historically “very high” rating. Of those hiring or trying to hire, 94 percent reported few or no qualified applicants for the positions they were trying to fill.
Even one bit of good news in Tuesday’s report wasn’t all that positive. According to NFIB’s Small Business Optimism Index, the net percent of owners raising their average selling prices decreased three points. However, the decrease comes after May’s record high reporting of price increases.
Heinrich advised that Arizonans cannot rest on the successes that have kept the state at or near the top of post-pandemic economic gains.
“We must continue to support leaders who understand that most new jobs are created by small business owners,” he said. “Small businesses drive the Arizona economy forward.”
The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the 4th quarter of 1973 and monthly surveys since 1986. Survey respondents are randomly drawn from NFIB’s membership.
