Tax Cuts Are Slanted to Richest Business Owners, While Service Cuts Would Hurt Small Proprietors and Their Customers

Legislation enacted by President Trump and his fellow Republicans in Congress would hurt small businesses, their owners and customers while further tilting the economic playing field towards giant corporations and their super-wealthy shareholders. This GOP tax-and-spending plan should be rejected and replaced with real tax reform that boosts small business and their clientele by demanding huge companies and their rich stockowners pay their fair share of taxes. 

Congress is Considering a Huge Budget Bill That Favors Rich Business Owners

President Trump has signed into law a budget that cuts services relied on by many small business owners and their customers to lower costs for healthcare and groceries: slashing Medicaid by nearly $800 billion and forcing millions off of SNAP (food stamps). Those cuts partially pay for tax cuts that overwhelmingly go to the wealthiest households. Despite these service cuts, those tax cuts add trillions of dollars to the national debt, which can have the effect of raising interest rates on small business loans and other forms of credit. 

The Budget Would Be Closer to Balance If A Big Corporate Tax Cut Were Reversed or Reduced

The corporate tax rate was slashed by two-fifths in 2017. Despite promises that this big handout would result in community benefits through increased hiring and pay, the big corporations that got the tax cut used it mostly instead to raise executive compensation and increase payouts to wealthy shareholders. 

A So-Called ‘Small-Business Tax Cut’ Included in the Budget Mostly Helps the Biggest Firms

Republican backers describe the passthrough loophole that they extend in their budget as a  “small business tax cut.” However, the reality is that the provision mostly benefits wealthy owners of large businesses. In 2024, over half (52%) the benefit of this so-called  pass-through deduction went to business owners with over $1 million of household income. According to the IRS, in 2020 over 90% of small business tax returns showed income of less than $100,000. That huge number of actual small businesses only got 6% of the pass-through deductions benefit in 2024. 

Whatever Tax Cut Small Businesses May Receive Is Easily Overwhelmed By Service Cuts

The House Republican budget would cost up to 16 million Americans their health insurance coverage (Medicaid and Affordable Care Act) and two million children some part of their food aid (SNAP). It would also add $3 trillion to the national debt, which will ultimately be used as an excuse to cut other services, like Small Business Administration loans. The bill also does not renew the enhanced premium tax credits (APTCs) which expire at the end of 2025. CBO estimates that 4.2 million people will be uninsured in 2034 if these tax credits are not renewed. Small business owners and their customers will both suffer from cuts to these public investments.