As the President of the Tucson Hispanic Chamber, I’ve seen firsthand that our current tax code places a stifling burden on local employers, disproportionately harming the Hispanic community, the fastest growing business segment in the nation.
According to the U.S. Census Bureau, startup activity has slumped in the 2000s--even after the Great Recession was over. In spite of this difficult economic environment, the Hispanic community has managed to start new businesses at an impressive rate, 50 times faster than any other demographic group in the United States, according to this study from the Georgetown Public Policy review. This is not a new trend. The five-year average growth rate in the number of Hispanic-owned businesses has remained at double or triple that of the national average for the past 15 years, according to the Stanford Latino Entrepreneurship Initiative.
Small businesses cannot compete globally when they are taxed as high as 44.6 percent. They face compliance costs that tear their time and their resources away from what they want to do: their job.
America’s job creators now spend an estimated 2.8 billion hours each year filing business income tax returns.
The result? Uncertainty.
Businesses cannot plan for the future, save, or make long term investments when they don’t know how much they will pay in taxes. Local employers wish they could serve more customers, pay more wages, and hire more people—but Washington is fighting against them and a healthy economy.
As a chamber President, I work daily with businesses from all industries who could gain from significant tax reform. Simplifying and clarifying our tax system for businesses would go a long way in stimulating investment and providing business owners the ability to hire more people throughout our country. Similarly, the American workforce and future workers could better understand and plan with a simplified, equitable tax system.
The Tax Cuts and Jobs Act which passed the House this week will reduce the tax rate on the hard-earned business income to the lowest tax rate on small business income since World War II. It even provides a new, low tax rate of 9 percent for businesses earning less than $75,000 in income to help microbusiness startups that fuel innovation and job creation in communities across the country.
Many businesses throughout Southern Arizona fall within this income range. This bill establishes strong safeguards to distinguish between individual wage income and “pass-through” business income so tax relief goes to the local job creators it was designed to help most. This would have an immediate impact in Southern Arizona and assist our businesses in finding the cash flow to hire new employees and to focus on revenue growth.
A specific provision of the Act allows small employers to immediately write off the full cost of new equipment such as computers, vehicles and machinery to improve operations and enhance the skills of their workers. It also protects the ability to write off the interest on business loans that help them start or expand a business, hire workers, and increase paychecks. Arizona ranks among the top five states for Hispanic-owned small business loan applications. This provision will help small business owners throughout our country as well as the more than 120,000 Hispanic owned small businesses in Arizona.
We face a once-in-a-generation chance to reform our complicated tax system. Our current tax code makes it harder to start a business, to create jobs and to maintain adequate cash flow to grow our revenues. If we do it right, it could be one of the single most important steps to driving economic growth for our country.
The House’s Tax Cuts and Jobs Act will help our local economy and the business climate in Southern Arizona. We appreciate Congresswoman Martha McSally’s support of this important issue and encourage all of our lawmakers to support tax reform.
Lea Márquez Peterson is president and CEO of the Tucson Hispanic Chamber of Commerce and a public voices fellow with The OpEd Project.
Welcome to the Tucson Hispanic Chamber Blog Page.
Our goal is to help member companies grow and prosper. We work to achieve this goal by advocating a pro-business agenda in Tucson and connecting members with business leaders and policy makers. How? With Networking & educational events, and online initiatives — like this blog.