Nordberg: Tax reform is powering small business growth
Recently, I was shopping at our local store and was amazed that holiday merchandise was already on the shelves. What happened to the tradition of launching the Christmas selling season right after turkey time at the end of November? Little did I know, the holiday shopping season now starts with Halloween and runs straight through until Christmas.
The last three months of the year are critically important for locally-owned small businesses. In fact, statistics show that locally-owned retailers earn as much as 50 percent or more of their total annual revenues from the period between Oct. 1 and the end of the year. During this time, businesses invest heavily on labor, new inventory, as well as marketing strategies to stay competitive with online retailers. The holiday season can be a drain both on the business owner's time and cash flow.
The good news is that the Trump administration's tax cuts and regulatory reforms are enabling small businesses to plan more effectively and reinvest in their companies by expanding, hiring more employees and raising wages. This is support that is badly needed during this time of the year.
With the new tax cuts, most small businesses will now be able to deduct 20 percent off their business income in addition to having their taxable income taxed at lower rates. And for the first five years, they'll be able to write off investments in new equipment the year the investment is made.
In addition to the tax cuts themselves, more than 6 million American workers have received a bonus, a pay raise or improved benefits as a result of the president's tax cut law. This translates into great news for small retailers across the country, because consumer spending during the holidays is expected to increase by 5 percent as a result of our growing economy.
Let's not forget our manufacturing sector. According to the Center for Manufacturing Output, N.D. manufactures accounted for nearly $3.71 billion in revenue in 2016, and employed more than 24,500 people in the state. Manufacturer optimism across the nation reached a near-record level in the 20-year history of the National Association of Manufacturers survey, and small business optimism stands at its third highest level on record since the National Federation of Independent Business began its survey 45 years ago. As a result of tax cuts and reforms, the American economy is booming with the number of job openings surpassing the number of job seekers for the first time on record, and the September unemployment rate at 3.7 percent, making six straight months at four percent or below.
I always look forward to the Christmas season with its holiday lights and community togetherness. Holidays can be stressful for all — especially small retailers — but thanks to the improved tax climate, everyone can breathe a little easier. In this more favorable environment, small businesses are thriving, entrepreneurs have a greater chance of success, and the nation's economic outlook is stronger than ever.
Nordberg is the SBA’s Region VIII administrator. He oversees the agency’s programs in Colorado, Montana, Utah, North Dakota, South Dakota and Wyoming.