Small Businesses Celebrate the Inflation Reduction Act
By John Arensmeyer, Founder & CEO, Small Business Majority
A year ago this week, President Biden signed the Inflation Reduction Act (IRA) into law. This landmark legislation has proven to be a tremendous boost for small businesses across America.
Small businesses welcomed the IRA for its significant provisions to reduce healthcare costs, implement tax policies that help level the playing field, and make critical clean energy investments to boost our economy and address climate change. When the IRA was signed into law, 24% of small businesses reported that they might only survive past the next six months with additional funding or market changes. Yet, we now see continued robust small business expansion, reduced inflation and a solid path to prosperity after the bleak years of the pandemic.
Rising healthcare costs remain a top concern for our nation’s entrepreneurs. The Affordable Care Act (ACA) has been a lifeline for millions of small business owners, employees and self-employed Americans, enabling them to obtain quality, affordable health coverage. The American Rescue Plan, passed in 2021, expanded the tax credits that made healthcare more affordable for those buying insurance on marketplaces established by the ACA. The IRA extended those expanded tax credits through 2025, enabling those in the small business ecosystem to prosper without the weight of excessive healthcare costs. Additionally, the IRA also included a groundbreaking provision allowing Medicare to negotiate lower drug prices — a critical step in beginning to bring down the cost of healthcare for everyone. “Expanding healthcare coverage and making healthcare more affordable is critical to small businesses like me and our business ecosystem,” said Mike Roach, Small Business Majority National Small Business Council member and co-owner of Paloma Clothing in Portland, Ore., the day the U.S. House of Representatives passed the IRA. “… We must do all we can to extend subsidies for the millions of small business owners and their employees who count on them, and to have these subsidies available for those needing them in the future.”
Likewise, the IRA took major steps toward leveling the playing field between large and small businesses while addressing significant budget shortfalls. For too long, our nation’s tax system has benefited the wealthiest Americans and large multinational corporations at the expense of small business owners, their employees and independent entrepreneurs. Smaller firms have felt disadvantaged by loopholes that allowed larger and wealthier businesses to avoid paying their share of taxes. By requiring corporations with profits over $1 billion to pay taxes totaling at least 15 percent of their reported profits (something supported by 7 in 10 small business owners), the IRA addressed one of the biggest loopholes in our tax code, one that is not available to average Main Street small businesses.
Likewise, the IRA dramatically expanded resources for the Internal Revenue Service (IRS) to improve services for entrepreneurs and other ordinary taxpayers while cracking down on wealthy individuals and big corporations who skirt the tax code via questionable tax strategies. Our polling found that 62% of small businesses supported appropriating enforcement dollars for the IRS to help small businesses operate on a level playing field and hold large corporations accountable. Initial estimates suggested the additional funding would facilitate an influx of $200 billion in revenue over the subsequent decade. By the end of tax filing season this year, the Treasury Department reported that the IRS had successfully answered 2.4 million more calls than the prior year and had cut phone wait times by 85 percent.
Finally, the IRA dramatically expanded the government’s energy and climate change investments. These investments are spurring small business opportunities and building the foundation for a sustainable competitive clean energy economy. Because of the IRA, companies have invested billions of dollars in U.S.-based clean energy projects that have increased demand for small manufacturers and suppliers’ products and services. The law has created significant small business contracting opportunities and, therefore, more small business job creation.
On the anniversary of the signing of the IRA into law, we celebrate its many accomplishments for small businesses, and we look forward to its role in supporting the continued growth of a thriving, equitable small business ecosystem.