The National Black Chamber of Commerce argued Tuesday that a proposal to overhaul the tax code could be particularly beneficial to minority-owned businesses.
House Speaker Paul Ryan and Rep. Kevin Brady introduced a blueprint last year aimed at overhauling the tax code. The National Black Chamber of Commerce (NBCC) believes the proposal would be particularly helpful to minority-owned businesses since many are small.
Small businesses have a lot to gain from tax and regulatory reform. They generally have less of an ability to absorb additional costs compared to larger businesses. A lower tax rate means small businesses face lower financial burdens. The Small Business Administration found that 15 percent of small businesses were minority-owned as of 2012.
“I think if the cost of doing business goes down, like corporate taxes, that’s going to be better for everybody,” NBCC President Harry Alford said during a teleconference call. “But it really affects the smaller guy. I think it will be 10 times more beneficial to a small business, which 98 percent of [our] membership is. They’ll all benefit, but I think it will be more so for the small businesses and minority businesses.”
The NBCC hosted the call to discuss the economic impact the blueprint could have on small and mid-sized businesses in states across the nation. The chamber previously released a memo detailing its support for the proposal last month. It even supports some of the more controversial provisions like the border adjustment tax.
The Republican blueprint has not yet been written into legislation, so the actual details are unclear. Minority-owned businesses make up 29 percent of all businesses nationwide. Black business owners make up 49.9 percent of all minority-owned businesses.
The percentage of minority business owners has grown increasingly in recent years. The increase has outpaced minority population growth from 2007 to 2012. Black-owned businesses, for example, increased by 34 percent while the black population grew by only six percent.
The Republican blueprint is designed to simplify the tax code and reduce rates. The hope is to consolidate the system down to three tax brackets and lower the top individual income tax rate to 33 percent. The tax code hasn’t been overhauled in any significant way since the 1980s.
The NBCC previously expressed support for the border adjustment tax provision in the blueprint. It’s a value added tax levied on imported goods. The chamber notes the border adjustment tax will help black business owners by increasing domestic investment and job creation. The border tax has drawn plenty of critics, including some who support the blueprint generally.
Also on Tuesday, the Tax Foundation released a state-by-state breakdown of the impact the House GOP tax blueprint would have on job growth and income. The analysis focused on the importance of looking at the plan as a whole rather than trying to isolate specific portions, such as the border adjustment tax. The organization reports that the plan would result in the creation of 1.7 million new jobs and after-tax incomes of median households would rise by 8.7 percent.