In the coming days, the US Senate will likely consider the Inflation Reduction Act, a historic deal struck between Senator Manchin (D-WV) and Majority Leader Schumer (D-NY). This legislation furthers the Biden-Harris Administration’s goal of supporting Americans and small businesses from the ground up by lowering healthcare costs for millions, reducing the deficit, investing in domestic energy production and manufacturing, and addressing longstanding tax disparities that benefit the wealthiest corporations.
Given that these initiatives address many of the long-standing problems that eat into their bottom line, it is no surprise that small business owners across the country find the Inflation Reduction Act appealing.
Speaking in support of the bill, Dr. Erika Gonzalez, CEO, President, & Co-Founder of South Texas Allergy and Asthma Medical Professionals (STAAMP) and STAAMP Clinical Research in San Antonio said, the legislation will, “help the bottom line of businesses and allow them to be more competitive in the labor market. I am glad to see the Inflation Reduction Act includes lowering the cost of prescription drugs, which is a main driver of healthcare costs and continues to be the No. 1 policy issue for small businesses.”
As Dr. Gonzalez noted, one of the crucial measures included in the Inflation Reduction Act addresses rising health care costs. A recent Small Business for America’s Future survey found that 83% of small business owners said rising health insurance costs have negatively impacted their business, forcing them to raise prices and hold back their growth. The Inflation Reduction Act helps address rising health care costs in several ways. The first is by extending Affordable Care Act subsides for three more years and the second is through allowing Medicare to negotiate drug prices.
In addition, the legislation caps out-of-pocket costs for Medicare and makes sure that companies don’t arbitrarily raise prices faster than inflation. A recent Kaiser study found that prices updated inflation for half of all drugs covered by Medicare in 2020.
“Because we are committed to attracting and retaining a talented workforce, we offer comprehensive health insurance. But the cost of healthcare is skyrocketing and is in turn limiting our growth as a company. It’s true that small businesses are the backbone of America’s economy, but we shouldn’t bend over backwards to just stay in business,” said Carling McManus, owner of CEO 84 Agency in Charleston, WV, when speaking about why she supports the healthcare provisions of the legislation.
Small business owners generally never ask for a handout, but they do ask for a level playing field – especially when it comes to taxes. This legislation does that by closing critical loopholes, setting a 15% minimum corporate tax rate, and providing $124 billion to the Internal Revenue Service for tax enforcement. This minimum corporate tax rate will not impact small businesses. In fact, it will only raise taxes on nearly 200 corporations earning more than $1 billion in profits and who pay less than 15% in federal taxes. Major American industries are behind this commonsense move to level the playing field in corporate taxation. In an article in The HillMichael Hanson, Senior Executive Vice President for Public Affairs at the Retail Industry Leaders Association, said, “The retail agreement struck accomplishes all the objectivesers have set out to achieve throughout the debate on corporate taxes: permanent lower rates, fairness to ensure all are contributing, and better enforcement to collect what is legally owed.”
And small business owners agree. “Loopholes and tax breaks for large companies create a huge deficit in our country’s budget which is being filled by small business and the middle class. We need changes that ensure large companies pay their fair share. The Inflation Reduction Act does just that,” said Christine Chin Ryan, owner of Synergy Consulting, Inc., in Portland, OR.
The Inflation Reduction Act also invests approximately $300 billion in deficit reduction. This will, in turn, help reduce the inflationary pressures that are driving up prices for both businesses and their customers.
Small business owners aren’t the only ones who think that this legislation is good economic policy. Economists share their opinion. On Tuesday, 126 of the country’s top economists, including seven Nobel laureates and two former US Department of Treasury Secretaries, sent a letter to Congressional leaders supporting the Inflation Reduction Act. They wrote, “This proposal addresses some of the country’s biggest challenges at a significant scale. And because it is deficit-reducing, it does so while putting downward pressure on inflation. We strongly recommend Congress actly to build a stronger economy by passing the Inflation Reduction Act as soon as possible.”
Former Treasury Secretary Larry Summers agrees that this legislation is headed in the right direction. Last week, he Tweeted, “Less demand, more supply & direct better bargaining for lower prices—those are the things involved in reducing inflation. The bill reduces the deficit & the level of demand in the economy, reduces prescription drugs prices & increases supply by stimulating energy production.”
It’s no secret that rising inflation generally is impacting small business owners, working families, and other vulnerable populations. While America is doing quite well compared to other developed nations, we must tackle these issues with legislation that takes strong steps to address inflation and tackle core issues: healthcare costs, energy costs, and a more equitable tax system. While some who represent select corporate interests in Washington don’t completely agree, many American industry and business leaders, small business owners, and economists think there is a lot in this legislation that will move our country forward.