Why is Rep. Jason Smith working against the interests of Missouri small businesses? | Opinion

Missourians know small and family-owned businesses are the main drivers of our state economy. Small businesses in the Show-Me State account for 99.4% of all companies and sustain roughly 1.1 million jobs, according to a recent report by the U.S. Small Business Administration. This is why it is so disheartening to see Missouri’s Republican Rep. Jason Smith, chair of the House Ways and Means Committee, cave to special interests in pursuit of a tax package, resorting to gimmicks that ultimately come at the expense of Missouri’s small businesses and his own constituents.

Forged in partnership with Democratic Sen. Ron Wyden of Oregon, the tax legislation features elements representing big government at its worst, imposing new burdens and costs that promise to wreak havoc on essential engines of our economy.

Research confirms that small business owners currently face unprecedented challenges. Adding to their worries is the persistent apprehension that the heavy hand of government will only add to their burdens, evidenced by their strong disapproval of how leaders in Washington, D.C., treat them. Amid persistent inflation, which remains at nearly 3.5% in Missouri, consumers rely on small and local businesses as much as ever, on track with a national trend noting that nearly 91% of Americans patronize a small business every week.

As a self-described champion for small businesses, Smith’s bill targets these very businesses with unfair penalties. Specifically, the legislation targets the employee retention tax credit, or ERC, which Smith and Wyden say would save $70 billion.

This is at best some very fuzzy math. As Sen. Thom Tillis of North Carolina recently argued in The Wall Street Journal: “The employee retention tax credit was never paid for to begin with, as it was passed as part of emergency pandemic relief under the Cares Act. Its hasty implementation resulted in massive fraud and cost overruns.” Characterizing the scheme as “phony savings,” Tillis noted, “it’s like paying off a credit-card balance with another credit card. It’s fiscally irresponsible and unsustainable.”

Worse still is the attempt by Smith to vilify a valid, reimbursable tax credit crafted to aid businesses that persevered in retaining employees during the pandemic. Facing closures and substantial declines in revenue throughout 2020 and 2021, these small businesses couldn’t work remotely in those years as Smith, Wyden and so many of their friends in government were able to. Instead, they had to navigate uncharted territory and fight for survival. Zeroing out the ERC callously ignores this undeniable reality.

Pro-business voices have taken note of this troubling trend. The conservative Heritage Foundation think tank concludes that while the business provisions related to expensing and research are valuable, the bill ultimately falls short in its accounting and stated goals.

It is entirely understandable, then, that the bill has failed to attract the majority of Senate Republicans. There are real concerns and genuine trepidation today with the U.S. tax system, not the least of which pertains to the accountability of the Internal Revenue Service and the Biden administration’s push to expand its reach with nearly 90,000 new IRS employees.

As the Senate considers the Smith-Wyden bill, they must shift the focus to pro-growth measures that will help Missouri businesses and consumers, not single them out for struggling to survive through the pandemic. For all of the local and family-run businesses on which we rely, tax policy should be strategic and prudent, not fueled by short-sighted schemes that don’t add up.

Gerard Scimeca is an attorney based in Oak Grove. He is chairman and co-founder of CASE, Consumer Action for a Strong Economy, a nonpartisan consumer advocacy 501(c)(40) nonprofit based in Alexandria, Virginia.