ORAL TESTIMONY GIVEN BEFORE THE U.S. HOUSE OF REPRESENTATIVES COMMITTEE ON SMALL BUSINESS

BY ANNE ZIMMERMAN

CO-CHAIR OF SMALL BUSINESS FOR AMERICA’S FUTURE

APRIL 18, 2023

Good afternoon Chairman Williams, Ranking Member Velazquez and members of the committee. Thank you for the opportunity to speak to you today.

My name is Anne Zimmerman, and I am a CPA and President & founder of Zimmerman & Co CPAs, with offices in Cincinnati and Cleveland, Ohio. I am also the Co-chair of Small Business for America’s Future—a national coalition of small business owners and leaders working to give the small business community a voice at every level of government.

As a small business owner myself, I take great pleasure in supporting other small businesses. Every Friday, my grandson AJ and I have a special tradition of treating ourselves to creamy whips on our way home from school — and for those of you not from Ohio, that is a delicious soft serve ice cream. We won't be able to enjoy that fun ritual this week because that small business we've grown fond of closed on Sunday. 

While unfortunate, this is not uncommon. This experience highlights the vulnerability of small businesses during their early years. With a record 10.2 million new small business starts since 2021, establishing a fair tax code is crucial for their success and for the country to capitalize on the potential economic activity that this boom in entrepreneurship could deliver.

The Tax Cuts and Jobs Act (TCJA) has primarily benefited large corporations, offering them a permanent 40% cut in their tax rate, while small businesses received a temporary 20% deduction instead. Extending the current small business deduction beyond 2025 would permanently enshrine these tax inequities, maintaining an unfair advantage for large corporations.

A public opinion poll conducted for Small Business for America’s Future by Morning Consult in 2019 found that changes in the tax code from the  TCJA did not significantly help small businesses grow or invest. Almost half of small businesses said the new tax law had no impact on their growth or profitability, while 24% said it had a negative impact. Only 19% of owners said the law had a positive impact on their business.

I have a few ideas about how the tax code can foster small business success; we should:

1. Create a tax credit for hiring the first employee, which would surely foster job growth
2. Make the first $25,000 in business profits tax-free to strengthen truly small businesses
3. Rebalance the TCJA tax cuts, reversing a small portion of big businesses’ 40% cuts to pay for improved permanent cuts for small business.
4. Simplify tax compliance and improve IRS customer service, including bringing back support for tax code technical help for small business owners. 
5. Implement a minimum tax on corporate book income, which would not impact most small businesses but would help level the playing field

Moreover, it is crucial to avoid destabilizing political fights, such as using the debt ceiling as leverage. Such tactics disproportionately affect small businesses and impede their ability to thrive, create jobs, and drive innovation.

In conclusion, I urge Congress to create a more equitable tax system that genuinely supports small businesses and fosters a stable economic environment, rather than merely extending the TCJA. Ensuring the well-being of small businesses is essential to this endeavor—and essential to making sure creamy whip stores, like the one AJ and I loved, can keep serving up smiles in communities across the country. Thank you for your time and consideration.