Among all the issues our country faces right now, a major threat to New York’s small businesses and manufacturers is not getting the attention it deserves. The IRS and proponents in Congress have set their sights on business partnerships as a new target in their never-ending quest for tax dollars.
As a business leader, I’ve seen how vital these partnerships are for fostering innovation, supporting jobs and driving growth in our state’s business community. However, recent tax proposals have introduced significant concerns around what the future could hold for successful businesses.
These proposals aim to impose new rules that would not only increase the burden on small partnerships but also disincentivize critical investments that stimulate New York’s economy. It’s essential to understand that these changes strike at the heart of many communities, threatening local farms, neighborhood retailers and even manufacturers who have dedicated decades to building businesses that serve our communities and employ millions of Americans.
During his campaign, President Joe Biden committed to not raising taxes on Americans making under $400,000. Despite this promise to voters, the plan to go after business partnerships includes changes to Subchapter K of the IRS code, which would, in fact, threaten those making under $400,000. This contradiction is not just a breach of trust – it’s a potential blow to the core of our economic system, where small businesses and manufacturers would find themselves under increasingly difficult circumstances.
The justification for these sweeping reforms rests on shaky ground. Danny Werfel, commissioner of the IRS, made his misguided case in a Bloomberg Law op-ed, explaining that partnerships should be subject to more government rules, requirements and audits to be held accountable for “what they owe.” However, research from the Cato Institute shows that the tax gap — the difference between taxes owed and taxes collected —has actually been stable relative to the size of the economy and is, in fact, lower than it was decades ago.
The reality is that partnerships, including those in the manufacturing sector, are often the vehicles through which innovation is funded and new projects are launched. These projects range from sustainable agriculture to renewable energy initiatives. The proposed tax changes would undermine the flexibility necessary for structuring partnerships that make such investments feasible, potentially stifling innovation and reducing overall investment in vital sectors.
In 2019, partnerships employed more than 16 million Americans. These jobs and the compensation they provide are crucial not just for the individuals and families directly involved but for the health of our nation’s economy. What’s more, the complexity and compliance costs associated with these changes would disproportionately affect small businesses and manufacturers, who are less equipped to navigate the labyrinth of new tax regulations.
As we stand at this crossroads, it’s imperative that our state’s leaders like Congresswoman Nicole Malliotakis and Senate Majority Leader Charles Schumer push back against IRS overreach and protect against the broader implications of the proposed IRS expansion and its impact on business partnerships. The proposed tax changes risk undermining the very foundation of our economic prosperity — all in the pursuit of revenue to fuel Washington’s ongoing spending spree.
It’s crucial that we preserve the flexibility and incentives that allow business partnerships to thrive and contribute to our economy. As we navigate the challenges ahead, we cannot forget the importance of supporting policies that foster growth, innovation and stability for businesses big and small. Our future prosperity depends on it.
John Phraner is the president of Trans Tech Bus in Warwick, N.Y.
John Phraner , 2024-04-01 21:03:03
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