Talking to people across Virginia, I am hearing the same message: They want to see a strong economy and job creation. While we've seen some signs that the economy is beginning to grow again, it's not moving at the rate needed to get our friends and neighbors back to work. The only way to shift the economy into high gear is to help our small businesses grow.
Over the past two decades, small businesses have created 65 percent of new jobs in our country. During the economic downturn, these small businesses — the backbone of our economy — have taken a beating. Here in Virginia, growing small businesses generated more than 109,000 new jobs from 2005 to 2008. Unfortunately, from 2008 to 2009, more than 76,000 small business jobs were lost.
Faced with a barrage of red tape and higher taxes coming from Washington, our small businessmen and women are still struggling. Currently, cash-strapped small-business owners are facing a federal tax rate as high as 35 percent, on top of what they already pay in state and local taxes, which siphons away income that would otherwise be used to re-invest in their businesses.
Small-business growth is the key to our economic recovery. In order to create an environment conducive to long-term private-sector job growth, we shouldn't be threatening to raise taxes on small-business people and entrepreneurs; we should be doing everything we can to help them succeed.
That is why, this week, the U.S. House of Representatives will vote on the Small Business Tax Cut Act to give every small business with fewer than 500 employees a 20 percent tax cut that goes straight to their bottom line.
While we pursue comprehensive tax reform that brings down rates, broadens the base and makes the tax code more competitive, this will help small businesses get back in the game right away. Immediately reducing the tax burden on small businessmen and women allows them to keep more of their hard-earned profits and gives them the freedom, flexibility and confidence to grow and expand their businesses.
The Small Business Tax Cut Act will help 22 million small businesses across the country, including hundreds of thousands in Virginia — no matter how they are organized or whether they pay taxes at the corporate or individual level. A third of those small businesses are owned by women and one-fifth are minority-owned small businesses. This 20 percent tax cut will free up resources so small-business owners can invest in new technology, hire additional workers, or provide a raise to a current employee — something so many employers haven't been able to do.
Small businessmen and women are the real experts who know what it takes to bring jobs back to our communities. And I've heard from several area small-business owners about just how beneficial this tax cut will be to them.
Take Gary Glover, president of Richmond's Puritan Cleaners, who says, "We've had to make tough decisions on how we spend our money and the direction that we take our business. Congressman Cantor's 20 percent Small Business Tax Cut will help us immediately as we look to expand our business by possibly adding a new location or even rehiring employees that we were previously forced to lay off."
One of the fastest-growing sectors of Virginia's economy is our wine industry. The Heidig family, owners of Lake Anna Winery and Oak Hill Farm & Vineyard, tell me that the Small Business Tax Cut Act will give them the additional funds to purchase equipment, increase production and hire additional personnel to sell and promote their wines. They see this as a "win-win" for them as small business owners and improving the overall health of the economy. A win-win is exactly what we need to free up capital and drive small business job creation.
And Jay Smith, president of Cox Transportation Services in Ashland, adds, "The 20 percent across-the-board federal tax cut for small businesses is exactly what is needed to encourage business owners and investors to regain the confidence that the federal government is actually going to stand up for job creators and allow them and their businesses to flourish."
Following the success of the bipartisan JOBS Act, which was signed into law earlier this month, Republicans and Democrats need to continue to work together to produce results to help spur job creation. By passing the Small Business Tax Cut Act, we can provide immediate tax relief and send a clear signal to Virginia's small businessmen and women that Washington intends to make it easier to start up and run a business, grow their job base and boost the economy.
Online: Richmond Times Dispatch