As Speaker of the House, Kevin McCarthy will have the opportunity to guide Congress to act on issues that matter to us all, such as lowering inflation, strengthening the supply chain and keeping us safe. However, the California Republican’s greatest opportunity of all may be getting Congress to finally and successfully partner with early-stage tech and life science companies — which are almost exclusively small businesses — to help foster economic growth, create jobs and ensure the U.S. remains ground zero for innovation and important breakthroughs in the fields of health care, defense, public safety and others.
The federal government always has taken part in helping small businesses, and for good reason. Small businesses are anything but a small part of the overall U.S. economy. According to a 2021 report from the U.S. Small Business Administration, businesses with fewer than 500 employees make up 99.7% of all U.S. businesses with paid employees, and account for 62% of net new jobs since 1995. In recent years, fiscal stimulus programs such as tax breaks and incentives were implemented to help entrepreneurs survive the pandemic and get out of hard economic times. At present, business owners need attention for another reason. There remain widespread concerns over a recession. And, with more layoffs, bankruptcies and closure rates in the news, it’s clear that small companies and everyday Americans across the nation are struggling.
Recognizing that small businesses drive the economy, produce jobs and lead innovation, a new, more business-friendly Congress should consider supporting early-stage tech and life science companies by providing zero corporate taxes for tech and life science businesses in their first five years, or $500 million in revenue (whichever comes first), which would be a boon to the economy. The lifeblood of small businesses is the available cash and liquidity of assets they either possess or have access to, and early-stage companies are extremely vulnerable to external factors that may limit that access. With the state of the U.S. economy still blurry and potentially darkening as the Federal Reserve steadily jacks up rates, a tax break for new tech and life sciences companies would allow entrepreneurs from across the country to reinvest into their businesses and have a better shot at lasting long enough to provide life-saving, national-security enhancing, and quality of life improving innovations.
Beyond taxes, there are other critical steps that the 118th Congress could take on a bipartisan basis to help these small businesses and thereby build a strong and resilient economy, including improving access to private capital in rural and underserved communities, and ensuring that smart regulations are tailored to early-stage enterprises. The next big idea is among us, and Congress should do everything it can to support economic growth through American innovation and these critical industries that will ensure a better future for all of us.
Aaron Price is the CEO of TechUnited: New Jersey.