Why Trump’s Tax Bill is Crucial for Small Businesses in the U.S.

Last week brought fresh optimism for Americans eager for a thriving economy.

Initially, President Trump decided to pause previously announced tariffs, giving him the opportunity to negotiate with other nations—including our allies—to address their numerous unfair trade barriers.

More significantly, House Republicans took a decisive step on Thursday by passing a budget bill, which sets the foundation for making Trump’s 2017 tax cuts permanent. The final version of this bill could be approved in a month or two.

Let’s be clear: Tax cuts are central to Trump’s presidential legacy. While tariffs may provide a boost to American industries, nothing elevates Americans themselves more than reduced taxes.

I express this sentiment while fully acknowledging the president’s dedication to trade issues. I’m not alarmed by the significant tariffs he introduced on April 2, which he aims to leverage short-term to initiate a transition to not just free, but fair trade.

However, tax cuts remain crucial for greater paychecks, improved jobs, and a flourishing economy.

Above all, permanent tax reductions will foster the entrepreneurial spirit that is essential for everything else to thrive.

Americans fondly recall the robust economy that stemmed from Trump’s 2017 tax cuts.

Wages surged at their fastest rate in two decades—with workers at the lower end of the income spectrum experiencing wage growth that was 400% quicker than that of the affluent.

Unemployment dropped to a 50-year low, marking the lowest figures recorded for Black and Hispanic workers.

Small businesses thrived, which is critical; start-ups and local businesses account for two-thirds of all new jobs in the country.

The positive memory of the Trump boom is precisely why numerous Americans, including record numbers of minority voters, supported him again in 2024.

However, a significant number of his tax cuts are scheduled to expire at the end of this year, affecting income-tax relief and support for small businesses.

If tax rates increase, the prospects for an economic boom dwindle to almost nothing, making a downturn highly probable.

Consequently, all Americans will bear the burden—entrepreneurs will struggle to keep their businesses afloat or establish new ones altogether.

This spirit of risk-taking has always been fundamental to our nation’s growth, innovation, and overall economic excellence.

We do not boast the world’s largest and most potent economy due to large corporations; our economy stands unparalleled because we have facilitated the establishment of small businesses.

Yet, increasing taxes represent the most significant obstacle to entrepreneurship.

I know this firsthand, as I launched my own retail company in the early 1990s.

Back then, taxes were even lower than the current level post-Trump’s 2017 cuts. After accounting for taxes and living expenses, I managed to devote 52% of my income to starting and expanding my business.

I required every penny—starting a small business remains immensely challenging and costly, even with lower taxes benefiting the process.

I doubt I could have succeeded if I had started my venture in the years leading up to Trump’s tax cuts.

Tax rates significantly increased between the early 1990s and 2016. This trend would likely continue if his tax cuts lapse at the end of this year.

When adjusted for inflation, I would now owe the IRS $80,000 more than I did in the early 1990s. Without that money, I can’t envision how I would have launched my company.

Millions of Americans face the same daunting challenge—not just those currently running small businesses: The upcoming generation of entrepreneurs will require lower taxes to turn their aspirations into reality.

If taxes revert to pre-2017 levels, many aspiring entrepreneurs will see their dreams shattered—especially those starting with minimal resources.

This situation could spell disaster for the entire economy.

Fewer small businesses would lead to stagnation in wages, a drop in job availability, and a decline in the innovation that enhances our standard of living.

Trump campaigned on a promise to enrich the lives of Americans. Now, he must fulfill that commitment by securing permanent tax cuts as quickly as possible.

The president must not allow himself to be sidetracked by tariffs. He needs to make a concerted effort to push his tax cuts through Congress.

When he declared his tariffs on April 2, he labeled it “Liberation Day.”

However, true liberation will come when he and Congress provide Americans with the permanent tax cuts they rightfully deserve.

John Tillman is the CEO of the American Culture Project.