Opinion: Small businesses need Congress to make Trump tax cuts permanent

As a female entrepreneur in the competitive world of manufacturing, playing hardball with other industry players is a daily exercise. But the challenges of negotiating supplier deals or competing for market share pale in comparison to the problems posed by government policy uncertainty. A looming end-of-year tax hike threatens to throw cold water on the small business economy.

What specifically is unfolding? During President Donald Trump’s first term, lawmakers passed the Tax Cuts & Jobs Act (TCJA), which lowered taxes for individuals at all rungs of the socioeconomic ladder, as well as for small businesses. But those tax savings are set to disappear in just eight months if Congress doesn’t act — a scenario that would deal a huge financial blow to the Chicago-area small business community.

Initially passed in 2017, the law changed the tax code in a variety of ways to benefit Main Street businesses.

The ability to immediately write off investments in new machines, upgraded facilities, or operational expansion was particularly game-changing for manufacturing companies like mine. For my business, specifically, the tax incentive expedited the timeline for us to purchase $750,000 in new, cutting-edge equipment and hire four new employees to run the machines. The expansion increased our production capacity and opened the door to new contracts that are still rolling in.

Additionally, the TCJA lowered tax rates for pass-through small businesses and created a special 20% deduction that applies to entrepreneurs. It allows small businesses like mine to protect more income from Uncle Sam’s tax collectors — savings that can be rolled back into the business.

At my manufacturing company, these financial savings resulted in better compensation for my current — and future — team. We dramatically increased wages, provided substantial bonuses, and offered 100% paid health care and 401(k) benefits with a company match.

The tax savings also gave us the budgetary wiggle room to think ahead and invest in the future workforce — cultivating the professional aspirations of the community’s young people. We have been able to partner with local schools to develop paid apprenticeship programs and internships that provide students the opportunity to explore future careers.

My business’s tax cuts success story is only one example among many. Hundreds of small businesses in the state have been empowered to deploy a similar expansionary playbook.

Following passage of the tax cuts, Morton Grove-based manufacturer Sko-Die, for example, gave its employees a raise and invested $1 million in new equipment. Schaumburg-based Rabine Group hired more people, increased wages, and accelerated research and development spending. And AbbVie, an area pharmaceutical company, provided salary increases for all non-executive staff and boosted profit sharing.

These types of stories are a dime a dozen but have huge ripple effects. As a result, the Chicago-area unemployment rate dropped to a three-decade low following the tax cuts’ implementation and real wages grew across the country at the fastest two-year pace in two decades. This is what happens when the government steps back and lets small businesses do what they do best: create economic opportunity.

But all of this progress now hangs in the balance. If Congress fails to pass legislation to make the provisions of the TCJA permanent and America experiences a tax hike in 2026, Main Street will suffer the consequences. The economic momentum created by the tax cuts carefully built over years could vanish overnight.

Illinois’ elected leaders in Congress need to support tax cuts now.

Nicole Wolter is president and CEO of HM Manufacturing, a power transmission components provider in Wauconda. She is also a partner of the Job Creators Network Foundation.