Making her first trip to Columbia as part of National Small Business Week, Linda McMahon emphasized how her entrepreneurial experience makes her an empathetic advocate for the nation’s 30 million small businesses.
McMahon, administrator of the U.S. Small Business Administration, met with local politicians and business owners Wednesday, including Forest Lake Fabrics owner Michael Marsha, as part of a series of East Coast stops. Marsha’s Forest Acres store won the SBA’s Phoenix Award in recognition of its recovery from a devastating flood in 2015.
“Their message was just so great,” McMahon said in an interview Wednesday morning at the Columbia Metropolitan Convention Center. “They’re so emotional about their business. I think that’s what continues to fuel me all the time, being a business entrepreneur myself and having built a business from the ground up. I know what it takes, the hours that it takes, the commitment – your heart, soul, liver, lungs, pledge your first two children, all of that, to get things done. So when you look at them and what they went through … that is such the spirit of entrepreneurs. That is what I love to see.”
McMahon, appointed by President Donald Trump in December 2016 as the 25th SBA administrator, is the former CEO of World Wrestling Entertainment Inc., which she co-founded with husband Vince McMahon. She said lessons learned in shepherding the global wrestling enterprise have served her well.
“Vince and I started sharing a desk in our basement,” she said. “When you build a business up to be a global business, traded on the New York Stock Exchange, and you’ve gone through all those steps, you understand what it’s like not to have access to capital, not to have all the employees that you need, and to wear so many hats all the time and work 24/7. There are sacrifices that need to be made.”
McMahon believes tax reform enacted by 2017’s Tax Cuts and Jobs Act will help ease the burden on small businesses owners. Several changes to the tax law affect small businesses, including lower individual tax rates, a 20% deduction for qualified companies filing as pass-through entities, and an expansion of Section 179 filing, which allows expensing of business-related equipment.
McMahon recalled asking a small business owner in Savannah, Ga., if the new tax structure benefited him. “He said, ‘Absolutely. I’m a small business. Every single dollar that I save by not having that tax or a regulation that I have to comply with goes right back in my business,’ ” she said.
Others, however, aren’t as sold on the benefits of the new tax laws. A March survey by Businesses for Responsible Tax Reform, a coalition of U.S. business leaders, found that 69% of small business owners did not plan on hiring a new employee because of the tax changes, and 59% did not plan to give raises. The survey found that 54% felt the changes favored large corporations, and 57% opposed the $1.4 trillion increase in the national debt to pay for tax reform during the next 10 years.
The survey consisted of automated telephone interviews of 385 small business owners in Senate battleground states of Arizona, Tennessee, Maine and Nevada. Among respondents, 41% identified as Republican and 31% as Democrat.
A report (.pdf) prepared for the Senate Committee on Finance by the Joint Committee on Taxation for a April 24 public hearing showed that businesses with an income of $50,000 to $75,000 were expected to file 2.5 million pass-through deductions in 2018, with a total estimated savings of $1.2 billion.
“Any benefits you get may be washed out,” said Frank Knapp, president and CEO of the S.C. Small Business Chamber of Commerce and co-chairman of Businesses for Responsible Tax Reform. “It’s going to cost small businesses more money by paying their CPAs to (see if they) qualify for it.”
The IRS has yet to issue guidance on the issue, leaving business owners confused about how to determine their estimated tax payments, Knapp said. U.S. Rep. Richard Neal, D-Mass., the top Democrat on the House Ways and Means Committee, urged the IRS and the U.S. Treasury Department on Tuesday to help clarify what income is eligible for pass-through deduction.
All individual tax credits are set to expire in 2025, while tax cuts for corporations are permanent.
“If you’re a C corporation, then you can plan,” Knapp said. “You know what your rates are going to be. You can move forward. You can buy back stocks. But small businesses have no idea what benefits we’re going to get out of this. All we know is we weren’t treated the same as corporations, and whatever benefits there are, they don’t compare at all. And ours are temporary.”
McMahon said that, in her travels to 35 states and talks with more than 700 business owners, she has not heard those concerns voiced. Instead, she said, small business owners have expressed relief.
“I have not had one small business owner look at me and say, ‘You know what? This tax cut is only going to be for another eight to 10 years. It’s not permanent,’ ” McMahon said. “They’re so happy to have it.”
McMahon said she most often hears, from both small and large business owners, about a lack of skilled workers in fields such as carpentry, electrical work, welding and HVAC. She said that was a driving factor behind an executive order expanding apprenticeship programs Trump issued last June.
“He absolutely believes that we have to do a better job of public/private partnerships, working with our vocational schools, our community colleges, and even our high schools,” McMahon said. “We’ve put an emphasis on our four-year college degrees, which I think are still necessary, (but) we’ve kind of ignored the development of our workforce. It’s critical that we get back to that.”
McMahon’s stop in Columbia included meetings with Gov. Henry McMaster, U.S. Rep. Joe Wilson and Columbia Mayor Steve Benjamin. She also received a key to the city.
“As I always say to all of our small businesses, I really do want them to know how important they are to the president, to the administration,” she said. “It’s top priority to make sure that we are helping provide the tools and the environment so they can create jobs. Because we don’t create them. Government doesn’t create them. But we can kill them through regulation and overtaxation.”