| Speaker | Time | Text |
|---|---|---|
|
unidentified
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Exeth and the chair of the Joint Chiefs of Staff, General Dan Kaine, testified on the President's 2025 budget request for the Pentagon before a House Appropriations Subcommittee. | |
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unidentified
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| A conversation on small businesses in America Now. | ||
| Our guest is Jeff Brabant. | ||
| He's vice president at the National Federation of Independent Business. | ||
| And Mr. Brabant, first remind people how many small businesses NFIB represents and what your mission is. | ||
|
unidentified
|
So NFIB is the voice of small business. | |
| We represent about 300,000 small business owners in every state in the country. | ||
| And the mission behind NFIB was to have small business owners with a voice. | ||
| So the whole idea is that we have a whole bunch of small business owners. | ||
| When you have 300,000, you have a small due structure, and you have one member, one vote. | ||
| And then they have the same voice as a large corporation. | ||
| So the typical NFIB member has about seven to eight employees. | ||
| So it's the real small mom and pop type of businesses. | ||
| And your website notes, non-profit, nonpartisan, if non-profit, how are you funded? | ||
|
unidentified
|
We're funded through member dues. | |
| So each member pays dues as well as less than $200 a year. | ||
| That's how you get advocacy. | ||
| That's how you get a research center and a whole host of activities to support small businesses in Washington, D.C. and all 50 state capitals. | ||
| And what are those small businesses advocating for when it comes to the One Big Beautiful bill? | ||
| Do they like it? | ||
|
unidentified
|
Love it, actually. | |
| We got more from the small business community than we ever anticipated in the One Big Beautiful bill. | ||
| The big issue that NFIB has been working on for years that we think brings most small businesses together is the 20% small business deduction. | ||
| The official name is the Section 199 CAP A qualified business income deduction. | ||
| That's quite a mouthful. | ||
| So we have dubbed it the small business deduction because if you look at IRS statistics in 2021, and actually there are 25.9 million small businesses that claim this deduction. | ||
| So this is something that's huge for the small business sector. | ||
| And one of the reasons it's so important in this bill that they're going to make this permanent and increase it from 20 to 23 percent is that's scheduled to expire at the end of the year. | ||
| And if we go back in time for a moment to 2017, the corporate rate, which is about 20 percent of small employers, less than 10 percent of all small businesses, pay the corporate rate or organize the C Corps, was lowered from 35 to 21 percent by 14 points, which was good for some small businesses. | ||
| However, they're only looking at lowering marginal rates, which most pass-through businesses pay. | ||
| That's anyone other than a C-Corp. | ||
| That's a sole proprietorship, that's a partnership, that's an S-corporation. | ||
| They're paying regular income tax rates. | ||
| They call them a pass-through because their income passes through to individual income taxes. | ||
| So their rates were only going to go down a couple points. | ||
| And we're looking at a top rate of 37% and a C-Corp rate of 21%, which is a pretty big gap when you're looking at lowering one rate by 14 points, another just by a couple. | ||
| There was a parity question. | ||
| So Congress created this 20% deduction, which gets the effective rate a lot lower for those pass-through businesses. | ||
| It gets them well under 30% closer to that 21% mark, but it was scheduled to expire, which would have resulted in a significant tax hike on tens of millions of small business owners. | ||
| So, your argument is that a special small business deduction is just fair when compared to major corporations. | ||
|
unidentified
|
Yeah, absolutely. | |
| It doesn't even get them all the way down to 21% when we look at the effective rate. | ||
| It just gets them a lot closer to that 21%. | ||
| So, it just keeps parity. | ||
| It's so that Congress isn't picking winners and losers in terms of how you organize your business. | ||
| Let's keep most businesses at around the same tax rate so that everyone's treated equally. | ||
| What is a small business expensing cap? | ||
|
unidentified
|
Are we talking about section 1979 expensing? | |
| Yes. | ||
| So, the 179 expensing cap, that's if you're a small business and you buy a piece of equipment for your business, you can expense that in the first year. | ||
| What that means is you can write it off or deduct it 100% of that expense in the first year. | ||
| Another huge win for small businesses in this bill was that cap went from $1.25 million to $2.5 million. | ||
| So, if you're a small business, $2.5 million in equipment expenses you can expense annually. | ||
| This one has a real substantial impact on small business owners. | ||
| Let's say you're a farmer, you need to buy a new tractor, you can expense that. | ||
| It gives small business owners a little more spending power in terms of wanting to expand their operations. | ||
| And is that about fairness as well? | ||
| Why do they need that additional spending power, that additional special rule for small businesses? | ||
|
unidentified
|
So, that kind of gets complicated in the gist of everything here. | |
| So, one of the things the Congress is debating is the bonus depreciation issue. | ||
| That's also an expensing issue. | ||
| 179 covers anything that isn't bonus depreciation. | ||
| Currently, 179 is permanent. | ||
| This expensing, we call it, I've dubbed it kind of small business expensing, at 1.25. | ||
| So, if they double that to 2.5, you don't have to worry about this bonus depreciation provision expiring or being on the books or off the books because everything under that threshold is permanently expensible. | ||
| Once you get over that threshold, you have to start looking at bonus depreciation, which right now we're looking at a five-year extension, not a permanent extension. | ||
| So, it's nice that the small business piece is permanent. | ||
| With all these topics that we're talking about, I should note we do have a special line for small business owners in this segment and do especially want to hear from you and your thoughts, not just on the one big beautiful bill, as it's called, but how your business is run and how Congress is impacting you. | ||
| 202-748-8003 is that number. | ||
| Otherwise, Republicans, 202-748-8001, Democrats, 202-748-8000, and Independents, 202-748-8002. | ||
| We'll put the numbers on the screen so you're not confused. | ||
| And as folks are calling in, Mr. Braybent, the tariff policy from the Trump administration, how is that impacting small business owners? | ||
| Is that something that you've been advocating on? | ||
|
unidentified
|
It's not something we've been heavily advocating on. | |
| It's something because when you're a group like NFIB, you represent every single variety of small business in America from retail, manufacturing, restaurants, agriculture. | ||
| The complicated thing is that tariffs don't affect everyone the same way. | ||
| There's a lot of different tariffs out there. | ||
| Some industries we've seen are very worried about it, some are not as worried about it. | ||
| The way our process works, we try to get a 70% consensus on big issues, and tariffs just because it affects industries so differently has been complicated. | ||
| The research we're doing, we actually had a new research out just about two hours ago, so you might not be privy to this, but it shows right now the number one issue. | ||
| We've been doing a monthly tracking survey called the Small Business Economic Trends Survey. | ||
| Going back to the 1970s, so we have a lot of historical data on this. | ||
| As of this month, the number one issue is taxes. | ||
| This is the first time taxes moved into that slot in several years, so this is a big deal. | ||
| Inflation has moved down to a couple spots. | ||
| Taxes 18% for business owners, inflation is 14%, if you ask them what their top issue is. | ||
| So, I think that they're still paying attention to tariffs. | ||
| It's just that I think with some of the deals, it hasn't tracked quite as highly as maybe it had previously. | ||
| The other thing that this survey shows is that small business optimism is up. | ||
| It shows that people are expecting better business conditions and people are expecting greater sales in future months. | ||
| Staying on tariffs for just one more minute, the argument for the Trump administration is that you won't get tariffed if you make things in the United States. | ||
| Are the tariffs sparking a surge in new small businesses making things in the United States? | ||
|
unidentified
|
That's unclear. | |
| We haven't necessarily heard that from our members, but it doesn't mean it's not happening. | ||
| We just don't have data on that. | ||
| We've got new data on the jobs numbers and unemployment numbers in the United States just last week on Friday. | ||
| When you get those at the NFIB, what are you looking for? | ||
| What did that tell you? | ||
|
unidentified
|
Generally speaking, that tracks pretty closely with the monthly surveys we put out. | |
| So we have seen optimism increase. | ||
| We have seen the one of the interesting things we've seen in the last three or four months is that access to qualified labor is coming down a little. | ||
| What does that mean? | ||
|
unidentified
|
That means one of the top issues business owners have had for years is a tight labor market. | |
| And when you say qualified labor, do you even have qualified people who you could fill a job with? | ||
| And that had been the number one issue for quite some time in our monthly tracking survey. | ||
| That's starting to track down. | ||
| That's tending to go with inflation. | ||
| One of the things we saw that kept inflation stubbornly high was labor. | ||
| And the cost of labor was so expensive, so expensive, so expensive, that's starting to get a little less expensive, which is helping with the inflation problem and helping with small businesses find and pay qualified workers. | ||
| What about the argument that the crackdown on illegal immigration is making a labor shortage even more exasperated and that it's harder for small business and large businesses to find the people they need to do the jobs? | ||
|
unidentified
|
We haven't seen that in our monthly tracking data yet. | |
| I understand the logic behind the argument. | ||
| We just haven't seen the data on that yet. | ||
| Let me get some calls for you. | ||
| Mr. Brabant is with us for just the next 15 minutes or so. | ||
| It is 8.30 at the bottom of the hour when he has to leave. | ||
| So get your calls in. | ||
| 202-748-8003 is the special line for small business owners. | ||
| But we will start with Danette in New Jersey. | ||
| Democrat, good morning. | ||
|
unidentified
|
Good morning. | |
| I'm listening to your guest, and I'm concerned that all I'm hearing from small business owners is the fact that they are so confused and discombobulated by the tariff policies that are being enacted by this administration. | ||
| I hear what he's saying about what's in the big, beautiful bill, but if they don't even survive as a small business because they can't anticipate supplies and being able to hire, or are they going to have to lay off until things are more stable with the tariffs that are trying to be put in place? | ||
| I can't understand how this tax that he's speaking about is even going to help if they're not even around. | ||
| Mr. Brabant. | ||
|
unidentified
|
Sure. | |
| The thing about tariffs is they're not a monolith. | ||
| They affect everyone very differently. | ||
| Every industry is affected differently. | ||
| Every country right now is looking at different tariff rates. | ||
| So it's a complicated issue. | ||
| The one thing our data is showing is that taxes are the number one issue for small businesses. | ||
| And the one concern is that at the end of the year, if the one big beautiful bill does not get passed, we're going to see a tax hike on about 33 million small businesses at a time when we will not see a tax hike on large C corporations. | ||
| That's a real issue of competitiveness, and that will do a lot to put small businesses out of business. | ||
| Are there things in the One Big Beautiful bill that you don't like? | ||
|
unidentified
|
There aren't significant concerns for us at this point. | |
| There's a lot, and frankly, we were loud. | ||
| If you remember, going back to 2017, NFIB took huge issue with the first draft of the Tax Cuts and Jobs Act. | ||
| So, we're not shy when we see an issue with the bill, but on the whole, this is a really good bill for small business. | ||
| What were you loud about back then? | ||
| Was it the sunsetting of or the need to renew the taxing decrease? | ||
|
unidentified
|
The first draft out of the House in 2017 didn't contain this 20% deduction. | |
| It only contained the 14% cut to the C Corp rate and didn't do anything on the pastor side. | ||
| The Senate eventually inserted that provision. | ||
| As you know, this is quite a long process, and as we're seeing over the last six months here, they were the ones who inserted the 20% provision, which made into the tax bill, which is now going to be increased to 23% and made permanent. | ||
| What is the NFIB's relationship with the Small Business Administration? | ||
| How much interaction do you have with them and the administrator? | ||
|
unidentified
|
Sure, we have a good relationship with the administrator over the small business administration. | |
| In terms of SBA programs, it's something we try to inform our members about. | ||
| Most small business owners, believe it or not, will likely not interact with the SBA in the lifetime of their business. | ||
| So, we're not super, super active on SBA policies. | ||
| They have the 7-A lending program, which is helpful to some small businesses who can't get credit elsewhere. | ||
| In terms of mature small businesses, which are the businesses most likely to get NFIB membership, they're usually past the phase where they're trying to get credit to start a business. | ||
| So, we don't find access to credit to be a huge issue for small business owners, but they have other good programs over at the SBA, like counseling programs, mentorship programs that have been valuable to small business owners. | ||
| Steve is in Massachusetts, Republican. | ||
| Good morning. | ||
|
unidentified
|
Hey, good morning. | |
| I want to talk about how are you guys today? | ||
| Doing well, Steve. | ||
| What do you want to talk about? | ||
|
unidentified
|
Good. | |
| I want to talk about during COVID and when all the private businesses were shut down by the government and how he was involved with that, and the fact that, like, now as government positions are being removed, everyone's so up in arms. | ||
| The Democrats are so up in arms. | ||
| But when all the private businesses were closed down, I mean, in Massachusetts, we weren't allowed to walk in the woods. | ||
| The woods had caution tapes around it, and you know, small business owners that hurt from that. | ||
| And I also want to know about how he feels about different companies that get subsidized by the government, because I know he's talking about how everybody should be equal and fair, which I believe it should be that way. | ||
| But how about different companies that have been subsidized by the government and continue to be like different solar companies, and how he feels about that? | ||
| Steve, we'll take the question. | ||
| So, NFIB during COVID and picking winners and losers. | ||
|
unidentified
|
The shutdowns were a massive deal for small businesses during COVID. | |
| Think about it. | ||
| Put yourself, they were determining who was an essential business to stay open. | ||
| They weren't picking small businesses, they were picking Walmarts of the world to stay open. | ||
| And that was a real problem for small business owners. | ||
| That was more, for the most part, a state and local level issue. | ||
| And at the state and local levels, NFIB was not supportive of those lockdowns. | ||
| Our members were shut out of business for a long time, and that was a huge, huge issue for them. | ||
| So, we're very clear and very on the record that in terms of trying to keep small businesses open, those were a very, very bad idea. | ||
| On the second question on subsidies for businesses, generally speaking, most small business owners that are on our membership are not seeking government subsidies. | ||
| We don't take positions on those issues because it does not affect small business owners. | ||
| So, we don't have a public position on them. | ||
| What our members are usually looking for is just a fair, even playing field in terms of the tax status we're looking at, such as we talked about, the small business deduction, to make sure that they are on a level playing field with larger competitors. | ||
| They're not looking for a handout. | ||
| How big can you be as a small business and still be considered a small business? | ||
|
unidentified
|
That's a complicated question. | |
| If you ask the SBA, they're going to give you different size standards by industry. | ||
| That's how the SBA does it. | ||
| The SBA does have standards you can look up. | ||
| And so, for example, if you're a bank, it's more about your net assets than your total employees. | ||
| If you're in other industries, it's about total employees. | ||
| The rule of thumb the SBA uses, and this does vary by industry, is about 500. | ||
| And is that what you use, or how do you qualify small businesses? | ||
| And where are most of the small businesses? | ||
| What category do they fall in? | ||
|
unidentified
|
To be an NFIB member, you just need to be an independent business. | |
| That's the INFIB, National Federation of Independent Business. | ||
| There are no publicly traded businesses. | ||
| Due to that fact and the fact that we have 300,000 members, our average member has about 70 employees. | ||
| 70? | ||
|
unidentified
|
Seven to eight. | |
| Seven to eight. | ||
|
unidentified
|
Seven to eight employees. | |
| If you look at, well, this number changes weekly as membership turns over, but over 90% of our members have fewer than 50, well over 80% or fewer than 20 employees. | ||
| So we do have some that are over that 100 member mark, and frankly, most of them are still considered small businesses by the SBA. | ||
| It's really, I know most Americans, if you ask them to close your eyes and tell me with small business, if you hear 400 employees, you're not necessarily thinking small business, but that is the SBA definition. | ||
| Eugene, Georgia, Independent, good morning. | ||
| Thanks for waiting. | ||
|
unidentified
|
Thank you for taking my call. | |
| Unfortunately, that gentleman's not being very honest with the public. | ||
| Oh, my God. | ||
| He hadn't mentioned that 90% of the undocumented countries work for small businesses. | ||
| Did you say you're going in and out? | ||
| I think you said you heard a stat that 90% of undocumented immigrants work for small businesses. | ||
| Is that what you said? | ||
|
unidentified
|
That's not a stat I read, sir. | |
| I've worked in the immigrant community now for 35 years. | ||
| I know some people that become millionaires and that's all they hire is undocumented. | ||
| When they start enforcing their own laws, the small business and start following the laws and quit hiring undocumented workers, then I'm all for let's do business. | ||
| But they're cheating the system, sir. | ||
| That's Eugene in Georgia, Jeff Brayband. | ||
|
unidentified
|
I'm not familiar with the statistic that 90% of small businesses are hiring undocumented immigrants. | |
| As we said, it's illegal to hire undocumented immigrants. | ||
| So I don't know any stats like that, but we don't support small business owners that break the law. | ||
| How do you recommend small business owners go about hiring people to ensure that they do not hire illegal immigrants and follow the law? | ||
|
unidentified
|
They could always use E-Verify, which is provided by the government. | |
| There are other best hiring practices where you generally have to fill out. | ||
| I think most people know when you come to your first day of work, you've got to bring your passport, you got to bring your driver's license, you have to have these things on file to make sure that you have American citizens working for you. | ||
| You say they could use E-Verify. | ||
| Would you support a measure that says they have to use E-Verify? | ||
|
unidentified
|
We'd have to ballot our members on that. | |
| Like I said, we try to get 70% consensus. | ||
| We haven't balloted that one recently because it hasn't been too much in the public discourse. | ||
| When's the last time you balloted that, and what's the general feeling on that? | ||
|
unidentified
|
Probably over a decade ago at this point. | |
| The general policy position we said is if you're going to make small businesses do E-Verify, just give them a longer runway to do it, meaning don't say they have to do it tomorrow. | ||
| Give them a year or two to actually get up to speed on the technology because it's a little different if you're small, you've never done it before in terms of trying to get up to speed with the technology than it is. | ||
| If you're a larger employer and you've been doing it for years. | ||
| So that's been our general public position on E-Verify, that if you are going to mandate it, just give people a little bit of time to get up to speed on it. | ||
| And you think the small businesses would then be on board if there was that longer runway that they could do it? | ||
|
unidentified
|
Well, they're not a monolith, so not everyone, but I think a lot of them would be. | |
| Alicia, Oregon, Independent, good morning. | ||
|
unidentified
|
Good morning. | |
| Thank you for having me. | ||
| I have a question. | ||
| Do you know the place to call to get funding for either a small business and a number for nonprofit? | ||
| And before you give me those numbers, sir, let me state that does anybody know there's a program out there called Blook-L-O-O-K. | ||
| You need to download it, read the book, so you understand the process of places you can go to. | ||
| And Alicia, you're looking for programs, grants from the government that could help small business owners. | ||
| Is that what you're saying you're asking for? | ||
|
unidentified
|
Or what you say? | |
| Are you a business owner that will finance small business or for a nonprofit? | ||
| What are those numbers I need to call? | ||
| Jeff Brabant, what would you tell the viewer? | ||
|
unidentified
|
If you're looking to start a business and you're looking for financing and you can't find it in the private sector, I would say go to the Small Business Administration's website and see what options there are. | |
| There are 7A loans, which are loans for folks who can't find credit elsewhere but are still deemed credit worthy by the SBA that you can get through a community bank or most community banks participate it. | ||
| There are some other financing programs through the SBA. | ||
| I would look through as well. | ||
| A viewer from Social Media X Pep writes in wanting to know about information about ports and overseas shipping. | ||
| I guess the relationship between the small business community and the ports and shipping community. | ||
|
unidentified
|
Sure. | |
| Most of our membership is not involved in exporting. | ||
| There is some, but it's when we do every four years, we do a huge survey asking what are your top 75 problems and priorities and exports are usually 74 or 5. | ||
| So we're not too heavily involved in export issues, but of course they have a larger macroeconomic effect on small businesses. | ||
| So if the ports get shut down, goods can't come in, businesses, and you have supply chain disruptions, that affects everyone, large businesses, small businesses, consumers, everyone. | ||
| So that's the biggest effect, making sure that the ports stay open, making sure that supply chains remain robust is a big deal to small business owners. | ||
| Just a couple minutes left. | ||
| We've talked about the one big, beautiful bill. | ||
| Besides that, what are the other issues that you're working with the folks on Capitol Hill on? | ||
|
unidentified
|
Another big issue that's kind of flying under the radar, it's called beneficial ownership information reporting. | |
| And earlier this year, the Trump administration changed a rule that would have required every business with only and only businesses with 20 or fewer employees to register their quote-unquote beneficial owners with the Financial Crimes Enforcement Network. | ||
| And if they didn't do it by a certain date, they'd have to go to jail for two years or get up to $10,000 in fines. | ||
| So that was a really scary thing for small businesses. | ||
| The whole idea was to root out money laundering, but they were going to require 32 million small LLCs to have to do this reporting, which was very burdensome and it was a lifetime commitment. | ||
| The Trump administration exempted American small businesses. | ||
| However, this is not permanent relief for American small businesses. | ||
| This is something that a new administration can change. | ||
| This is something that eventually might change in court. | ||
| So we're asking Congress to do permanent regulatory relief for small businesses to get rid of this beneficial ownership information reporting. | ||
| Is that through a law, permanent regulatory relief, essentially pass a law? |