April 15,2024

Wyden Statement on Looming Small Business Failures if Senate Republicans Block the Tax Relief for American Families and Workers Act

Senate Finance Committee Chair Ron Wyden, D-Ore., today released new data from the Treasury Department on the potential harm facing small businesses, particularly those that invest heavily in research and development, if the Senate fails to act on the Tax Relief for American Families and Workers Act:

Overall, nearly 4 million small businesses could be hurt if the Senate fails to act. According to Treasury data, 3.8 million small businesses* claimed bonus depreciation or used the deduction for R&D costs in tax year 2021. The 2017 Republican tax law cut the value of the deduction for R&D beginning in 2022 and bonus depreciation beginning in 2023. With those changes having gone into effect, small businesses are facing higher costs for investments in things like new equipment, software, and innovative research. 

Roughly 10,000 small businesses that invest heavily in R&D could face unprecedented disruption, including layoffs, investment cuts or outright failure. According to Treasury data, approximately 10,000 small businesses* had R&D expenses greater than 50 percent of their total deductions in tax year 2021. These are the small businesses that are most heavily invested in research-based innovation, and they are facing severe tax increases as a result of the 2017 Republican tax law. 

“It will be devastating to small businesses all across the country if the Senate fails to pass this bipartisan tax bill because not enough Republicans were willing to stand up and voice their support. Some of the bill’s Republican opponents say they can sit back and wait until the next time they have a majority, when they won’t have to work with Democrats. If that’s the approach they take, they’ll be dooming a lot of innovative small businesses to failure in the coming months and years,” Wyden said. “The reality is, Republicans undercut the value of the R&D deduction in 2017, and they’ve been promising they’d fix it ever since. Democrats want to get this done, and the Senate is sitting on a bill that got 357 votes in the House. It’s past time for Republicans to step up and make good on their promises to innovative small businesses all over the country.” 

*In both cases these are businesses with receipts under $25 million, which is a threshold definition for small businesses used in certain tax rules. The Treasury Department provided the data to the Finance Committee’s majority staff.