Peach Tree Times

Georgia small business owner Alison Couch recently addressed the U.S. House Committee on Ways & Means, advocating for the permanence of the 20% Small Business Deduction, also known as Section 199A. Couch, who owns Ignite Accounting and Business Advisors in Harlem, Georgia, emphasized the significance of this deduction for small businesses.

During her testimony on January 14, Couch stated: “In my April 2023 testimony, I underscored the need for Congress to act to preserve the 20% Small Business Deduction. In that testimony, I stated that the tax burden on small businesses was already incredibly heavy and allowing this deduction to lapse when it has been in place for many years would not feel like a sunset but like a tax increase. Today, with this section of the tax code set to expire in less than one year, this remains true, and I urge Congress to act swiftly to renew it. The small businesses that I work with have become dependent on having access to those funds, and they need the certainty provided by making the 20% Small Business deduction permanent.”

Representative David Kustoff (TN-08) queried Couch about Section 199A's impact on employment and wages. Couch replied: “199A has provided tax relief to free up cash flow that’s been reinvested in small business by the owners. And as I mentioned in my testimony that small business owners’ income is different from business income. The owners take profits and invest them back into their businesses and that’s done by way of raises and hiring additional employees. They also use that money to invest in software purchases and things of that nature. But they also give money to the T-ball teams, they sponsor youth trips, they really invest it back into their communities as well. And that’s something that we can’t ignore and that I’m afraid would be some of the first things to be cut if that deduction expired.”

Further questions came from Representative Greg Steube (FL-17), focusing on Section 199A's effect on employees and customers. Couch explained: “My typical client earns gross revenue under $3 million a year, employs 10 or fewer employees. So we’re talking about coffee shops; we’re talking about ice cream shops; restaurants; professional service business owners—the real heartbeat of the American economy. And I have seen 199A have the greatest impact on that segment of business owners more so than any other form of tax relief in my 21 years in practice. So it frees up cash flow to reinvest in employees, to reinvest in equipment and software. And as mentioned earlier, I think that it really provides a little bit of cash flow to give back to the community.”

Steube also asked how businesses might react if Section 199A were discontinued. Couch responded: “If 199A expires, it will feel like a tax increase on small business owners instead of a sunset of a tax deduction. And so what you will see as a result of that is the inability to provide raises; the inability to invest in new equipment; the inability to really R&D and different things of that nature which is so crucial when you own a small business. And quite frankly, I think it will cost some small business owners their businesses. I think it is that impactful.”

Couch's full testimony is available online.