America's Small Business Economy Is Strong
American small businesses are experiencing a period of strong growth, with new business formation reaching record highs and small firms accounting for all recent job creation. Tax reforms, including the Working Families Tax Cuts, have played a significant role by reducing burdens on both businesses and workers, particularly through tax-free tips and overtime. These policies have improved employee retention, boosted productivity, and enabled business expansion, as seen in Caribou Coffee franchisee Bill Mathis's plans to open new locations.
- ▪New business formation is at a record high, with around 500,000 monthly applications recently.
- ▪Small businesses with 1-20 employees have accounted for all recent U.S. job growth.
- ▪Over 25 million taxpayers claimed the no tax on overtime deduction, and over six million claimed the no tax on tips deduction.
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Off the front pages, and in the real world, American small businesses are quietly thriving. US Census Bureau data shows new business formation hovers at its highest level in history, with approximately 500,000 monthly applications over the last several months. That's 15% to 20% higher than the post-pandemic average. The most recent ADP Payroll Report shows that small businesses with 1-20 employees account for all the nation's job creation. This small business surge coincides with last summer's passage of the Working Families Tax Cuts, which meaningfully reduced the tax burden on small businesses and ordinary folks. As a Caribou Coffee franchisee in the St. Petersburg/Clearwater Florida area, I can speak firsthand about the beneficial impact of these tax cuts.
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