Bill Overview
Title: Brick and Mortar Small Business Tax Credit Act of 2022
Description: This bill allows a new state and local general sales tax credit through 2026 for certain small businesses whose business gross receipts for the taxable year do not exceed $2 million and that were generated by a specified percentage of in-person sales. The amount of the credit is 5% of business gross receipts not exceeding $1 million. The bill also requires the Small Business Administration to conduct a public awareness campaign to inform small businesses of this tax credit.
Sponsors: Rep. Khanna, Ro [D-CA-17]
Target Audience
Population: Small business owners with in-person gross receipts <= $2 million/year
Estimated Size: 9350000
- The bill targets small businesses, specifically those with in-person sales components.
- The eligible businesses have gross receipts not exceeding $2 million per year.
- The focus is on 'brick and mortar' businesses that conduct a significant portion of sales in person.
- These businesses are given a tax credit, impacting their financial health and potential for stability and growth.
- The Small Business Administration's role in increasing awareness suggests that not all eligible businesses may know about the credit without outreach.
Reasoning
- The population affected consists mainly of brick and mortar businesses with in-person sales not exceeding $2 million annually.
- The impact of the policy will be more significant for businesses closer to the lower end of revenue as 5% of $1 million is a substantial benefit relative to their total revenue.
- Not all eligible businesses might take full advantage of the policy due to lack of awareness, indicating the importance of the outreach campaign by the Small Business Administration.
- The policy may not have direct impacts on individuals who are not business owners, although they could indirectly benefit from an economy with more thriving small businesses.
- Since the policy targets a specific subset of small businesses, the individual impact may vary widely depending on the business type and current financial health.
- Over time, continued small business viability can positively affect the community through job retention and local economic stability.
Simulated Interviews
Small business owner - Bookstore (Portland, OR)
Age: 45 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 5/20
Statement of Opinion:
- The tax credit would provide much-needed financial relief.
- Promoting in-person sales is important in a digital market.
- Awareness of these types of policies is often low; the campaign could be useful.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 4 |
Coffee shop owner (Austin, TX)
Age: 36 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- Happy to see direct financial incentives for businesses like mine.
- Would like to see more support for increased labor costs.
- In-person sales focus is crucial for service industries like mine.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 5 |
| Year 2 | 8 | 5 |
| Year 3 | 8 | 4 |
| Year 5 | 8 | 4 |
| Year 10 | 7 | 3 |
| Year 20 | 6 | 3 |
Bakery owner (Columbus, OH)
Age: 29 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 5/20
Statement of Opinion:
- This policy seems beneficial, especially as wages and supplies get more costly.
- We rely heavily on local customers, so sustaining in-person sales is vital.
- I wasn't aware of this, and a campaign could help others like me.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 4 |
Furniture store owner (Seattle, WA)
Age: 52 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 4/20
Statement of Opinion:
- Appreciates a focus on physical retail locations.
- Concerned about limitations due to high capital costs despite revenue falling under $2 million.
- Support through credits might encourage more steady operations.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 4 |
| Year 20 | 4 | 3 |
Restaurant owner (Charlotte, NC)
Age: 41 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 7/20
Statement of Opinion:
- A tax credit could ease some financial burdens.
- Having employee retention incentives would be equally beneficial.
- Important for businesses trying to recover from recent economic slumps.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 8 | 4 |
| Year 5 | 8 | 4 |
| Year 10 | 7 | 3 |
| Year 20 | 6 | 3 |
Hardware store owner (Kansas City, MO)
Age: 60 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 2.0 years
Commonness: 3/20
Statement of Opinion:
- Support for local businesses helps the community as a whole.
- We've been around for a long time, though the market has changed significantly.
- Welfare of employees is equally critical with such financial policies.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Florist (Phoenix, AZ)
Age: 48 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 5/20
Statement of Opinion:
- Grateful for any financial support offered.
- Events largely dropped, hard to maintain sales figures lately.
- Policies like this can buy time to rebuild clientele.”
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 3 |
Record store owner (Denver, CO)
Age: 34 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- It's a great benefit for niche businesses like mine.
- Finding ways to increase foot traffic is also critical.
- I've seen others unaware of similar programs, effects could be broader.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 4 |
| Year 20 | 6 | 4 |
Boutique clothing store owner (Miami, FL)
Age: 38 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 5/20
Statement of Opinion:
- Incorporating a tangible incentive for sales can help prioritization.
- Support for marketing could further boost store performance.
- Important for hybrid stores like mine to find balanced operations.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 5 |
| Year 3 | 8 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 3 |
Tech retail store assistant manager (New York, NY)
Age: 25 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 2.0 years
Commonness: 5/20
Statement of Opinion:
- While not the owner, I see how this affects our business.
- Retaining in-person sales can improve job stability.
- Owner is concerned about digital competition reducing visit rates.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 4 |
| Year 3 | 5 | 4 |
| Year 5 | 5 | 4 |
| Year 10 | 5 | 3 |
| Year 20 | 4 | 3 |
Cost Estimates
Year 1: $6000000000 (Low: $5000000000, High: $7000000000)
Year 2: $6000000000 (Low: $5000000000, High: $7000000000)
Year 3: $6000000000 (Low: $5000000000, High: $7000000000)
Year 5: $6000000000 (Low: $5000000000, High: $7000000000)
Year 10: $6000000000 (Low: $5000000000, High: $7000000000)
Year 100: $6000000000 (Low: $5000000000, High: $7000000000)
Key Considerations
- Extent of awareness and utilization of the credit by eligible businesses through SBA efforts.
- Potential for goals of local economic stimulation and business retention to be met through such fiscal incentives.