The more than 690,000 small businesses that operate in Colorado remain resilient despite the challenges of the last two years. Our state continues to see significant small business growth, largely due to business-friendly policies that contribute to building a prosperous and equitable economy. The contributions small businesses make to our state’s economy promise to grow even stronger as a result of the recently passed Inflation Reduction Act (IRA). The Act will lower healthcare and energy costs for small businesses, build community wealth, and level the playing field between small businesses and very large corporations.
One of the key provisions of the Act is its extension of Affordable Care Act (ACA) healthcare subsidies through 2025. Small business owners and their employees have historically comprised a disproportionate share of the working uninsured population. When the ACA was enacted in 2010, the marketplace created provided access to healthcare coverage for millions of uninsured Americans. Among working-age Coloradans, small business owners and self-employed individuals currently account for 24% of marketplace enrollees. Despite the ACA’s success in expanding insurance coverage, the pandemic created significant obstacles to retaining coverage. A Small Business Majority survey revealed that 34% of small businesses considered obtaining health insurance a challenge for themselves or their employees during the pandemic. By expanding the ACA subsidies through 2025, the Act will help small business owners and their employees save hundreds of dollars on healthcare premiums. It is estimated that the extension will benefit 160,000 Coloradans when they access healthcare coverage through the ACA marketplace. Small business owners can invest these savings back into their businesses and get the financial breathing room they need to continue recovering from the pandemic’s impacts.
In addition, the Act takes critical steps to level the playing field for small businesses through commonsense tax reforms. Our nation’s tax system has long benefited wealthy Americans and large corporations at the expense of small businesses and their employees. Small businesses have long supported policies to correct this inequity. In fact, Small Business Majority’s research found that 62% of small businesses support increasing the tax enforcement budget at the Internal Revenue Service (IRS) to audit larger businesses and the wealthy. The Act will establish a 15% corporate minimum tax on corporations with profits in excess of $1 billion, while also appropriating essential dollars to the IRS’s audit division to ensure large corporations pay the taxes they owe. The resulting tax equity across the nation and in Colorado will help small businesses compete more effectively with large corporations, who use savings from tax benefits to undercut smaller firms on prices.
The provisions in the IRA designed to combat the climate crisis will also have a significant positive impact on Colorado’s small businesses. Over the next ten years, the Act’s investments in Colorado’s energy security and climate change programs will lower energy costs for consumers and businesses, and spur quality job creation. The clean energy provisions in the Act will save small business owners money through tax credits, such as the $5/square foot credit that commercial building owners can receive to support energy efficiency improvements. Other small business-friendly provisions in the legislation include tax credits covering 30% of the costs of installing low-cost solar power and of purchasing clean trucks and vans for commercial use. We are also excited about the opportunity that the anticipated growth in the alternative energy sector will provide to increase employee ownership. A leading example of how successfully the new energy sector can pair with the economic benefits of employee ownership is Namasté Solar, an employee-owned solar energy installation cooperative that is working to transform energy and build community wealth up and down the Front Range. This small business has catalyzed other new employee-owned businesses in Colorado and demonstrates how renewable energy can help our state develop energy security while strengthening our communities and building community wealth through employee ownership.
The Act’s provisions will greatly benefit entrepreneurs and small businesses in Colorado and across the nation for years to come. As the backbone of our state’s economy, these businesses will create jobs and grow wealth for thousands of Coloradans in rural and urban communities throughout the state. Through targeted investments, small businesses can benefit from federal policies that will help level the playing field. We are eager to learn more details on how the package will directly influence Colorado’s small business ecosystem, and are optimistic that the law will accelerate the growth of our small businesses, their employees and the communities they serve.
Lindsey Vigoda is the Colorado Director of the Small Business Majority, a small business advocacy organization.
Yessica Holguin is the Executive Director of the Center for Community Wealth-Building, an organization with a vision of a people-owned, inclusive, and sustainable Metro Denver economy that catalyzes prosperous and resilient communities free from racism and injustice.