The latest developments surrounding the COVID-19 Omicron variant have American businesses on edge, and for good reason.
The World Health Organization (WHO) has stated that the new variant poses a “very high” global risk, leaving companies around the world once again anticipating even more government restrictions.
According to the current administration, approximately a third of America’s small businesses were forced to shut their doors during the pandemic. Although experts have attempted to ease business owners’ concerns in the face of the new variant, stating that we are more prepared now than ever before, there will undoubtedly be some adversity that business owners face with this new wave.
That’s why it’s vitally important for the U.S. government to realize one crucial fact: American businesses are just starting to get back to full strength after having to suffer blow after blow during the initial waves of the virus. With threats of new mandates and shut down orders, along with a fragile supply chain and rising inflation rates, now is not the time to pull back available financial assistance.
Starting with the Paycheck Protection Program (PPP) and eventually the Employee Retention Credit (ERC), Congress understood the need for American businesses to have access to capital when government shutdown orders restricted their ability to conduct business normally.
That’s why it was unfortunate to see Congress cut the qualification period for the ERC by a full calendar quarter as part of its Infrastructure Investment and Jobs Act. Until the passage of the new infrastructure bill, companies could claim the payroll credit using amounts spent on U.S. wages through the end of 2021. Now, although businesses can still claim the credit for prior quarters, the period for calculating eligibility ended as of September 2021.
This deprives American businesses that are still digging themselves out of a financial hole brought on by this tragic pandemic of billions of dollars. Ending the eligibility period for this incentive a full quarter early, especially in the face of the Omicron variant, ignores the barriers that these businesses are still facing.
Since the infrastructure bill was drafted, new variants emerged and changed the equation. Given the precarious political support for the bill, Congress couldn’t make any changes, even after Delta started spreading.
Congress should take a step back and realize the significance of taking away this crucial support for millions of businesses who will still need this cushion to weave their way through the pandemic era. Luckily, a new bill, the “Employee Retention Tax Credit Reinstatement Act,” calls on Congress to do just that.
The bill, which would reinstate the ERC for the fourth quarter of 2021, was recently put forward by Congresswoman Carol Miller (R-WV) and cosponsored by fellow Ways and Means Members Stephanie Murphy (D-FL), Kevin Hern (R-OK), and Terri Sewell (D-AL).
Miller acknowledges in her statement regarding the bill that Congress eliminating the credit “was the wrong decision and hurts our small businesses who are still recovering from the economic fallout of the pandemic.”
The Congresswoman couldn’t be more right. The bottom line is that access to some sort of capital to stay afloat is still needed by businesses across the country. We must work to get ahead of the curve and provide federal support for small and medium-sized businesses before too much damage is done and jobs are needlessly lost.
We have seen firsthand the impact that this tax credit has had on businesses, who with access to this lifeline have been able to keep employees on payroll, invest in their operations, and keep their doors open during one of the harshest economic periods in recent history for our country.
An increase in vaccination rates, as well as other improvements in tools to help combat COVID-19, are promising signs that will help us push back against the Omicron variant in ways we couldn’t during the pandemic’s first wave. However, we must remain cognizant of the fact that American businesses are still suffering.
Congress should heed the lessons learned during the initial stages of this terrible pandemic, and work to support small businesses as they prepare for another potential wave.
Rick Lazio is currently a senior vice president at alliantgroup. He is a former managing director and executive vice president at JP Morgan Chase. A former U.S. Representative from New York, Lazio served in Congress from 1993 to 2001.
Joe Crowley is a senior policy advisor at Squire Patton Boggs in Washington and serves as alliantgroup’s chairman for job creation and retention. He was elected to Congress in 1998 to represent New York’s 7th District and in 2012 as the representative of New York’s 14th District. Crowley served as chair of the House Democratic Caucus and a member of the House Committee on Ways and Means.
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