Women Business Owners Are Missing Out on Billions -- How Congress Can Change That

Will tax reform, if it happens, harness the economic energy generated by women business owners?

learn more about Jane Campbell

By Jane Campbell


Opinions expressed by Entrepreneur contributors are their own.

Before the bottom fell out of the economy in 2008, Cincinnati businesswoman Anne Chambers had been running a successful test market for an edamame snack brand. It was an on-trend business idea, and she had distribution deals lined up with Kroger and other companies. But she needed money to scale up.

Related: 50 Ways Women Entrepreneurs Can Fund Their Businesses

Despite her solid business plan and the decades of experience and good market results Chambers offered, neither banks nor investors would give her capital. Her idea -- which has since made a fortune for others--died for lack of investment.

Unfortunately, Chambers' story is not unique. In 2016, less than 5 percent of investor money went to women-led businesses, according to data from M&A. True, the tax code includes provisions to help owners raise capital for their burgeoning businesses. Yet those provisions are doing little to help women business owners, who now represent more than a third of all U.S. firms.

This must change. And now there's an opportunity for that to happen: For the first time in 30 years, Congress is looking seriously at revamping the tax code, which means we have a once-in-a-generation chance to transform the code into a tool that empowers women entrepreneurs. The question is, will Congress seize this opportunity?

A new report by Caroline Bruckner of American University's Kogod Tax Policy Center and the national advocacy organization Women Impacting Public Policy (WPP) that I lead found that women business owners can't take full advantage of more than $255 billion in tax incentives because of how they are legally organized and the industries they serve.

For the report Billion Dollar Blind Spot: How the U.S. Tax Code's Small Business Expenditures Impact Women Business Owners, researchers surveyed 515 women business owners across the country to determine how they use key small-business tax provisions. In fact, fully 84 percent of these survey subjects operate businesses in service industries excluded from provisions designed to stimulate small business growth, access to capital and investment.

Related: Why Women Entrepreneurs Have a Harder Time Finding Funding

Other obstacles outlined in the report included:

  • Only 12 percent of respondents organize their businesses as C-corporations; that means that 88 percent are excluded from significant small-business tax incentives.
  • Only 0.6 percent of women surveyed reported being able to attract capital for their businesses from non-corporate investors by using a provision in the code that allows them to issue qualified small business stock.
  • Some 53 percent of respondents said they didn't fully benefit from Section 179, a provision allowing businesses to deduct equipment purchased and placed into service. Possible reasons: They either don't know about the provision or don't buy the kind of equipment that qualifies under the provision.
  • Some 86 percent of respondents said they'd never claimed a tax loss, under a provision that permits an ordinary loss on the sale or exchange of qualified business stock.

What's more, the research found a complete lack of government analysis about the effects of tax expenditures on women-owned firms. This situation raises real questions about whether the tax code's small business tax expenditures are operating as Congress intended: Clearly, policymakers have a billion-dollar blind spot when it comes to understanding how effective such expenditures are with respect to women-owned firms.

Correcting this inherent inequity carries the potential to dramatically impact the economy. The percentage of firms owned by women has skyrocketed from 4.6 percent in 1976 -- the first time the Census released a report on women's business ownership -- to 36 percent today. There are 10 million women-owned businesses, and they employ 9 million people and contribute an estimated $1.6 trillion to the economy.

Clearly, women entrepreneurs' economic might is significant and growing. But they could accomplish even more if the tax code created stronger investment opportunities -- something WIPP member Anne Chambers knows first-hand.

"How many more women would have gone into business for themselves rather than working for someone else?" she told us. She said that her query sprang from her question as to whether, if the tax code were to offer more opportunities for people to invest in women owners, even more women-owned businesses would exist today.

"We'll never know how many more jobs could have been created by women who couldn't open businesses or expand them," Chambers said.

Related: 3 Women Entrepreneurs Who Unleash Their Energy for the Greater Good

There is much talk by this administration and Republican lawmakers about a revamping of the tax code. If that happens, Congress must use tax reform to harness the economic energy generated by women like Anne Chambers. Our workers, our communities and our country's economy will all be stronger for it.

Jane Campbell

President, Women Impacting Public Policy

In her role as the director of the Washington office of the National Development Council (NDC), Jane Campbell brings the expertise of NDC’s 40 years of experience working to bring capital to underserved communities -- both urban and rural -- into the federal public policy debate. In 2016, Women Impacting Public Policy partnered with NDC to provide support for WIPP’s coalition activities. In her role as director of the NDC Washington office, Jane Campbell also serves as president of WIPP.

Related Topics

Editor's Pick

This 61-Year-Old Grandma Who Made $35,000 in the Medical Field Now Earns 7 Figures in Retirement
A 'Quiet Promotion' Will Cost You a Lot — Use This Expert's 4-Step Strategy to Avoid It
3 Red Flags on Your LinkedIn Profile That Scare Clients Away
'Everyone Is Freaking Out.' What's Going On With Silicon Valley Bank? Federal Government Takes Control.

How to Detect a Liar in Seconds Using Nonverbal Communication

There are many ways to understand if someone is not honest with you. The following signs do not even require words and are all nonverbal queues.

Business News

A Retired Teacher and Her Daughter Were Scammed Out of $200,000 Over Email: 'I'm 69 Years Old and Now I'm Broke and Homeless'

The mother-daughter duo was in the process of buying a townhouse when their email chain with the title company was hacked.

Starting a Business

This Seasoned Exec's High-Tech Farming Company Has Upended the Status Quo. Here Are His Top 3 Success Tips.

This founder is on a mission to revolutionize the fresh food supply chain to embrace greater simplicity, safety and sustainability.

Business News

How to Give Feedback Without Hurting Anyone's Feelings

Constructive feedback can be an excellent way to boost morale, productivity and results.

Business News

New Starbucks CEO Steps in Early Amid Union Turmoil — Will He Accept an 'Olive Branch'?

The 55-year-old former CEO at Reckitt Benckiser Group PLC was expected to assume the role on April 1.

Business News

Carnival Cruise Wants Passengers to Have Fun in the Sun — But Do This, and You'll Get Burned With a New $500 Fee

The cruise line's updated contract follows a spate of unruly guest behavior across the tourism industry.