May is Asian American and Pacific Islander Heritage Month, which honors the remarkable accomplishments of Americans of Asian and Pacific Islander heritage that have enriched our nation and helped shape our history. As the White House proclamation put it, “These Americans bolster our economy as entrepreneurs, business owners, and employees who initiate and expand opportunities for their families, communities, and country.”
Asian Americans represent the nation’s fastest-growing multicultural group, with a population projected to reach over 25 million by the end of this year. Culturally, Asian Americans exemplify the entrepreneurial mindset, with an ethos centered on self-reliance, innovation, and resilience. From 2007 to 2012, where a record number of businesses went under after the recession and the slowest ever recovery, Asian American-owned businesses grew by 24% and had the highest percent sales increase of any racial group, according to U.S. Census Bureau data.
Asian American-owned businesses are also wildly successful. In fact, Nielsen reports that “of the 87 U.S. start-up companies valued at over $1 billion, 19 were founded by Asian-Americans.”
After two years of a booming Trump economy, the Asian American community has much to celebrate. The overall economy enjoyed an astounding 3.2% GDP growth in the first quarter of 2019, and the Asian American unemployment rate, at an incredible 2.1%, has reached the lowest levels in the history of our country. Without question, President Trump’s deregulatory agenda and the 2017 Tax Cuts and Jobs Act have been a boon for Asian Americans. In a thinly veiled attempt at race baiting, New York Times columnist Jim Tankersley unintentionally confirmed that Asian Americans were the biggest beneficiary of the tax cuts in 2018. Funny how Tankersley’s headline says that whites “gain the most,” as if Asians, who actually gained a lot more than whites, according to the study he cited, are too insignificant even to count.
Overall, Asian taxpayers saw an average tax cut of $2,560, which means more money to invest in their small businesses and the economy as a whole. Access to capital continues to be an issue for many Asian American small-business owners, so the ability to keep more of their own money is a huge benefit. This is especially true for more recent Asian immigrants who simply do not have the required credit history to obtain credit lines or startup loans. For the most part, they are forced to rely on personal savings to start their businesses.
Fortunately, the tax-cut legislation contained another provision poised to help Asian American small business owners. The Opportunity Zones program encourages long-term investments in low-income urban and rural communities nationwide by deferring tax on capital gains invested in zones designated by state governments and approved by Treasury.
Opportunity Zones are a bipartisan exercise in cooperative federalism — the original legislation was co-sponsored by Sens. Tim Scott, R-S.C., and Cory Booker, D-N.J. As the Democratic mayor of Vicksburg, Miss., George Flaggs summed up while speaking at the White House, he’s “never seen any piece of legislation that allows more collaboration between federal, state, and local government” in 25 years in public office.
In counties with a concentration of Opportunity Zones, wages have risen by 8%, which is more than the national average. In addition, property values in Opportunity Zones have shot up by more than 20%. Treasury Secretary Steven Mnuchin estimates that as much at $100 billion could be invested in Opportunity Zones. Opportunity Zones could be another big win for Asian American business owners. The influx of capital, increase in property values, and the potential tax savings all create a business climate that produces results.
As the Asian American Hotel Owners Association CEO, Chip Rogers wrote that tax cuts and Opportunity Zones are “creating the conditions for economic revitalization and prolonged growth.” With the 2020 presidential election looming, Asian Americans will be a key demographic in several swing states. For instance, in the battlegrounds of Virginia, Colorado, Florida, Nevada, New Hampshire, North Carolina, Pennsylvania, and Wisconsin, the number of eligible Asian American voters will eclipse the 2016 margins between Trump and Hillary Clinton. Only time will tell if the economic gains and propensity for growth are enough to sway this key voting bloc in support of Trump.
Surya Gunasekara is a Sri Lankan American small-business owner and a member of the U.S.-Asia Institute Congressional Circle. He previously served as chief of staff and tax counsel to former Rep. Jim Renacci, R-Ohio.
