Like the nation at large, Michigan will see its economy recover as the pandemic ends. But substantial tax hikes proposed by the Biden administration threaten to hamper recovery, harming Michigan workers and families.
President Joe Biden’s latest budget bill includes tax increases of $ 3.6 trillion. The government claims the tax hikes will only hit big corporations and the rich, but the truth is that workers and families will pay for the proposed tax hikes through lost jobs and lower wages. This will affect thousands of small businesses.
Our region is home to many fast growing high tech companies, some of which specialize in advanced and cutting edge research. Increasing their tax burden could slow the growth of high-paying technology and research jobs, which must be a large part of our future.
Raising the corporate tax rate from 21 to 28 percent would harm businesses of all sizes, as well as workers and consumers. A corporate tax rate of 28 percent will result in Greater Lansing companies receiving a combined state and federal tax rate of 35.1 percent – more than 10 percentage points higher than China – making it extremely difficult for manufacturers in Greater Lansing to deal with overseas Companies to compete.
In addition, Michigan-based companies would face higher US taxes on global income, according to the president’s budget proposal.
In total, that tax hike would hit 50,054 Michigan employers, including 34,599 small businesses with fewer than 500 employees. Many of these companies are just starting to get back on their feet. Sudden and significant tax hikes are a surefire way to stop the momentum of their recovery.
Experience shows that the damage from higher corporate tax rates is largely borne by workers, who will see lower wages and fewer jobs. And all Michigandans can expect higher prices and even higher utility bills as consumers as businesses are forced to pass on the cost of those increased taxes.
Remember, the tax increases proposed by President Biden are not just for incumbents. They also threaten investments in startups and growing businesses in Michigan. The Biden Plan essentially doubles the tax rate on capital gains and affects approximately two-thirds of capital investments in the United States.
For some Michigan investors, the combined state and state tax rate would exceed 50 percent. As you save for retirement, buy a home, or save for your kids’ college education, you will feel the pinch.
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The Lansing Regional Chamber of Commerce recently released the Benchmarking Report on the State of the Lansing Area. The report identified one of the key opportunities for our region in the growth of our private sector, which includes startups and business expansion. The proposed tax increases for these types of businesses would make growth very difficult.
The bottom line is that the tax hike will now nip the recovery in the bud. These tax hikes are not policies that promote growth or employment. They are not part of the recipe for recovery. And they have to be stopped.
Hardworking Michigandans and Americans deserve better. I encourage my fellow Michigan residents to contact me with their representatives and tell them not to collect taxes that harm small businesses, workers, and families.
Steven Japinga is Vice President, Public Affairs, Lansing Regional Chamber of Commerce.