mAccording to an analysis by the U.S. Chamber of Commerce, more than 1 million small businesses would be affected by President Joe Biden’s corporate tax hikes. This study shows that the Biden government’s claim that its tax rate hike would only affect the largest corporations is wrong.
The board analyzed the data from the IRS and the census and found that 1.4 million small businesses would be affected by the increase in the corporate tax rate. Although many small businesses file as sole proprietorships, LLCs, or S-Corps and pay individual income taxes, many are structured as C-Corps and are subject to corporate income tax. According to the chamber, the country’s 1.4 million C-Corps employs around 13 million workers. Over 84% of these companies have fewer than 20 employees. None of them are the big companies that Biden says don’t pay their fair share.
However, these small businesses would be affected by the higher corporate tax rate. Many of them are neighborhood vendors, small-scale manufacturers, and professional service providers. They represent every sector of the economy, including agriculture, retail, construction, healthcare, real estate, and more.
Chamber analysis shows the significant number of small businesses in each state that would be forced to pay the higher corporate tax rate. For example, the number of small firms that would be affected by the higher quota would be 21,646 in Arizona, 35,475 in Pennsylvania, and 45,053 in New Jersey.
Small businesses have traditionally been a major source of job growth in the economy, but increasing the Biden tax would hit these job creators with the highest combined federal and state tax rate in the industrialized world. Even at 25%, the combined federal-state ratio would be higher than in most other states.
America’s small businesses have already been hit hard by the pandemic. A third of small businesses are estimated to have closed during the pandemic. Many small businesses these days are struggling to get back on their feet. Many more are leading the economic recovery.
The last thing these small firms need now is an increase in the corporate tax rate. Instead of increasing tax rates for these job creators, we are focusing on getting the coronavirus under control and getting the economy going again.
Bruce Thompson was Senate Advisor, Assistant Secretary of the Treasury for Legislative Affairs, and Director of Government Relations for Merrill Lynch for 22 years.