On Thursday, President Joe Biden proposed raising the corporate tax rate from 21% to 28%, a regime that could weigh on businesses large and small.
While the term “corporation” is widely used to describe large corporations such as Microsoft, Walmart, and McDonald’s, C-corporations are the most common of corporations, both small and large. Individual shareholders of C corporations have profits that are taxable at both the corporate level and the individual level (double taxation).
Additionally, according to the Small Business Administration (SBA), small businesses accounted for 65.1% of net new jobs created from 2000 to 2019 and accounted for 99.7% of employer businesses. There are approximately 31 million small businesses in the United States. Eighty-one percent, or 25.7 million, have no employees (managed and managed by one person).
Biden announced his proposal to raise corporate taxes by seven percentage points in Philadelphia on Thursday, essentially reversing the Trump-era tax cuts passed by Republicans.
“The budget sets the corporate tax rate at 28%, which is significantly lower than the 35% rate that existed before the 2017 tax law,” the proposal said.
In his speech, Biden did not clarify whether his proposal would affect only large companies. to have the resources to avoid tax whenever possible. However, he said he is willing to negotiate with House Speaker Kevin McCarthy (R-CA) on the budget.
“I’m ready to meet with the speaker at any time,” Biden said as he rolled out his $6.9 trillion budget proposal. “My budget shows what we can do to ease the burden on hardworking Americans.”
Budget Day in Philadelphia pic.twitter.com/RtZj8jVfKX
— Tyler Pager (@tylerpager) March 9, 2023
While Biden seems happy to raise corporate taxes, House Republicans oppose the measure becoming law. Republican Conference Speaker Elise Stefanik (R-NY) told reporters Thursday that the budget should be small business-friendly.
“When you think about the financial challenges that we face, I think of the hard-working families, the hard-working farmers, the small business owners in my district,” he said. “When faced with challenges, they open their books and look for smart ways to save to continue growing for future generations.”
Representative Elise Stefanik (R-NY) speaks at the CPAC 2023 Conservative Political Action Conference, Saturday, March 4, 2023, at the National Harbor in Oxon Hill, Maryland. (AP Photo/Alex Brandon)
Some Democrats seem concerned about the election tax hike. A small business tax increase could affect the hiring and employment prospects of nearly 31 million small businesses and many of them vote workers.
Democratic senators vying for re-election such as Sen. Joe Manchin (D-WV), Sen. Jon Tester (D-MT) and Sherrod Brown (D-OH) appear to be the most worried.
“I don’t know what he’s going to raise taxes on, that’s very important,” Tester said when asked about Biden’s tax hike pledges last week.
“If it’s about tax fairness, we’ll look at it. “If it’s about raising taxes across the board for everyone, it’s probably not the right time to do it because of inflation,” he added.
Subscribe to Wendell Husebo Twitter @WendellHusebo. He is the author The Politics of Slave Morality.
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