Biden:
Posted on 05/14/2021 11:48:43 AM PDT by Kaslin
During the 2020 campaign Joe Biden promised that taxes on small businesses would not go up. So why is he now pushing numerous tax hikes that would hit small businesses?
His promise is not up for interpretation. During a Democratic debate in February 2020, Biden said: “No. Taxes on small businesses won’t go up.”
Now that he is safely in office, it appears he has no intention of keeping this promise. The $3.5 trillion in tax hikes Biden has proposed includes several small business tax hikes. His proposal to increase the top marginal income tax rate would hit small businesses organized as pass-throughs. His proposal to raise the corporate income tax rate would target the one million small businesses organized as C-corporations.
Finally, his plan to create a second death tax through repealing step-up in basis will hit family-owned businesses and add an immense amount of tax complexity.
Most small businesses pay taxes on the individual side of the code. Biden's increase in the top marginal income tax rate to 39.6 percent will hit small business organized as “pass-throughs” like sole proprietorships, LLCs, partnerships, and S-corporations. Therefore, by raising to top marginal income tax rate, Biden is raising taxes on these small businesses.
Currently, 90 percent of small businesses are organized as pass-throughs, employing 54 percent of the private sector workforce. In 2017, individuals reported $1.03 trillion in net income from pass-through firms, accounting for 9.3 percent of income reported on individual tax returns.
According to the National Federation of Independent Business (NFIB), a 5 percent increase in the individual income tax rate has historically reduced capital investments made by small businesses by 10 percent. Simply put, a significant amount of small businesses and small business revenues would be negatively affected by a top marginal income tax increase from 37 percent to 39.6 percent.
While the Left and the media portray corporations as large, extremely profitable businesses, many corporations are small businesses.
One million small businesses with less than 500 employees are organized as C corporations, as noted by the Small Business Administration. According to the Congressional Research Service, 55 percent of C corporations had fewer than five employees, and 99 percent of C corporations had fewer than 500 employees.
So Biden's plan to raise the corporate income tax would not just impact big businesses – it would also harm the many small businesses structured as C corporations.
Finally, Biden’s repeal of step-up in basis will impose a second death tax on small, family-owned businesses. Repealing step-up in basis will impose the capital gains tax, which Biden has also proposed raising, on the unrealized gains of every asset owned by a taxpayer when they die. This will be separate from and in addition to the existing 40 percent Death Tax.
Biden’s repeal of stepped-up basis means that Americans will be forced to pay a capital gains tax on decades of “gains” that are actually just inflation. Assets such as homes, buildings, and land are typically held for decades.
Because many family-owned businesses are asset rich but cash poor, under the current law families already have to liquidate equipment, land, and other assets in order to pay the Death Tax. The second death tax will compound this problem, forcing family-owned businesses to sell a significant portion of their business or go into significant debt to pay their tax liability.
This law would also create new complexities for these taxpayers. As noted by an Ernst and Young study, “Family-owned businesses may also find it difficult to comply because of problems in determining the decedent’s basis and in valuing the bequeathed assets. It seems likely that these administrative problems could lead to costly disputes between taxpayers and the IRS.”
Tax compliance is already a significant burden for small businesses. Biden's plan will both increase taxes and increase tax complexity.
As stated by the NFIB, tax compliance costs are 67 percent higher for small businesses than for big businesses, costing small-business owners $18 to $19 billion per year. Paperwork costs often come to $74.24 per hour. It’s also important to remember that few small businesses have internal staff who can handle taxes. As the NFIB notes, “administrative tasks fall to owners, diverting them from their core businesses. Lacking tax expertise, 89 percent of owners rely on outside tax preparers.”
Biden needs to withdraw these tax increases if he wants to keep his word to the American people.
Simple: they’re stupid, ignorant, on the government dole, or some combination thereof.
Part 28 of the Dims’ continuing war on small businesses. Final victory will be obtained only when pro-leftist mega-large companies like Microsoft, Walmart, and Coca-Cola remain as token capitalism entities.
“Biden needs to withdraw these tax increases if he wants to keep his word to the American people.”
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This guy must have gotten a hold of some really powerful dope.
And deserves to pay a carbon tax. /s
Like 0bummer, if his lips are moving, he’s either dribbling or lying.
“No one, let me say it again, no one making under $400,000 will see their federal taxes go up, period”
Joe Biden
“The White House clarified last month that the threshold applies to households, not individuals.”
He didn’t make any promises. All he did was read what was on the teleprompter. Therefore he can’t be blamed. It is an interesting dynamic. The progressives lied cheated and stole to get a reasonable-looking candidate into office and now they just stick papers in front of him to sign. If he is asked a question he doesn’t know the answer to, he is whisked off the stage. Everything he does say is either read from a teleprompter or garbled mumbling which is anybody’s guess what he is actually saying. The Chinese could attack us right now and we would be totally screwed at least in the short term. The only reason they don’t is that they have already mostly won and they are just consolidating their holdings.
after a year plus of the Covid 19 shut downs, a tax hike WILL be the coup de grace for the small businesses in the US. It’s a no brainer that the democrats know this fact and therefore are intentionally sabotaging America’s middle-class. What to do?
“....everybody who is breathing is rich....” - except for people of certain races, gender identities, immigration status, or those who think it is better to stay home and collect entitlements.
That leaves pretty much, “....everyone who pays taxes is rich.....”. Those who don’t pay taxes are immune.
Biden:
“it’s estimated more than 1/2 of businesses could close permanently due to covid restrictions. Now biden wants to finish off the majority of those that are left i guess”
Yes, that is what the international Covid19 scam is about. (Wu Flu is bad, combating it has been criminal trainwreck)
The Plan? Beggering the World into subjection. The New Slavery to the Globalist State.
Dems had an answer for keeping money in corporations long ago. There was a retained profits tax.
I am shocked... this didn’t already happen under Biden.
Meanwhile, PoS like Gates and Buffett take Billion$ in stock with unrealized capital gains, move it untaxed into a charitable trust at today’s value, then continue to muddle the world with their insanity.
He aims to destroy what the COVID lockdowns failed to destroy.
McJobs, Walmart, Target and Amazon fulfillment center jobs for all.
He did say, ‘If you don’t want higher taxes, don’t vote for me.’
Ignorance.
Yes! Biden lie? Never, except on every day on the calendar.
He’s shown that besides hiding in a closet from the media, he’s been hiding his Marxism in that same place. Getting crowded in there - Support for Israel - going; containing Iran as a nuclear bombs maker and as a terrorism/arms exporter all around the Middle East, Africa (it’s coming), the Indian Ocean, maoist terrorist movements in the Philippines, possibly Thailand, and maybe in Indonesia, etc.
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