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Biden to Impose Small Business Tax Hikes in Violation of Campaign Pledge
Townhall.com ^ | May 14, 2021 | Isabelle Morales

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-corporationsTherefore, 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 Service55 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.


TOPICS: Business/Economy; Culture/Society; Editorial; Politics/Elections
KEYWORDS: bidenadmin; joebiden; smallbusiness; taxandspend; taxes; taxincreases
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Why anyone would believe a dem, especially one like Biden is beyond me
1 posted on 05/14/2021 11:48:43 AM PDT by Kaslin
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To: Kaslin

He NEVER HAD ANY intention of keeping this promise. .......................


2 posted on 05/14/2021 11:49:38 AM PDT by Red Badger (Jesus said there is no marriage in Heaven. That's why they call it Heaven.....................)
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To: Kaslin

A small bite here and a small bite there and eventually small businesses will be gone. Let’s hear it for the plan going so well.


3 posted on 05/14/2021 11:50:13 AM PDT by bgill
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To: bgill

All to clear the decks for the multinational megacorps who paid for him.


4 posted on 05/14/2021 11:51:37 AM PDT by Army Air Corps (Four Fried Chickens and a Coke)
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To: Kaslin

Small Businesses are the BACKBONE OF OUR ECONOMY.

The Dems must BREAK THIS BACKBONE TO STAY IN POWER.

When will the morons that vote for Dems realize that if you have a political party made up of poor disaffected people, you are going to make damn sure you NEVER RUN OUT OF POOR DISAFFECTED PEOPLE!.............


5 posted on 05/14/2021 11:52:13 AM PDT by Red Badger (Jesus said there is no marriage in Heaven. That's why they call it Heaven.....................)
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To: Kaslin

When are people going to realize that when a Leftist DEM moves its lips, it’s lying? OMFG......people actually believed this “pledge”?! LMAO.


6 posted on 05/14/2021 11:52:44 AM PDT by cranked
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To: Red Badger

well, that is the kind of political base that they believe is easier to control.


7 posted on 05/14/2021 11:53:30 AM PDT by Army Air Corps (Four Fried Chickens and a Coke)
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To: Kaslin

Promises made, promises denied. It IS standard ops with 99% of politicians. 😕🐂💨💩


8 posted on 05/14/2021 11:55:46 AM PDT by rktman (Destroy America from within? Check! WTH? Enlisted USN 1967 to end up with this?)
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To: Kaslin

And they’ll only raise taxes on the rich. /s


9 posted on 05/14/2021 11:57:22 AM PDT by DoughtyOne (Folks, if you haven't yet, please start an automatic monthly for Jim and his crew.)
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To: Kaslin

The ghost of FDR.


10 posted on 05/14/2021 11:58:11 AM PDT by SkyDancer (If At First You Don't Succeed ~ So Much For Skydiving)
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To: Army Air Corps

Congressional Rs need to fight His Senile Lying Fraudulency tooth and nail, scorched earth, not an inch yielded on any policy matter.


11 posted on 05/14/2021 11:58:47 AM PDT by laconic
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To: Kaslin
Violation? Since when did politicians lying garner them a violation? Is he at least impeachable for that "violation"?

I didn't think so.

Yes, he reneged on his campaign promise, but unfortunately that is not a violation of anything I am aware of.

12 posted on 05/14/2021 11:59:31 AM PDT by Robert DeLong
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To: DoughtyOne
-- And they'll only raise taxes on the rich. --

Part 2, everybody who is breathing is rich.

13 posted on 05/14/2021 11:59:42 AM PDT by Cboldt
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To: Kaslin

And The Big Guy gets his 10%.


14 posted on 05/14/2021 12:00:28 PM PDT by Army Air Corps (Four Fried Chickens and a Coke)
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To: Kaslin

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


15 posted on 05/14/2021 12:02:54 PM PDT by Bob434
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To: Kaslin
“I promise you that if I am elected, I'll always tell you the truth”.........lying sack-a-s*** !
16 posted on 05/14/2021 12:03:35 PM PDT by wardamneagle (c)
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To: Kaslin

They keep fiddling with the tax code and it does more than just change taxes it changes organizational structures and the way money is invested, used and spent. Trump’s reduction on C corp taxes actually created an incentive to keep assets inside of the corporations. Why take it as personal income or dividends (where it is taxed twice) if you just leave it in the corporation, pay the low/lower rate, and reinvest it in - well anything. Equipment, cars, homes, marketing, expansion, advertising, open export markets etc.

Change it again a couple years later, it moves the entire economy. People will reorganize their businesses and make different decisions. Government works for the people, not the other way around. Too many politicians constantly worrying about how much the government should take. Absurdity.

I sometimes laugh at Warren’s “Billionaire tax”. So you have $1 billion in your family. Good for you! Now you want to take 6% a year on it? Cheaper to get a divorce, split the assets. You can still live together, be married in the religion of your choice - just change your paperwork on file with the government.


17 posted on 05/14/2021 12:03:47 PM PDT by monkeyshine (live and let live is dead)
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To: Kaslin

Biden’s Administration “We know most of you won’t make it- so here’s a kick in the teeth to take your mind off that fact”


18 posted on 05/14/2021 12:03:54 PM PDT by Bob434
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To: Kaslin

Scumbag liars lie.

I did not believe him when he said it.


19 posted on 05/14/2021 12:05:28 PM PDT by RatRipper ( Democrats and socialists are vile liars, thdieves and murderers - enemies of good and America.)
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To: Kaslin

Xiden could not care less about keeping his word about anything, at least because he likely does not remember what he promised. All Xiden cares about is keeping his Chinese masters happy - and wrecking the US (same thing).


20 posted on 05/14/2021 12:05:41 PM PDT by piytar (Do NOT forget Ashli Babbit!)
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