SBE Council Statement on Small Business Tax Increases in the President’s Proposed Budget

By SBE Council at 9 March, 2023, 3:00 pm

NEWS

FOR IMMEDIATE RELEASE

Washington, D.C. – President Joe Biden unveiled his proposed budget today, which includes tax increases on small to mid-size businesses (SMBs) and new taxes that will undermine U.S. capital formation, investment and competitiveness. The Small Business & Entrepreneurship Council (SBE Council) issued the following statement about the President’s proposed tax hikes and related measures.

Karen Kerrigan, SBE Council president & CEO, said:

“President Biden’s tax increases will hit small to mid-size businesses. The sizable increases are aimed at many struggling firms as they work to recover, compete, and operate during an unstable and inflationary period. This is capital that SMBs need to navigate higher costs, invest in new equipment, boost marketing and sales efforts, compete for labor, and provide current employees higher wages and expanded benefits. Our SMBs need their capital to compete in the global marketplace and effectively scale to compete with bigger businesses. Yet, the President’s tax hikes would add to their pain and erect what we call ‘The Biden Barrier’ to successful business growth. All of our businesses have struggled more than enough over the last three years. They need relief not more agony via higher taxes.”

SBE Council chief economist Raymond J. Keating observed:

“The last thing that the U.S. economy needs is a set of anti-growth, anti-entrepreneurship tax increases. Yet, that’s exactly what President Biden has proposed. While resorting to old, tired class warfare politics, the economic realities are that Biden’s higher tax rates on personal income, business income and capital gains would mean fewer resources and reduced incentives for starting up, building and investing in new and expanding businesses. The U.S. desperately needs entrepreneurship to be revitalized, and a return to robust economic growth. Unfortunately, the Biden tax proposals work against such economic necessities.”

Kerrigan added:

“As if the threat of punitive tax hikes on productive U.S. businesses and investors weren’t enough, President Biden’s plan would also jeopardize American competitiveness through more aggressive innovation-killing price controls that will ultimately lead to access restrictions for patients. The plan would broaden the list of prescription drugs eligible for Medicare ‘negotiation,’ and expand the government’s power to build price controls into American healthcare – and punish companies for innovation and growth. Small, innovative companies dominate the bio-pharmaceutical sector, and again these small firms – along with patients – would be the biggest losers.”

According to various reports, President Biden’s budget would – among other harmful proposals aimed at business and investors – raise taxes on individuals making $400,000 or more, “the wealthy,” and corporations (again, many small businesses fall within the President’s targeted group of taxpayers) by hiking the top marginal income tax rate from 37 percent to 39.6 percent; increasing the corporate tax rate from 21 percent to 28 percent; doubling the capital gains tax rate from 20 percent to 39.6 percent and imposing a new wealth tax on unrealized gains; increasing the Medicare tax rate on earned and unearned income above $400,000 from 3.8 percent to 5 percent; and expanding the Net Investment Income Tax (NIIT) to include the active income of pass-through business owners and raise the rate from 3.8 percent to 5 percent.

Contact: Karen Kerrigan, president & CEO, SBE Council, kkerrigan@sbecouncil.org  

Raymond Keating, chief economist, SBE Council, rkeating@sbecouncil.org

SBE Council is a nonpartisan advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship. For 28 years, SBE Council has worked on and advanced a range of private sector and public policy initiatives to strengthen the ecosystem for strong startup activity and small business growth. Visit www.sbecouncil.org for additional information. Twitter: @SBECouncil

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