The Small Business and Entrepreneurship Council (SBE Council) warns that the Biden administrations tax plan would raise taxes on 2.1 million small businesses – contrary to the administrations’ claims.

Last week the White House released a backgrounder on the plan saying the tax proposal “will protect 97% of small business owners from increases in income tax rates while providing tax cuts to over $ 3.9 million. entrepreneurs “.

According to Tax foundation, American businesses currently pay about 93% of all taxes collected in the United States, funneling the money into just about every federal program.

During the last administration, the Tax Reductions and Employment Act reduced federal corporate tax from 35% to 21%. Prior to that, the country’s combined tax burden was the highest in the Organisation for Economic Co-operation and Development (OECD). When the federal corporate tax was lowered to 21%, the combined tax burden (including state and local governments) put the United States right in the middle of OECD countries.

Today, the Biden administration wants to raise corporate taxes to 28%, raising concerns among business advocates that it will make the United States less competitive in the global market. If this change takes place, the United States will once again find itself in the top bracket of OECD corporate tax rates.

Even more concerning is the fact that the U.S. economy is still bouncing back in a COVID-hit market that has seen small businesses face shutdowns and scaled-down operations. While the fact sheet released by the White House looks rosy, the SBE Council says its numbers are off base even though President Biden says alone 900,000 small businesses could face higher taxes.

According to the chief economist of the SBE Council Raymond J. Keating, the estimated 900,000 businesses that will pay more tax are actually much higher, more than twice as much. To quote the advocacy group that supports entrepreneurs:

“… The White House is simply ignoring the fact that most C corporations are small businesses. The Small Business Administration defines small businesses as having fewer than 500 employees. It turns out that 99.89 percent of employer businesses (according to the latest Census Bureau data) have fewer than 500 employees. That’s 933,000 businesses facing a tax increase. Second, what about companies without an employer? There are (again, based on the latest Census Bureau data) 379,000 more of these businesses that would face a tax hike. Third, if we accept the White House’s assertion that 2.6% of small mid-market businesses face a tax hike directly, that’s roughly 790,000 businesses. So, based on those numbers, at least 2.1 million small businesses would face higher taxes directly under the Biden plan. “

The Biden administration also wants to increase the capital gains tax. For entrepreneurs who frequently reward first-time employees in stocks, this could diminish the ability of these start-ups to distribute prosperity as a startup turns into success. On the other end of the spectrum are small family businesses that may have difficulty transferring a business to the next generation, as these businesses are often very illiquid.

At the same time, the Biden administration is promoting a Global minimum tax – a risky political objective at best.

Although the concept has garnered support from other developed countries, the reality is that it will be very difficult to apply because every country has special programs, deductions and transfers that can make GMT a fabulistic ambition. Will a global tax regulator be next?

The SBE Council adds that the GMT largely targets American technology companies that are successful and therefore primarily paid for by the United States:

“Ultimately, limiting tax competitiveness and raising costs directly on large US companies – such as large tech companies – will be negative for the overall economy, and that includes for small businesses. Consider that, for example, the increased costs of large technology companies will negatively affect these companies, and therefore small and medium-sized enterprises (SMEs) which are not only customers of these large companies but also partners with them, that is, that is, they grow and profit from the use of platforms like Amazon, Facebook and Google.

Keating ends by explaining:

“Even in politics, trying to say that increasing taxes on businesses, including millions of small businesses, is good for small businesses, is like saying the top is the bottom, two plus two. equal three, and the sun rises in the west and sets in the east. It is just ridiculous at first glance. It is a weird fantasy that no one should take seriously.