To pay for infrastructure investments that will strengthen our economy, President Joe Biden has proposed tax increases that ensure corporations and the wealthy are contributing their fair share to the effort.
Cue the disingenuous lament: This will ruin America’s small businesses.
Hogwash. Despite what the National Federation of Independent Business and other critics would have you believe, many small business owners welcome the investment in our infrastructure because of the economic benefits it will deliver. And they, like most other Americans, want to see corporations and the wealthy chip in more.
The vast majority of small business owners are not affected by proposed changes to the upper income tax brackets, the small business deduction, estate taxes, capital gains taxes or the corporate tax rate.
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Most small businesses are not taxed as corporations, and their owners are not wealthy. They are largely members of the middle class.
And the assertion that taxing the wealthy hurts investment in small business is another version of the theory of trickle-down economics often deployed to protect the rich.
In the public discourse around taxes, there is a conflation of big and small business interests, but in reality their situations are far different. For example, proposals to adjust the corporate tax rate do not affect 95% of small businesses because they are not taxed as corporations.
This makes for strikingly different attitudes toward taxation – and not a little frustration from small business owners about the tax cuts corporations got under former President Donald Trump.
Small businesses face different issues
This difference in attitudes shouldn’t be surprising. Does anyone think Amazon and a family-run pizza shop face the same issues on taxes? Of course not. But those trying to keep big business from having to pay more in taxes want you to think so because we all like the family-run pizza shop and want it to thrive – while the public casts a jaundiced eye toward the tax shenanigans of large corporations.
Small Business for America’s Future has surveyed small business owners since 2017 to ascertain their feelings about taxes. The responses have been clear and consistent: Small business owners think large corporations don’t pay their fair share, they feel lawmakers favor large corporations and they want a tax code that levels the playing field.
Tax code favors large companies
Our most recent survey of more than 1,000 small business owners on taxes and infrastructure shows:
►72% of small business owners surveyed say the current tax code favors large corporations.
►75% do not believe that large corporations pay their fair share of taxes.
►76% agree that small businesses are harmed when corporations use loopholes to avoid paying taxes.
►60% support partially rolling back the 40% corporate tax cuts given to large companies in 2017 to pay for infrastructure investment.
►76% of small business owners say infrastructure investment will boost the economy, and 72% say it will help small businesses specifically.
►51% of small business owners say raising taxes on Americans making more than $400,000 a year would not harm small businesses.
As the delta variant hampers our economic recovery, and government programs like the Paycheck Protection Program designed to help small businesses hang on during the pandemic expire, it is more important than ever that our lawmakers invest in the long-term health and strength of our economy. The president’s proposed investments in the country’s infrastructure is a chance to do just that.
Anne Zimmerman, co-chair of Small Business for America’s Future, is founder and owner of Zimmerman & Co. CPAs, with offices in Cincinnati and Cleveland.