During his 2020 campaign, Joe Biden promised voters he would not raise taxes on small businesses. Mr. Biden said, “We’re not going to raise taxes on small businesses.” But his official budget to be released on Thursday breaks that promise.
The pledge was made before a national audience on February 20, 2020, during the Democratic debate hosted by MSNBC.
Hallie Jackson of MSNBC: “I would like to hear about Latinos owning a quarter of new small businesses in the US. Many of them benefit from President Trump’s tax cuts. , may be hesitant about new taxes and regulations: Will taxes on their small businesses go up under your administration?”
Biden said, “No. Taxes on small businesses will not go up.”
But Biden now wants to impose higher taxes on small businesses.
1. Biden’s budget calls for raising the top marginal income tax rate from 37% to 39.6%. This hits Main Street hard. Small business sole proprietorships, LLCs, partnerships, and S-corporations will all be hit.
2. Biden’s budget raises the corporate tax rate from 21% to 28%, targeting 1 million small businesses nationwide.
As noted by the Small Business Administration Office of Advocacy, there are 31.7 million small businesses in the United States, 25.7 million of which have no employees, but 6 million have employees. Of these 6 million small employers, 16.8% or 1 million companies are classified as c-corporations. The SBA classifies a small employer as an independent company with fewer than 500 employees.
3. Biden’s budget raises Medicare taxes by 31%, from 3.8% to 5.0%, while aggressively increasing net taxable income. As the Wall Street Journal pointed out, “These taxes have no income cap, effectively creating a new top tax rate.”
As the WSJ pointed out, this tax increase, combined with higher marginal income tax rates, will give the US the highest income tax rate in decades.
“If Biden again proposes raising the top marginal income tax from 37% to 39.6%, he We are aiming for a top federal tax rate of 44.6%, the highest at any time since the mid-1980s. If it becomes law, the combined marginal tax rate for top earners will exceed 50% in many states.“
In keeping with his small business tax pledge to the American public, Biden must forego the above tax increases.