While President Joe Biden’s proposal to increase the corporate tax rate is aimed at big companies, not all small businesses will escape it.
While the majority of the more than 30 million small businesses in the U.S. are pass-through entities in which tax obligations are passed to the owners, 1.4 million of them are organized as C corporations and thus subject to the corporate tax, according to the U.S. Chamber of Commerce.
In the finance and insurance sector, there were 80,000 small-business C-corps with more than 705,000 employees in 2017, the Chamber reports, citing Census data.
The Chamber — the biggest lobbying group in the U.S., representing millions of businesses — recently launched an initiative to analyze how Biden’s proposed tax increases will affect small businesses of every segment of the economy, including agriculture, construction, health care, real estate and finance.
As part of its initiative, the Chamber is providing each state delegation information on how many employers in their state would see their taxes increase, including how many small businesses with fewer than 500 employees will be affected.
The proposal to raise the corporate tax rate from 21% to 28% was originally intended to fund Biden’s plan to upgrade the nation’s infrastructure but was jettisoned as part of a bipartisan deal. Washington insiders have said, however, that the tax hike plan could be revived later.
In the gallery above are the states with the most small businesses organized as C-corps, according to the Chamber, which gathered data from the IRS and the Census Bureau.