What You Need to Know
- The vast majority of small-business owners don't pay corporate taxes.
- Raising income taxes on top earners would affect less than 3% of small-business owners, according to a Treasury analysis.
- Expanded tax credits for parents and people who buy health coverage through HealthCare.gov are helping millions of small-business owners, the White House says.
President Joe Biden’s Build Back Better agenda will protect 97% of small-business owners from income tax rate increases, according to a new Treasury Department analysis cited Thursday in a White House fact sheet.
Meanwhile, the American Rescue Plan gave 3.9 million entrepreneurs a tax cut, the White House said, citing expanded tax credits for parents and for buying health insurance.
The Treasury analysis follows charges from Republicans in Congress, citing the Joint Committee on Taxation, that the corporate tax hike would hurt retirees and small businesses.
Biden’s plan, in the words of the fact sheet, will:
- Raise the corporate income tax rate to 28%;
- Strengthen the global minimum tax for large multinational corporations;
- Reduce incentives for foreign jurisdictions to maintain ultra-low corporate tax rates by encouraging global adoption of robust minimum taxes for large corporations;
- Enact a 15% minimum tax on book income of large, highly profitable corporations;
- Eliminate incentives for large corporations to offshore profits and jobs; and
- Ramp up enforcement to address tax avoidance among large corporations
Treasury points out that a corporate tax hike “would not affect any small businesses that file taxes as a passthrough entity (LLCs, S-corps, and sole proprietorships).”
There are more than 30 million small businesses in the U.S., according to the Small Business Administration. The U.S. Chamber of Commerce, which opposes the tax hike, says there are 1.4 million small businesses organized as C-corps, which are subject to the corporate tax.
The 2017 tax overhaul cut the corporate tax rate from 35% to 21%.