Biden’s plan to raise the corporate tax rate from 21 percent to 28 percent could raise taxes on 1 million small businesses across the country.
As noted by the Small Business Administration Office of Advocacy, there are 31.7 million small businesses in the U.S. Of those, 25.7 million have no employees, while 6 million have employees. Of these 6 million small employers, 16.8 percent, or 1 million of these businesses are classified as c-corporations. The SBA classifies a small employer as any independent business with fewer than 500 employees.
Biden claims his spending plan makes large corporations pay their “fair share.” However, the plan will raise taxes on many small businesses that are structured as corporations.
Raising the corporate rate will also harm American workers and families in the form of fewer job opportunities, lower wages, and reduced life savings.
As noted by Stephen Entin of the Tax Foundation, labor (or workers) bear an estimated 70 percent of the burden of corporate tax hikes. There is debate over how much workers bear of this tax, with some economists arguing just 20 percent is borne by labor, while others argue 50 percent or even 100 percent of the tax hits workers. But even if we assume that workers bear just 20 percent of the corporate tax, workers will collectively be hundreds of billions of dollars worse off.
These tax hikes will also harm millions of middle class Americans that are invested in publicly traded corporations through the stock market including the 53 percent of American households’ own stock, the 80 to 100 million Americans that have a 401(k) and the 46.4 million households that have an individual retirement account.