Democrats in Washington are trying to bolster their tax-and-spend reputation as they strive to pass an “infrastructure” package, as written, would cost taxpayers approximately $3.5 trillion in spending and untold sums in tax increases to “pay” for it. Corporate tax hikes along with higher cigarette and income taxes have been proposed to offset some of the spend-a-thon. Some of the new tax proposals have made headlines​, others have had less attention than they deserve.

An example is the Democratic drive to raise federal corporate income tax from 21 to 26.5%, has been widely reported, while tax hikes proposed for small businesses, such as S-corporations and partnerships have not. Reports have focused more on Wall Street than Main Street.

The fact is small business and partnerships comprise the majority of America’s businesses and they will shoulder a heavier new tax burden than their Wall Street rivals under the new Democratic tax play. But neither set of tax increases will be good for U.S. businesses or consumers.

Currently C-corporations pay a flat 21% federal tax on profits, but the new bill would increase that to 26%, one of the highest corporate tax rates in the world. American small businesses, S-Corporations, and partnerships, however, pay taxes according to the progressive income tax scale, with a top individual tax rate that would increase to over 40% under the congressional Democrats’ plan.

As both big and small businesses continue to recover from the pandemic’s stifling economic effects, this is no time to hit them with higher taxes. Internation economists recommend reducing corporate and capital taxes because they do the most damage, and many states along with much of the industrial world have moved to reduce corporate taxation precisely because lower taxes encourage business growth, hiring, innovation, and higher wages. 

But the prideful and selfish Democrats in Washington believe they know better and want to make some of America’s small businesses and partnerships, the most heavily taxed businesses on the planet. The Democrats new infrastructure would threaten jobs and prosperity across the country.

Midwestern states like Ohio, for instance, have strategically reduced their tax burdens to help small businesses grow and compete with larger corporations. Some state policymakers understand that small companies not only create new jobs and spur economic opportunities, but they need to retain their working capital to do it. Syphoning even more small business money to Washington, even from more established firms, undermines those efforts.

Maybe congressional Democrats need a refresher on how corporate taxes work in the real world. Federal corporate tax increase will either be passed along to consumers through higher wholesale and retail prices, or else leave businesses with fewer dollars to invest in their workers or grow their operations. Either way, American prosperity will suffer under the Democrats’ tax-and-spend proposal.

And their competitive advantage will suffer, as well. As other countries reduce their corporate tax burdens, their companies can lower prices to attract new customers and pay higher wages to attract new workers, all at the expense of American companies trying to compete in a global market.

Some states have worked hard in recent years to grow their economies and recover from the Great Recession by reducing the tax burdens faced by small businesses. Congress and the Biden Administration seem poised to negate those laudable efforts with one of the largest corporate tax hikes in American history and many small businesses and their employees may be completely unaware that it’s coming, and that they and their customers will pay the price.

Our appreciation to WND News and Real Clear Politics for contents in this story.

Beware when any politician tells you it won’t cost you a penny.  It will cost you dollars, not pennies.

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Harry Ort
Harry Ort
11 months ago

Thats how they have been for as long as I can remember and I’m 66. Why anyone votes Democrat is beyond comprehension.

Danny Smith
Danny Smith
11 months ago

I will sing and dance when these dung-stains have left our world for Hell.