day one in office, President Biden has focused on providing America’s
small businesses with the tools and resources they need to reopen,
rehire, and rebuild. To date, the Biden-Harris Administration has
delivered more than $300 billion in relief to Main Street and is on
track to fully forgive more than 6 million small business loans by
While Main Street is roaring back, many small businesses struggle to grow and compete globally due to a tax code that disproportionately benefits multinational corporations and a financial system that prevents millions of entrepreneurs from obtaining sufficient capital to start and expand operations. President Biden is committed to changing that.
President Biden’s Build Back Better Agenda will crack down on the unfair tax schemes that give big corporations a leg up. According to a new Treasury Department analysis, the President’s Agenda will protect 97 percent of small business owners from income tax rate increases, while delivering tax cuts to more than 3.9 million entrepreneurs.
The revenue raised from creating a fairer tax system for Main Street will help pay for investments that will grow our economy and create jobs, including investments in small business. This includes creating a national paid leave program with benefits paid by the federal government – not the employer – leveling the playing field for small businesses that cannot afford to provide this benefit to employees. The Build Back Better Agenda will also increase access to contracting opportunities and provide tens of billions of dollars in financing and technical assistance programs for small businesses, including small manufacturers. In short, President Biden’s plan lays the foundation for American small businesses to win the 21st century.
Specifically, President Biden’s Build Back Better Agenda will:
Level the playing field for small business owners by reforming the tax code
The current tax system unfairly prioritizes large multinational corporations over Main Street American small businesses. Small businesses don’t have access to the army of lawyers and accountants that allowed 55 profitable large corporations to avoid paying any federal corporate taxes in 2020, and they cannot shift profits into tax havens to avoid paying U.S. taxes like multinational corporations can. U.S. multinationals report 60 percent of their profits abroad in just seven low tax jurisdictions that, combined, make up less than 4 percent of global GDP. These corporations do not make money in these countries; they just report it there to take a huge tax. In 2018, married couples making about $150,000 working at their own small business paid over 20 percent of their income in federal income and self-employment taxes. By contrast, U.S. multinational corporations paid less than 10 percent in corporate income taxes on U.S. profits.
Facts about the current unfair tax system are unsettling, but they are no surprise to Main Street. Nearly three-quarters of small businesses say the current tax system favors big businesses over small businesses and that their business is harmed when big corporations use loopholes to avoid taxes. About two-thirds of small business support increasing taxes on corporations.
President Biden has laid out a comprehensive tax reform plan to level the playing field, address the concerns of small business owners, and raise revenue that will help pay for new programs for Main Street.
The President’s plan will:
President Biden’s Build Back Better Agenda will make the tax code fairer while protecting millions of small businesses from tax increases. For example, President Biden’s proposal to restore the corporate tax rate halfway back to its pre-2018 level would not affect any small businesses that file taxes as a passthrough entity (LLCs, S-corps, and sole proprietorships). That’s nearly every small business in America. Similarly, the President’s proposal to restore the top income tax bracket to its pre-2018 level – which would only raise taxes by 2.6 percentage points for the wealthiest households in America – would affect less than 3 percent of small business owners, according to the Treasury Department’s new analysis focused exclusively on small businesses filing as S-corporations, partnerships, and on individual income tax return Form 1040 Schedules C, E and F (as noted, nearly every small business falls in this category). Across President Biden’s agenda, smart reforms to make America’s tax code fairer are tailored to protect Main Street small business owners from tax increases.
Give a tax cut to 3.9 million small business owners.
Not only will President Biden’s Build Back Better Agenda protect more than 97 percent of small business owners from income tax increases, it will also provide well-deserved tax cuts to Main Street entrepreneurs. These tax cuts will give more entrepreneurs the financial security and peace of mind they need to start or grow their own business. Specifically, the plan will:
Help small businesses retain workers and compete against large corporations through a national, federally-funded paid leave program.
While the vast majority of small business owners believe it
is important to establish a federal paid family and medical leave
program, the U.S. remains one of the only countries in the world that
does not provide it. As a result, nearly four out of five private
sector workers – and 95 percent of
the lowest wage workers – have no access to paid leave. This puts small
businesses at a disadvantage when it comes to recruiting and retaining
talented workers. Well-resourced large corporations can afford to offer
their employees paid leave programs, but small business with fewer
resources may have a harder time doing so. President Biden’s Build Back
Better Agenda will level the playing field for those small businesses. It
guarantees twelve weeks of paid parental, family, and personal
illness/safe leave by year 10 of the program, and will ensure workers
get three days of bereavement leave per year starting in year one.
Importantly, under President Biden’s proposal, wage replacement would
come from the federal government – not the employer – eliminating any
potential burden on small businesses. According to a state-level
study, 9 out of 10 employers
experienced positive or no noticeable effects on productivity,
profitability, turnover, and employee morale after a paid leave program
Increase access to contracting, capital, technical assistance for small firms.
The President’s plan will increase access to federal contracts and invest in new financing and technical assistance programs that will directly benefit small businesses. Specifically, President Biden’s plan will: