All House Small Business Committee Republicans – led by Ranking Member Luetkemeyer – sent a letter to President Biden and Speaker Pelosi highlighting the negative impacts the Democrats’ tax hike proposals would have on small businesses. As Democrats prepare to take historic steps to recklessly push forward trillions of dollars in spending paid for by small businesses across the country, Committee Republicans are standing up for Main Street USA. Small businesses are focused on recovering from the economic effects of the pandemic, and the last thing they need is the devastating tax increases that President Biden and Speaker Pelosi have proposed to fund the Democrats’ profligate spending agenda.
Excerpts and the link to the full letter can be found below.
“First, your proposals slash the 20 percent small business deduction, enacted by the Tax Cuts and Jobs Act of 2017… The benefit allows owners of ‘pass through’ businesses, such as sole proprietors, subchapter S corporations and partnerships, to claim up to 20 percent of their business income from taxes.
“Second, your proposals nearly double the long-term capital gains rate from 23.8 percent to the top ordinary capital gains rate of 39.6 percent. In an August 2021 Small Business and Entrepreneurship Council survey, 60 percent of small business owners opposed this sharp increase.
“Third, your proposals repeal the step-up in basis of an inherited asset at death, the ‘stepping up’ the value of the asset and taxing it at its current market value. This means the asset will be retroactively taxed on the investment’s gain when transferred at the owner’s death.
“Fourth, your proposal eliminates 100 percent bonus depreciation on most investments immediately, rather than phasing it out… Eliminating this provision simply means small businesses will have less capital with which to operate.
“Fifth, your proposals hike the corporate tax rate from 21 percent to 25 percent, or even 28 percent. Despite the Democrat rhetoric to the contrary, increasing the corporate tax burden would negatively impact many small businesses.
“Despite your pledges not to raise taxes on those earning less than $400,000 per year, your proposal to raise the top marginal tax rate from 37 percent to 39.6 percent would adversely affect many small businesses.
“At a time when small businesses are trying to get back on their feet, they are also absorbing the impact of other economic damage. Inflation is at a twenty-year high and rising. The cost of goods and services is skyrocketing, with prices increasing 5.4 percent in July compared to a year ago. Supply chains have been disrupted, evaporating revenue. Small businesses still cannot find workers. They need stability, and more uncertainty means they cannot plan.
“We strongly urge you to rethink your costly and unwise proposals to drastically increase taxes on small businesses.”