The Small Business & Entrepreneurship Council (SBE Council) has distributed a note criticizing President Joe Biden’s planned tax increase that will hit both individuals and businesses. Addressing the policy of pushing business taxes higher, the SBE Council says raising taxes during the shaky economy and pandemic would seriously jeopardize the emerging recovery and private sector investment needed to maintain U.S. competitiveness.”
SBE Council President & CEO Karen Kerrigan states:
“Modern infrastructure and access to fast broadband are incredibly important to small businesses and the growth of entrepreneurship across America. We all agree that these must remain a priority. However, the encouraging economic signs would quickly go south if capital needed by private businesses, and being deployed to compete safely and survive during what we hope will be a post-pandemic economy, is now diverted through these proposed tax increases. The President refers to his tax-increase initiative as the Made in America Tax Plan, but fewer things will be made and invested in across the U.S. if taxes are raised on American companies.”
The SBE Council notes that most C corporations are small businesses – with 84.8% having fewer than 20 employees. These firms may be the most vulnerable to an increase during a difficult time.
The SBE Council adds that investments made by larger corporations benefit millions of small businesses as suppliers as well as local communities and jobs. The SME and startup advocacy group says it is vital that the U.S. stays competitive in the global economy.
SBE chief economist Raymond J. Keating said that tax increases on entrepreneurs and businesses are surefire ways to undermine economic recovery and growth.
“The U.S. faces a daunting challenge in getting entrepreneurship, private investment and our economy back on track given the pandemic. Reducing the returns on entrepreneurship and investment via tax increases will work against this vital effort.”
According to the Tax Foundation, in 2017, before the tax relief law in 2018, the United States had the “fourth highest statutory corporate income tax rate in the world, levying a 38.91% tax on corporate earnings.” The report stated that the only jurisdictions with a higher statutory rate were the United Arab Emirates, Comoros, and Puerto Rico.
Following tax reform, the US is now in the middle of the pack. To quote the Tax Foundation:
“One hundred of the 223 separate jurisdictions surveyed for the year 2020 have corporate tax rates below 25 percent and 117 have tax rates above 20 and at or below 30 percent. The average tax rate among the 223 jurisdictions is 22.57 percent. The United States has the 85th highest corporate tax rate with a combined statutory rate of 25.77 percent.”
To compare several c0untries with the US:
- Sweden – the statutory corporate tax rate will be cut from 21.4% in 2020 to 20.6% in 2021.
- The Netherlands – the corporate tax rate was at 25% in 2020
- Ireland is known for its low 12.5% tax rate
- Hungary reduced its corporate income tax rate from 19% to 9% in 2017
- France introduced a bill to reduce the standard France corporate tax rate, the first reduction since 1993. The bill states that the French corporate tax rate for large companies will drop from 33.33% to 25% over a five year period (26.5% in 2021)
- The UK will increase the corporation tax rate from 19% to 25% beginning April 1, 2023
Expectations are for the Biden Administration to raise corporate taxes from its current 21% to 28% or a 33.3% increase.