Democrats in Washington are looking to bolster their tax-and-spend reputation as they try to pass an “infrastructure” package currently slated to cost taxpayers roughly $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. But although some of the new tax proposals have made headlines, others have garnered less attention than they deserve.
The Democratic drive to raise the federal corporate income tax from 21 to 26.5 percent, for example, has been widely reported, while the tax hikes proposed for small businesses, such as S-corporations and partnerships, have not. Reports have focused more on Wall Street than Main Street even though small businesses and partnerships comprise the majority of America’s businesses and Main Street will shoulder a heavier new tax burden than their Wall Street competitors under the new Democratic tax plan. But neither set of tax increases will be good for U.S. businesses or consumers.
American C-corporations currently pay a flat 21 percent federal tax on their profits. Congressional Democrats want them to pay 26 percent — 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 percent under the congressional Democrats’ tax plan.
As U.S. businesses — big and small — continue to recover from the pandemic’s stifling economic effects, this is no time to hit them with higher taxes. International 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 Democrats in Washington think they know better and want to make some of America’s small businesses and partnerships the most heavily taxed businesses on the planet. That misguided hubris will 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 fledgling 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.
Perhaps congressional Democrats need a refresher on how corporate taxes work in the real world. Federal corporate tax increases 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 so will their competitive advantage. 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.
Rea S. Hederman Jr. is executive director of the Economic Research Center and vice president of policy at The Buckeye Institute in Columbus Ohio and Michael G. Franc is a Washington, D.C.-based senior fellow with The Buckeye Institute. From 2013 to 2015 he served as policy director and counsel to then-House Majority Leader Kevin McCarthy.
✔️ Boost your immune system with Nutraceutical by Dr. Zev Zelenko
✔️ Get ahead of shortages with 5 Antibiotics Delivered to Your Home
✔️ Detox your body with Organic Supplements
Photo by Blake Wisz on Unsplash. Article cross-posted from Real Clear Policy.
Yes, We Need Your Help
I hate being “that guy” who asks people to donate because I think our conservative news network is so crucial, but here I am…
When I left my cushy corporate job in 2017, I did so knowing that my family would have to make sacrifices. But I couldn’t continue to watch the nation slip into oblivion and was inspired by President Trump’s willingness to fight the good fight even at his own personal expense. What I didn’t realize then is that conservative media would be so heavily attacked, canceled, and defunded that the sacrifices would be extreme.
Many in this nation are struggling right now even though we weren’t struggling just a few years ago. I’m not alone. But I wake up every morning and operate the sites we’ve been able to build because there’s really no other choice. I refuse to be beholden to Big Tech like so many other conservative news outlets, which is why you won’t see Google ads here. With that said, it’s often challenging to pay the bills and it’s even harder to expand so we can get the America First message out to a wider audience.
The economic downturn has forced me to make a plea for help. Between cancel culture, lockdowns, and diminishing ad revenue, we need financial assistance in order to continue to spread the truth. We ask all who have the means, please donate through our Giving Fuel. Your generosity is what keeps these sites running and allows us to expand our reach so the truth can get to the masses. We’ve had great success in growing but we know we can do more with your assistance.
We currently operate:
- NOQ Report
- Conservative Playlist
- Uncanceled News
- Based Underground
- Five other conservative news sites
I would even be willing to entertain investments and partnerships at this stage. I’ve turned them down in the past because editorial purity is extremely important. I’ll turn them down again if anyone wants us to start supporting RINOs or avoid “taboo” topics like voter fraud, vaccines, or transgender supremacy. But I’d talk to fellow America First patriots who want to help any (or all) of our 10 news sites. Hit me up at jdrucker (at) substack (dot) com if you’re interested.
For those who have the means and just want to help keep the mission of spreading a conservative, Christian message to the nation, please consider a generous donation.
Covid variant BA.5 is spreading. It appears milder but much more contagious and evades natural immunity. Best to boost your immune system with new Z-Dtox and Z-Stack nutraceuticals from our dear friend, the late Dr. Vladimir Zelenko.