Tax Hikes Threaten Small Business Growth and Jobs
September 12, 2024 | Finance: Senate Committee, Standing Committees - House & Senate, Congressional Hearings Compilation
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During a recent government meeting, discussions centered on the implications of proposed tax increases on corporations and small businesses, highlighting concerns over their potential impact on workers and the economy.
A key point raised was the assertion that corporations do not directly pay taxes; instead, the financial burden falls on employees and consumers. It was argued that increasing corporate taxes could lead to a significant reduction in wages, with estimates suggesting that 50-60% of the tax burden would be absorbed by workers. This perspective framed the proposed tax hikes as detrimental to labor, labeling them as an \"anti-worker\" approach.
The conversation also touched on the broader economic context, particularly the current inflation rate, which was described as equivalent to a 20% sales tax. This inflationary pressure was characterized as a regressive tax that disproportionately affects lower-income individuals, raising questions about the fairness of the administration's fiscal policies.
Senator Grassley highlighted specific tax proposals from the Biden-Harris administration, including an increase in the top individual tax rate to 39.6%, taxing capital gains as ordinary income, and raising the net investment tax. He sought insights from Mister Brabant on how these changes would affect small business owners. Brabant indicated that a significant majority of small business owners surveyed would respond to tax increases by raising prices or delaying investments, which could stifle economic growth.
The discussion concluded with a focus on the potential elimination of the 20% small business tax deduction, which Brabant identified as the most harmful change for family-run businesses. He noted that while proposals to increase the amount of startup costs that can be expensed might be beneficial, they would not match the broader impact of maintaining the small business deduction.
Overall, the meeting underscored the tension between proposed tax reforms and their anticipated effects on employment, inflation, and the viability of small businesses in the current economic landscape.
A key point raised was the assertion that corporations do not directly pay taxes; instead, the financial burden falls on employees and consumers. It was argued that increasing corporate taxes could lead to a significant reduction in wages, with estimates suggesting that 50-60% of the tax burden would be absorbed by workers. This perspective framed the proposed tax hikes as detrimental to labor, labeling them as an \"anti-worker\" approach.
The conversation also touched on the broader economic context, particularly the current inflation rate, which was described as equivalent to a 20% sales tax. This inflationary pressure was characterized as a regressive tax that disproportionately affects lower-income individuals, raising questions about the fairness of the administration's fiscal policies.
Senator Grassley highlighted specific tax proposals from the Biden-Harris administration, including an increase in the top individual tax rate to 39.6%, taxing capital gains as ordinary income, and raising the net investment tax. He sought insights from Mister Brabant on how these changes would affect small business owners. Brabant indicated that a significant majority of small business owners surveyed would respond to tax increases by raising prices or delaying investments, which could stifle economic growth.
The discussion concluded with a focus on the potential elimination of the 20% small business tax deduction, which Brabant identified as the most harmful change for family-run businesses. He noted that while proposals to increase the amount of startup costs that can be expensed might be beneficial, they would not match the broader impact of maintaining the small business deduction.
Overall, the meeting underscored the tension between proposed tax reforms and their anticipated effects on employment, inflation, and the viability of small businesses in the current economic landscape.
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