Biden's tax-and-spend budget proposal would hurt small businesses

Just a little more than two years into office, President Joe Biden has added nearly $4 trillion to the national debt. Unfortunately, his latest budget proposal doubles down on his same failed economic policies of crippling tax increases and record spending that has led to 40-year-high inflation and soaring interest rates.

In fact, under Biden’s $6.8 trillion tax-and-spend budget-buster, federal spending would skyrocket by more than $15 trillion, or 20%, when compared to projections from the nonpartisan Congressional Budget Office at the beginning of his presidency. And shockingly, the national debt would balloon to a jaw-dropping $51 trillion – nearly 30% larger than the size of the entire U.S. economy.

Small businesess would be affected

Biden's budget proposal also includes $4.7 trillion worth of tax increases, including $1.8 trillion in tax hikes on American small businesses. Unfortunately, these mom-and-pop businesses are hurting now more than ever.

On top of still record-high inflation, small businesses owners are struggling to maintain competitive compensation and are suffering from severe labor shortages. In fact, according to the National Federation of Independent Businesses, nearly half of small businesses have job openings they can’t fill, and of those hiring, a staggering 90% reported few or no qualified applicants.

And while it’s been said time and again, these small businesses truly are the backbone of the American economy. They employ more than 50% of the American workforce and have accounted for 2 out of every 3 new jobs added to the economy over the past 25 years.

The weight of increased taxes on the small business community will mean pay cuts for workers, price increases for customers and fewer growth opportunities for owners.

Raising corporate tax rate

President Biden has also proposed raising the corporate tax rate to 28% – one of the highest in the industrialized world. We’ve learned the hard way that higher taxes ship American companies to foreign countries with lower rates (like China). And despite claims that Democrats are attempting to “tax the rich” and dismantle mega-corporations, their policies will devastate small businesses and job creators who won’t be able to afford to do business here.

And while most small businesses function as pass-through entities and pay taxes at the individual rate, more than 1 million small businesses are structured as C-corporations and would be subject to the new increased corporate tax rate. These are not big corporations – they are Main Street businesses, the vast majority of which have fewer than 20 employees and business receipts below $500,000 a year.

More scrutiny from IRS

On top of that, this multi-trillion-dollar tax increase proposed by President Biden also comes with the promise of greater scrutiny from the IRS. Biden and congressional Democrats already injected $80 billion of funding from the so-called Inflation Reduction Act into the IRS last year to hire an additional 87,00 IRS agents. Just seven months later, the administration is proposing an additional $43 billion for the beleaguered tax agency.

And despite Biden’s many promises to not raise taxes on those making less than $400,000, Treasury Secretary Janet Yellen recently confirmed that the proportion of new audits on individuals and small businesses making under $400,000 would remain in line with historic levels.And according to the Government Accountability Office, more than 90% of audits hit families and small businesses making below $400,000 a year.

Simply put, a supercharged IRS means the middle class and small businesses will once again be caught in the crosshairs of Biden’s radical agenda and could face increased audits and higher tax bills.

Low taxes equal growth

It’s no secret that keeping taxes low is one of the greatest drivers of economic growth.

In 2017, Republicans passed the most comprehensive overhaul of our tax code since the Reagan administration. The Tax Cuts and Jobs Act reduced taxes on middle-class families and small businesses across the country and created nearly 5 million jobs in the two years following its passage. It also delivered the lowest unemployment rate in 50 years (3.5%), the fastest wage growth in a decade and all-time low unemployment for African American and Hispanic workers.

And despite misleading claims by many Democrats, data from the Congressional Budget Office proves that Republican tax cuts reduced federal tax rates for families across every income level while actually increasing the share of taxes paid by the top 1% of American households. Federal tax revenue in 2022 was $4.9 trillion, the highest on record, which shows the Tax Cuts and Jobs Act worked for all Americans.

With the $31 trillion national debt growing by $5 billion a day, it's clear we need to address the reckless spending responsible for the problem. Unfortunately, President Biden’s budget proposal does the opposite and will fall squarely on the shoulders of small businesses and middle-class earners, resulting in higher prices, lower wages and fewer jobs for those already struggling in Biden’s cruel economy.

U.S. Rep. Vern Buchanan represents Florida's 16th Congressional District and is the co-chairman of the bipartisan 30-member Florida delegation. He is also vice chairman of the powerful House Ways and Means Committee and chairman of the Health Subcommittee.

This article originally appeared on Sarasota Herald-Tribune: Small businesses would pay the cost of Biden's reckless spending plan