Less than 3% of the roughly 30 million small-business owners in the United States could face tax increases under President Joe Biden’s jobs and infrastructure plan, according to a new analysis by the White House on Friday.
The White House has been seeking to leverage the support and political popularity of small-business owners in its fight to raise the corporate tax rate from 21% to 28% on large corporations such as Walmart Inc and Amazon.com Inc The move has faced stiff opposition from large national trade groups like the U.S. Chamber of Commerce and the Business Roundtable.
The proposed increase in the corporate tax rate to 28% would not affect any small business that file taxes as a “passthrough entity” such as a limited liability corporation, said a senior administration official. Nearly all small businesses fall in that category, the official said.
The proposed increase in the top income tax bracket by 2.6 percentage points for single earners who earn over $452,700 annually and married couples above $509,300 per year – “would affect less than 3 percent of passthrough business owners,” the official said.
Most small businesses are passthrough businesses like limited-liability organizations and S-corporations that do not pay a corporate tax. Instead, the owners report business income and pay the tax on their personal tax returns.
“There has been a false line of attack circulating that the president’s tax plan represents some kind of significant wide-ranging tax increases on small business owners and that’s just simply untrue,” the official said.