Legislation includes harmful tax increases, new mandates, and costly penalties on small businesses
WASHINGTON, D.C. (Nov. 5, 2021) – The National Federation of Independent Business (NFIB), the nation’s leading small business advocacy organization, announced H.R. 5376, the Build Back Better Act as an NFIB Key Vote for the 117th Congress in a letter sent to members of the U.S. House of Representatives. The legislation would increase taxes, impose new mandates, and increase penalties on small business owners.
“Small businesses are managing challenges right now including labor shortages, rising inflation, supply chain disruptions, and COVID-19 variants,” said Kevin Kuhlman, NFIB Vice President of Federal Government Relations. “It is not the time for Congress to impose significant tax increases, inflexible mandates, and massive new civil monetary penalties on small businesses. The small business economy is fragile, and they simply cannot absorb these substantial fines and cost increases.”
The Build Back Better Act broadens existing passive income and applies them to active income, creating a true “Small Business Surtax.” Specifically, the legislation substantially expands the 3.8% net investment income tax (NIIT) on pass-through business income and applies it to all business income above $400,000 (individual filers) and $500,000 (joint filers).
The legislation also creates a four-week federal paid family and medical leave program for all workers without regard to employer size. This program would be a considerable change for small employers who are currently not subject to the Family and Medical Leave Act (FMLA), taking away the flexibility many small businesses need to be able to manage their workforce.
The Build Back Better Act increases civil monetary penalties on small businesses with isolated errors when trying to comply with complicated federal employment law and increases penalty exposure for employers by expanding the Affordable Care Act’s employer mandate. There is a strict liability standard for Fair Labor Standard Act (FLSA) violations, meaning employers who make an honest misinterpretation of the law or make an isolated mistake are not given leniency.
NFIB has launched the Small Business Survival campaign, which is a coordinated advocacy effort that includes targeted traditional and digital advertising, media initiatives, research, grassroots, lobbying, and other efforts that highlights why tax increases would be harmful to small businesses while holding members of Congress accountable for their support of tax hikes and mandates.