NFIB To Congress: Tax Increases on Small Businesses Will Crush Them

Date: September 14, 2021

NFIB letter to House warns of endangering the small business recovery

WASHINGTON, D.C. (Sept. 14, 2021) – The National Federation of Independent Business (NFIB) sent a letter to the U.S. House Ways and Means Committee on S. Con. Res. 14, the Fiscal Year 2022 Budget Resolution, urging members of Congress to avoid imposing tax increases on small businesses.

“The more we learn about this proposal the worse it gets for small businesses. Congress wants to dramatically expand the size of government and fund it by crushing small businesses with massive tax increases. Small businesses and their employees are struggling to recover from the pandemic and government-imposed shutdowns and mandates, and Washington’s response is to take more of their hard-earned money,” said NFIB President Brad Close.

NFIB specifically opposes:

  • Efforts to raise taxes on small businesses: The Small Business Deduction (Section 199A) provides tax relief for small businesses organized as pass-through entities. Curtailing the small business deduction, increasing the top marginal rate, broadening the tax base, and imposing the net investment income tax on pass-through business income earned amounts to a multi-prong tax blitz on small businesses.
  • Increasing the top corporate tax rate: Increasing the corporate tax rate from 21% to 26.5% will negatively impact a substantial number of businesses structured as C corporations (C-corps). NFIB does appreciate the proposal restores a graduated corporate rate structure which would effectively lower the corporate rate for the smallest C-corps and maintain the current rate for many small businesses organized as C-corps.
  • Changes to the estate tax and increasing the top capital gains tax rate: Sunsetting estate tax thresholds prematurely increases complexity and uncertainty for small business owners. By increasing the top capital gains rate, the small business owner would lose significantly more of their hard-earned retirement.

“The small business economy is fragile and increasing taxes now would endanger their confidence for a robust economy moving forward,” said Kevin Kuhlman, NFIB Vice President of Federal Government Relations in the letter to Congress. “Small businesses are currently facing several obstacles such as labor shortages, rising inflation, supply chain disruptions, and increasing threats from COVID-19 variants. We urge Congress to avoid policies that would harm the small business economy, including any tax increase.”

Small business owners reported that the most severely ranked tax problem for small business owners is “Federal Taxes on Business Income,” which ranks third out of 75 policy concerns. In NFIB’s most recent tax survey, small business owners reported that federal business income taxes were the most burdensome on both a financial and administrative basis.

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