By John Kirchner, Vice President, U.S. Chamber of Commerce
Last month the business community had cause for celebration, as the Senate passed an historic, bipartisan infrastructure package that will make long-overdue investments in our nation’s physical infrastructure. Unfortunately, that bipartisan moment didn’t last long. Shortly after passage of the Infrastructure Investment & Jobs Act, the Senate passed a $3.5 trillion budget resolution on a party-line vote that calls for unprecedented expansion of government spending that will likely be funded by an equally unprecedented tax hike on businesses.
The administration claims its proposed tax increases will only hit big corporations and the rich, but the truth is these will be paid for by workers and families through lost jobs and lower wages. Furthermore, the majority of c-corps are small businesses, with 84% having fewer than 20 employees. The burden of these tax hikes will fall hardest on small business. Raising the corporate tax rate from 21% to 28% will put MN businesses at a severe competitive disadvantage. If the corporate rate were increased to 28%, MN companies would face a combined state and federal rate of 37.8%. That is higher than the corporate rate of every other developed nation on earth, making it harder for MN manufacturers to compete with foreign companies.
The Biden administration also proposes nearly doubling the tax rate on capital gains, hitting approx. two-thirds of capital investment in the U.S. This will dampen investments in MN start-ups and hurt families saving for retirement or college or looking to buy a home. The capital gains rate hike would also apply to the transfer of assets of family-owned businesses at death. This would threaten the ability of the next generation to keep family-owned businesses up and running.
Raising taxes now will stop recovery dead in its tracks. Congress should build upon the momentum of the bipartisan infrastructure bill and abandon the partisan spending spree that leaves businesses holding the bill. Contact your representatives and tell them not to raise taxes that will hurt small businesses, workers, and families.