Opinion: Biden's economic plans spell disaster for small businesses
Like many Democrats, Joe Biden is full of promises. The Democratic presidential candidate recently vowed to create 3 million jobs in caregiving and early education as part of his “Build Back Better” economic agenda.
Investing $1.3 trillion into American infrastructure. Moving the U.S. economy to net-zero greenhouse gas emissions. Rebuilding the middle class. These are all Biden promises, yet his treatment of small businesses is even more troubling than the hot air.
According to Biden's campaign website, the plan for small business is to punish “corporate America.” In promising to help “small businesses and entrepreneurs come out on the other side of this crisis,” the Biden campaign immediately pivots to addressing bailouts for “big corporations and Wall Street.” Biden will purportedly “ensure that corporate America finally pays their fair share in taxes,” yet makes no mention of the tax and regulatory hurdles facing small business.
Here’s a question for Biden and other Democrats: How does punishing “big corporations and Wall Street” help independent bookstores and mom-and-pop diners?
Of course, it doesn’t. The Democrats’ deflection should be instructive to American voters. Those political candidates who are truly interested in helping small business focus on, well, small business and lay out specific action items.
In fact, Bidenomics would do nothing but hurt small business. Biden supports increasing the minimum wage to $15 an hour, which would inundate millions of small businesses with higher labor costs. According to the nonpartisan Congressional Budget Office, a $15 hourly minimum wage would cost working Americans 1.3 million jobs, as employers struggle to afford the higher wage floor. At the same time, Biden is a proponent of mandated paid time off, another government requirement that increases labor costs.
Then there’s tax policy. Biden has promised to repeal President Trump’s Tax Cuts and Jobs Act (TCJA), which would immediately raise taxes on small businesses by increasing marginal income tax rates and eliminating the 20% small-business deduction. Biden may claim to keep small businesses exempt from tax hikes, but that is simply impossible if the TCJA is repealed. Because of the TCJA, more than 1,100 small businesses have publicly announced new hires, pay raises and more employee benefits.
Moreover, Biden vows to increase the corporate income tax rate from 21% to 28% and revert the top individual income tax rate (for taxable incomes above $400,000) back to the pre-TCJA level of 39.6%. This may seem like an attack on the “1 percent,” but small business owners earning $400,000 a year are hardly multi-millionaires and billionaires. In fact, it is precisely in the top bracket that you find job creators who provide employees and job-seekers with financial security. Target them, and career opportunities tend to dry out.
All in all, Biden’s economic agenda comes with nearly $4 trillion in new tax collection over the next decade. This would leave millions of Americans — again, not just multi-millionaires and billionaires — with less after-tax income, while reducing U.S. economic output in the long run.
On the other hand, Trump explains exactly how tax relief benefits small business owners. According to his campaign website, the TCJA cut small business taxes by 20%, providing $415 billion in tax relief for small business employers.
Trump is also proposing a payroll-tax cut that would reduce hiring costs and revitalize the American labor market. The federal government currently imposes payroll taxes of up to 15.3% on wages and self-employment income, split between employers and employees. Slashing the tax would, on the one hand, leave employees with more after-tax income and, on the other, incentivize job creators to find new talent. When labor costs are lower, employers are more likely to hire. And, let’s be clear: The payroll tax is a major cost that should be cut.
What small businesses need most of all is relief from Big Government — a concept foreign to Biden and other Democrats. With decades of business experience, Trump understands that.
Biden, however, has never run a business of any kind — and it shows. Ignore the promises: With Bidenomics, the devil is in the details.
Joseph Semprevivo is the president and CEO of Joseph’s Premier Real Estate in Florida. He wrote this for InsideSources.com.