Last week, President Joe Biden announced his infrastructure plan or, more accurately, a gigantic $2 trillion spending plan masquerading as such — only 38% percent of it actually goes to infrastructure.
In the theatrics of policymaking it makes sense for the President to market it that way: If you are against the majority of the bill you must be an evil soul who’s surely against better roads, safer bridges, and internet access for inner cities and rural communities. Who wouldn’t want that for their America?
Well, you can and should be against out-of-control spending piggybacking on good spending when one of the critical funding mechanisms is increasing taxes on businesses. The President is proposing that the corporate tax rate be raised from 21% to 28%.
At a quick glance to the average person the increase looks harmless. They’ll say, “that’s only 7%.” It’s not. It’s 7 percentage points, which is actually a 33 percent increase. That’s means a business that paid $100,000 in federal taxes last year will pay an extra $33,333 this year.
Not that anytime is a good time for raising taxes, but such a cash grab could not come at a worse time. Because of the pandemic and governments’ responses to it businesses are crippled, that is if they were lucky enough to survive. The President himself knows that, as he said in February, “Since the beginning of this pandemic, 400,000 small businesses have closed — 400,000 — and millions more are hanging by a thread.”
Why add to that death toll?
If they are fortunate enough to actually achieve a profit in this mess, small businesses should not have more of their money taken away when it needs to be spent on getting through the crisis which is already more than a year old and will linger for at least a couple more. They need that money to pay the bills, cover debt, right the ship, invest in the new norm, and build opportunity for their coworkers, customers, and communities. Every extra dollar thrown Uncle Sam’s way is a dollar diverted from staying alive and becoming stronger.
In response to such sentiments, the President said last Friday, “Asking corporate America just to pay their fair share will not slow the economy at all.”
He fails to see that companies like mine and smaller are paying our fair share. It’s the larger corporations that aren’t.
Just last week, a study was released by the Institute on Taxation and Economy Policy that showed 55 of America’s largest firms paid no taxes last year. Among them are companies that benefitted greatly from Americans being stuck at home because of the pandemic — FedEx and Dish Network, which had incomes of $1.2 billion and $2.5 billion respectively.
The big boys have found and will always find creative ways to mitigate if not outright eliminate their tax obligations.
On the other hand, the little guys like us are left footing the bill. We aren’t making tax shelters, playing with numbers, and masking monies overseas.
We know that we have an obligation and a duty to fund the roads, courts, and defense that our country — and our companies — need. You won’t find many small businesses complaining about paying a tax rate in the 20% range. When you get closer to 30%, and likely one day above that, that’s when we have problems.
Confer Plastics pays hundreds of thousands a year in federal taxes. I have zero interest in paying a few more hundreds of thousands a year, especially when I’ve seen what the “Trump Tax Cuts” of 2017 have meant to my company since the rate dropped from 35% to 21%.
In those few years since, even in the COVID crisis, we were able to buy new machinery and equipment and pay out excellent bonuses to the entire team … all while become debt-free for the first time in over a quarter century. That’s right: No more seasonal lines, no more equipment lines at the bank. By having access to more of our money because of lower tax rates we didn’t need the bank’s money.
In the days before COVID, similar positive stories could be heard from retailers, restaurateurs, and industrialists across the country.
That’s how you advance the economy. You let Main Street grow. You let the mom-and-pop operations flourish. You don’t take away more of their money as we head into a strange, new economy and give it to others to do who knows what.
Ironically, increasing taxes on small businesses will be entirely self-defeating to something the President touts as the American Jobs Plan. Advancing that initiative will kill jobs and/or temper future growth.
One million small businesses will be impacted by the move.
It not just the big companies who are in the sights of a corporate tax increase.
It will be the machine shop down the street, your favorite restaurant, the local hardware store, your family’s beloved campground, maybe even your employer.
As Mister Biden said, “Small businesses are the engines of our economic progress; they’re the glue and the heart and soul of our communities. But they’re getting crushed.”
He needs to be true to that statement.
You know what we bring to the table. Don’t crush us.
Bob Confer is a Daily News columnist and president of Confer Plastics. He can be reached at email@example.com. You can follow him on Twitter @bobconfer.