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Joe Biden plans to increase the taxes levied on small businesses, even though he has clearly promised not to do so in the course of the campaign.
The White House proposal, backed by the president himself, will begin to pass Congress next week.
The Senate passed a $ 3.5 trillion budget resolution last week paving the way for Biden’s planned legislation, meaning that the Democratic majority will vote for next week’s budget resolution, which will almost certainly be passed. To do.
Under this system, the maximum marginal tax rate will be raised from 37% to 39.6%. The marginal tax rate is an additional tax paid for every $ 1 of income that exceeds the previous tax rate.
Seen on Friday, Joe Biden promised not to raise taxes on small businesses on the road to the campaign-still his new plan sees a 1.9 million rise.
The Americans for Tax Reform Council think tank has calculated that 1.9 million SMEs will be affected.
Most are owners of small businesses that run their businesses as C-corporations. They are separate from the owner’s finances and are the entities that protect the owner from personal liability in the event of a business failure.
Biden hopes that C-corp will be hit by a 7% federal tax surge from the current 21% to 28%.
Biden was asked directly by small businesses in a discussion with Donald Trump in the course of the February 20, 2020 campaign, whether taxes would rise.
Harry Jackson of MSNBC said: Many of them have benefited from President Trump’s tax cuts and may be hesitant about new taxes and regulations. Will taxes on their small businesses go up under your control? “
Biden replied:’No. Taxes on SMEs will not increase. “
A small business filmed in San Francisco in April was severely damaged during a pandemic.Many of them are now facing an increase in their tax burden
On Thursday, the administration defended the U-turn and insisted that a tax increase was needed.
“President Biden’s SME agenda does more than help companies reach the other side of the crisis,” said Deputy Secretary of Finance Wally Adeyemo.
“It’s about building better and creating a fair economy for all Americans.”
The administration is also under Biden’s proposal that 3.9 million small business owners will expand the expansion of child tax credits and affordable care law subsidies included in the president’s coronavirus rescue law. He said he would receive a tax cut.
Biden was portrayed on June 30th with Speaker of the House Nancy Pelosi. Next week, Pelosi will begin shepherding a budget adjustment plan through the House of Representatives. This will pave the way for tax increases.
The American Tax Reform Council also pointed out that small business owners will be hit by plans to abolish the so-called “basic step-up” rule of inheritance tax.
The current arrangement allows people inheriting from relatives to sell their assets without paying capital gains tax.
Biden plans to get rid of the deal.
Robert W., a tax lawyer. Wood wrote in Forbes: ‘Under current tax law, assets passed directly to heirs are stepped up for income tax purposes.
“It doesn’t matter if you pay the inheritance tax when you die.
“For generations, the assets held at the time of death are gradually raised to market value when you die.
“SMEs rely on this.”