Washington, D.C. – With the U.S. economy teetering on the edge of a recession, Senate democrats attempted this week to revive President Joe Biden's Build Back Better bill on a much-reduced scale. The effort, sparked by renewed negotiations between Senate Majority Leader Chuck Schumer, D-N.Y., and West Virginia Sen. Joe Manchin, is being described by some as a last-ditch effort to get something through Congress before it adjourns for the summer.
Manchin, it should be recalled, almost single-handedly torpedoed the effort to get the administration's original proposal passed. By opposing it, he denied Democrats the opportunity to create a situation in the 50-50 Senate in which a tie could be affirmatively broken by Vice President Kamala Harris, giving Biden a win.
The new version, however, is said by critics to be little better than what the Senate has thus far been willing to approve. One key element of the new plan, according to published reports, is a more than $250 billion tax hike on small businesses, which, say many economists, is just about the last thing one should consider in an economy battered by inflation and in which interest rates are rising.
The proposal most expect to be included in the upcoming bill, which reportedly has an overall price tag of $1 trillion, would expand the 3.8 percent net investment income tax created as part of Obamacare. That tax is currently imposed on individual passive business income, including interest, dividends, annuities and royalties but not levied on wage income or nonpassive business income.
The Schumer-Manchin plan, as opponents have already dubbed it, would, according to the static method of measuring the impact of tax hikes, raise additional revenue by applying the NIT to nonpassive business income for taxpayers filing as individuals making more than $400,000 and joint filers making more than $500,000.
The Congressional Joint Committee on Taxation estimates the proposal would raise $252 billion over ten years. Its actual impact is unknown, but historically, tax rate increases spark changes in economic activity that often produce less revenue than forecast because of their inherent disincentive effect.
Americans for Tax Reform, a non-partisan advocacy group, estimates the expanded tax would affect key employers all across the country. That includes 1,870 filers in Manchin's home state, 85,870 files in Schumer's New York and 17,000 filers in Arizona, home to Sen. Krysten Sinema, who, unlike her West Virginia colleague, has repeatedly said she would oppose most efforts to increase tax rates that were part of any reconciliation bill.
“While the Left argues this would close a ‘loophole,'” ATR said in a release, “it would actually be a substantive policy change that would increase taxes on small businesses across the country. When Congressional Democrats created this tax in 2010, they deliberately had it apply to passive income, not active business income because of the concern that it would raise taxes on small businesses.”
In stating its opposition to the proposal, the taxpayer group recalled Biden's February 20, 2020, promise that taxes like these would not be increased under his plan. “No,” he said in response to a question during a televised debate. “Taxes on small businesses won't go up.” In fact, “raising taxes on organized as pass-through entities like sole proprietorships, LLCs, partnerships, and S-corporations,” ATR said, would “violate Biden's pledge.” And, because the existing NIT threshold is not indexed to inflation, the impact of the tax will grow as more and more taxpayers are required over time to pay it.
The amount needed to trigger the NIT when it went into effect on January 1, 2013, was $250,000. However, because of inflation, $197,000 in 2013 has the same purchasing power as $250,000 in May 2022, according to the U.S. Bureau of Labor Statistics inflation calculator.
According to ATR, 51.6 million Americans, or 41.6 percent of the labor force, worked for pass-through businesses in 2015. S-corporations employed 32.6 million Americans (26.2 percent of the labor force), partnerships employed 14.3 million Americans (11.6 percent of the labor force) and sole proprietorships employed 4.7 million Americans (3.8 percent of the labor force). Additionally, the group said, 75.2 percent of small employers, defined as fewer than 500 employees, are pass-through entities, with 12.9% being sole proprietorships, 11.8% partnerships and 50.5% S-corporations.
The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.
Manchin has held off the most abhorrent of the democrat’s terrible policies so far, but at the end of the day, he isn’t a democrat by accident. He is a lifelong democrat and will carry their water over the finish line for them in the end. He can’t help himself, he was indoctrinated a long time ago. Isn’t it ironic that the party of John Kennedy who held off Kruschev all those years ago will be the same party to end America in favor of a Marxist, socialist utopia, like China and Russia. Pretty sure Manchin remembers Kennedy. Why doesn’t he have Kennedy’s disgust for communism and not back these commies in Washington? Good question for all the democrats in the Congress and democrats in general. Why are you all commies now?
NO , small business already ruined by 2 years lockdowns
As if you didn’t kill enough small businesses with your BS lockdowns and no gathering in groups. Hpw do you expect these small businesses to survive — stupid question — you don’t want them to. Why not use some common sense and stop all the BS foreign aid to our enemies — whoa — wait — did I say common sense — lost my head for a minute. If you want to get this country back on track and our economy booming again — PUT TRUMP BACK IN THE WH AND OUST EVERY DEMOCRAT/RINO FROM OFFICE !!!!
With inflation soaring and the economy in recession, the brilliant thing to do is raise taxes on businesses that are barely making it. Democrat logic is great, isn’t it?
It never seems to END, does it? They always come after the HEART BEAT of America, small businesses.
The brain dead Democrats doing their best to destroy small businesses. The lockdowns only destroyed half the businesses so they are going to finish off the other half taxing them into closing. The greed of this Democratic Party is disgusting and humiliating. All the Democrats can think about is how to control our lives and our money. Looks like they’re taking lessons from Joe Biden‘s China.While the rich are buying a private island and underground bunkers we are going to be left to starve to death. People need to wake up and start fighting back.
The brain dead Democrats doing their best to destroy small businesses. The lockdowns only destroyed half the businesses so they are going to finish off the other half taxing them into closing. The greed of this Democratic Party is disgusting and humiliating. All the Democrats can think about is how to control our lives and our money. Looks like they’re taking lessons from Joe Biden‘s China.While the rich are buying a private island and underground bunkers we are going to be left to starve to death. People need to wake up and start fighting back. Stop Censoring my comment.
It is time for Biden and his losers to remember the Law of Holes. That is, when you find yourself in a hole quit digging. Biden has caused inflation to soar out of sight for the average American. Practically every activity we engage in costs much more that what it did when Biden took office. Prices for many goods have tripled since then. I have to assume either one of two scenarios. One. No one in his administration has the slightest understanding of basic economics (inflation occurs when too much money chases too few goods). Two. Biden wants all Americans to become destitute and become wards of the federal government. Under either circumstance we, the American people, are paying the price for his idiotic policies.
I will add this. Since Biden became President I find that I have grown physically stronger. When he took office it was all I could do to carry $50 worth of groceries to my car. A couple of days ago I had no trouble carrying almost $80 worth of groceries to my car.
A class of political elites (tax and spend liberals) has been allowed to develop and grow in our government. These elites have never held an actual job but have lived off our government and our taxes. Our founding fathers never envisioned this structure of government. Our elected officials and the minions that work for them have corrupted our political system. WE THE PEOPLE need to take our government back! VOTE ALL DEMOCRATS AND RINOs out of office and demand term limits!
Anybody who votes for a democrat is a blank blank blank loser. PERIOD.
Absolutely agree with you and the others that are questioning the Democrats………….what is wrong with these people??????
Tax abd spend tax and spend the democrat party war cry,two million illegal’s are walking our streets,no jobs, no money, no food, no shelter, no cars, but give up your guns to the biggest crime wave of drugs our country has even seen with now over 100,000 deaths to illegal drugs, Bidens BS is once again for the birds, Mayorkas, your actions toward the laws of our land, your broken oath to all of America, have more then helped to cause all those avoidable tragedies, so many unauthorized illegal’s enter our Country, it’s on your soul, conscious, stop this illegal invasion of people/drugs. Mayorkas bleeds excuses for his on purpose actions, when impeachment time comes, he will cry like a little girl for his lies to Congress and broken US laws. Missuse of taxpayers money, broken oaths of office, public lies to Congress, and not taking any responsibility for all those border crossing deaths.