The White House is keeping all options on the table when it comes to covering the costs of the massive "Build Back Better" bill. President Biden has signaled he's willing to cut the price of the spending bill from $3.5 trillion down to less than $2 trillion, in order to win over moderate Democrats who have held up the bill for weeks. But even with a lower price tag, the bill would still be paid for largely with higher corporate and business taxes. A White House spokesman says all options remain on the table for tax hikes, including raising the corporate tax rate from 21% to 28%.
The president and his allies repeatedly insist the tax hikes will target "the rich" or "millionaires and billionaires." But economists warn raising business taxes will impact far more than just fat cats. "If the point of the bill is to stimulate the economy, taking money away from businesses is not the way to do it," says Zilvinas Silenas, president of the Foundation for Economic Education (FEE). "If you take money away from businesses, there is no money left to stimulate those businesses...or for them to make new investment decisions or better production decisions."
The proposed tax hikes would especially impact small businesses and startups, many of which would find themselves in the same boat as behemoths like Walmart or Amazon. "The (business income) level at which the corporate income tax would apply I think is five million dollars," says Silenas. "If you have a business, you know that five million dollars in turnover is not that large."
"So the rhetoric that it's just the rich that will pay for this is absolutely misleading."
Regardless of the bill's final stated cost, its actual price tag will end up being much higher. And everyone will feel the brunt, whether it's through higher taxes for businesses or higher prices for consumers. "It might impact GDP growth, it might impact jobs numbers, as well," says Silenas. "Any way you slice it, increased taxes on businesses and increased taxes on companies---that is not good for business."
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