But if the pass-through treatment which allows for a 20% deduction of business income is not revised, and C corporations are subject to a higher corporate tax rate, there could be a reversal in the way small businesses incorporate in the future, Nitti says. There also was no new talk of changes to the pass-through deduction for businesses set up as S corporations and partnerships, which could be phased out at higher levels of income. "We didn't see that in the latest proposal," Nitti said. There were no big surprises in the latest tax proposals, but there were a few additions and omissions which are notable.įor many small businesses, it will be good news that the president did not highlight any increase in the payroll tax contributions for Social Security, where a doubling from the current level has been under consideration at higher income levels. There will be more tax increases to pay the piper beyond what we know about today, and that is a big concern," she added.Īnthony Nitti, national tax partner at RubinBrown, said business owners who have been paying attention should not be waking up shocked after Biden's most recent tax policy unveiled this week. "Is it just the opening salvo? We are spending a lot money. "They definitely view infrastructure spending very positively, but the timing is everything, and when coming off a year of devastation, and just digging out of a big economic hole, they just fear what the broader effects of tax increases will be," Kerrigan said. But even if these projects last for a few years they are temporary, he said, while the impact of tax changes could be permanent. "The proponents of the president's proposals will pitch the broad economic benefits," said Kevin Kuhlman, vice president of federal government relations at the National Federation of Independent Business, and there are small business sectors where spending could result in growth such as broadband and infrastructure projects. And ambitious spending initiatives on infrastructure and America's workers can lead to benefits in the form of economic growth and support from the government in future funding of employee benefits. These proposals should not come as a surprise - they were part of Biden's platform while running for the presidency.
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