Survey: Small businesses support tax reforms to pay for robust infrastructure investments

Small Business Majority
Tuesday, June 8, 2021

The size and scope of the American Jobs Plan—the White House's $2 trillion proposed infrastructure reform plan—continues to be hotly debated on Capitol Hill, and proposals to pay for infrastructure investments via tax reforms are some of the most contested pieces of the plan. A new small business survey reveals that small businesses strongly favor key provisions of the American Jobs Plan, and they support paying for them by enacting reforms that would require wealthy corporations and individuals to pay a higher share of taxes. 

Specifically, the survey found broad support for key provisions included in the American Jobs Plan, including the following investments:

  • Improving the nation’s physical infrastructure, such as roads, bridges, and airports (79% support, 58% strong support) 
  • Expanded and enhanced broadband infrastructure (76% support, 53% strong support)
  • Community-based small business incubators and innovation hubs to spur entrepreneurship (80% support, 59% strong support)
  • Programs that support the nation’s manufacturers (75% support, 50% strong support)
  • Clean energy and clean water projects (83% support, 63% strong support)
  • Increased opportunities for small firms to obtain federal contracts to work on infrastructure projects (80% support, 63% strong support)

One idea for paying for infrastructure improvements include establishing a 15% minimum tax on profits that the largest corporations report to their investors (“book income”), which would stop firms from using manipulated “taxable income” to pay little or nothing in taxes. More than 3 in 4 (76%) small businesses support this idea. Additionally, 7 in 10 (71%) support setting a minimum tax rate of 21% on corporate offshore profits. 

Another proposal would increase the corporate tax rate from 21% to 28%. When asked how they felt about increasing the corporate tax rate to help pay for the infrastructure plan, a majority supported the idea (52% total support and 41% strongly support), and just 18% said they are strongly opposed to the tax increase. It is also important to note that the majority of small businesses would not be affected by the corporate tax increase; only 12% of businesses surveyed are organized as C-corporations and just 5% of small businesses nationally pay the corporate rate. Lastly, some have proposed increasing the top rate for wealthy individuals (those with more than $628,300 per year in income) from 37% to 39.6% to help pay for infrastructure improvements. This idea is supported by 67% of small businesses, with more than half (54%) strongly supporting it.

The survey also examined the current state of small businesses as local economies start reopening and found that small business owners are struggling to survive, much less grow their enterprises. The survey revealed that 22% of small businesses say their business operations are still on the decline, and 30% are not able to grow. Additionally, more than 1 in 4 small businesses reported they may not survive past three months without funding or market changes, and 10% of small businesses are temporarily closed. These numbers are holding steady compared to our April 2021 survey, when 25% of business owners reported their businesses were on the decline, and 11% were temporarily closed.

Even prior to the pandemic, more than half of small business owners said that infrastructure investments were essential to the success of their businesses. Taking into account how many small businesses are still struggling, it’s not surprising that they support policies that could create new business opportunities and stimulate the economy. The American Jobs Plan is designed to help businesses recover by increasing their federal contracting opportunities, encouraging innovation, and strengthening manufacturing supply chains while leveling the playing field through tax reforms. In order to support the growth of small businesses on their road to recovery, these investments could be critical to their success.