Small businesses share views on proposed tax reforms, workforce shortages

Small Business Majority
Wednesday, August 18, 2021

As lawmakers in Washington consider a robust budget reconciliation package to invest in “human infrastructure” and debate how to pay for this plan, it’s important that they consider the perspective of America’s job creators on these issues. Small Business Majority surveyed small business owners and managers of operations at small businesses around the country to better understand their views on our tax system, as well as their opinions on tax policies that have been proposed to offset the costs of the human infrastructure plan.  

The survey reveals that America’s small businesses strongly believe our nation’s tax system favors large corporations and the wealthy over Main Street. They feel disadvantaged by loopholes that allow larger and wealthier businesses to avoid paying their share of taxes, expressing the following views on our nation’s tax policies:  

  • The current tax system favors big business over small businesses like mine (73% agree). 
  • Offshore tax loopholes allow big businesses to avoid paying their fair share (69% agree). 
  • Wealthy individuals currently do not pay their fair share of taxes (64% agree). 
  • More tax incentives for small businesses should be provided (76% agree). 

Additionally, the respondents showed strong support for a number of provisions aimed at leveling the playing field  through tax reforms, many of which have been proposed as a way to help pay for the $3.5 trillion human infrastructure package being debated by Congress. This includes the following measures: 

  • Nearly 7 in 10 (69%) support 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. 
  • Two-thirds (66%) support setting a minimum tax rate of 21% on corporate offshore profits. 
  • Sixty-five percent support increasing the tax rate on households earning more than $400,000 per year. 
  • Sixty-two percent support increasing the tax enforcement budget at IRS to audit larger businesses and the wealthy.  
  • Roughly 6 in 10 (59%) support attracting private investment through financing authorities and issuing bonds.  

Meanwhile, the issue of workforce shortages has been a hot topic over the past few months, particularly its impact on recovering businesses. Our survey found that small business owners have mixed views on this topic. More than half of small businesses (53%) are hiring or have hired recently, and 37% who are hiring report the hiring process has been easy, while nearly the same number (42%) report it has been difficult. Additionally, a number of businesses have taken measures to create more incentive for workers such as: increasing pay (32%), increasing benefits (20%), creating more part-time positions (26%) and hiring younger staff (23%).  

As this survey reveals, small businesses want a more level playing field when it comes to our nation’s tax system. They support policies that will help them compete while offsetting the cost of investments in healthcare, child care and paid leave that would provide a much-needed boost on their road to recovery. As policymakers debate the human infrastructure package, it’s critical that they take these views into account.