Update: On August 24, 2021, the House of Representatives approved the $3.5 trillion budget resolution package.
Joe Biden knows that supporting small businesses is politically popular; that's why the president just recast his Build Back Better Agenda as means for growing jobs and creating a fairer tax system for Main Street.
The White House late last week published a fact sheet, outlining a litany of reasons small businesses ought to favor the Biden agenda. In addition to painting previously proposed measures such as an extension of subsidies for paid leave and child tax credits as small-business benefits, the memo showcases how raising the corporate tax rate to 28 percent (from 21 percent) and ramping up IRS enforcement of tax avoidance strategies among large corporations levels the playing field for small businesses.
"In short, President Biden's plan lays the foundation for American small businesses to win the 21st century," reads the document. And, in return, small businesses may well be the key to getting it passed.
Lawmakers on both sides of the aisle have taken issue with all or parts of the $3.5 trillion budget resolution, which sets the stage for passage of Biden's ambitious American Families Plan later this fall. The budget resolution blueprint passed the Senate on August 11, and the House is expected to vote early this week, after returning from its August recess. While an approved plan doesn't require Republican votes, it will need Democrats to remain unified behind the package.
Progressive Democrats in the House want to approve a spending package before they vote on the infrastructure bill, which passed the Senate on August 10. The GOP opposes both raising corporate taxes and adding to the deficit--although it's not yet clear if this plan would add to the deficit. Moderate Democrats, including Senators Kyrsten Sinema of Arizona and Joe Manchin of West Virginia, have said the resolution figure is too high, yet they've not said what number they'd prefer.
One thing everyone can get behind? Small business.
"Small business is motherhood and apple pie on the Hill," says Robert Litan, an economist and nonresident senior fellow at the Brookings Institution, a nonpartisan think tank in Washington. So it makes sense, then, that Biden painted many of his wish-list agenda items as beneficial for small businesses, adds Litan.
By extension, it also tracks that lawmakers will favor the small-business provisions, as outlined in the fact sheet. "I would be surprised if the small-business measures get left on the cutting room floor," Litan adds.
Among the highlights, which includes a 15 percent minimum tax on book income--income before taxes and the amount most often disclosed to shareholders--of "large, highly profitable" corporations, there's:
- An extension of the tax credits authorized by the American Rescue Plan for small businesses that buy health insurance through HealthCare.gov. According to the White House, the tax credit, which offsets an individual's health insurance premiums, saved families an average of $50 per person per month. The Build Back Better Agenda makes the premium reductions permanent, benefiting the 1.2 million small-business owners who already access the exchanges, the White House estimates.
- An expansion of the enhanced child tax credit--valued at $3,000 for children 6 to 17 years old and $3,600 for children under 6. The previously existing child tax credit was $2,000. While Biden's fact sheet doesn't indicate when the extension of the credit would end, a prior proposal has the measure running through 2025. The White House pointed to new research from the Department of the Treasury showing that more than three million small-business owners with children would benefit from an extension of the cuts.
- An extension of employer-subsidized paid leave--with 12 weeks of paid leave by year 10 of the program, and three days of bereavement leave per year starting in year one. The Families First Coronavirus Response Act, first passed on March 18, 2020, and extended through September 30, 2021, by the Economic Aid Act, fully subsidizes enhanced paid leave benefits for all employers. It is not clear if Biden's BBB agenda will also offer to subsidize wage replacement for bigger companies. Citing a "state-level study," the administration says nine out of 10 business owners experienced a positive affect on productivity, profitability, and turnover after adopting paid leave.
The memo also contains plenty of more traditional small-business-focused items: There's a plan to inject "billions of dollars" into the Small Business Administration's flagship 7(a) loan program. Biden will further ask Congress to seed a new financing facility to allow the federal government to co-invest with private capital in small manufacturers, and he's calling for an increase in federal contracting opportunities for small businesses.
While Biden won't get everything on his wish list, you can certainly conclude that he's trying to make doing so more palatable, says Dean Baker, a senior economist at the nonpartisan Center for Economic and Policy Research in Washington, D.C. "The Biden administration is trying to say there are clear economic benefits [to his agenda], and small businesses, in particular, are in position to gain from it," he says. "Trying to connect this to a broader economic agenda is an obvious way to go and also politically popular."