State by State Analysis: Impact of Proposed Tax Increases on Small Businesses
By: Neil Bradley, EVP and Chief Policy Officer, U.S. Chamber of Commerce
July 13, 2021
The Biden Administration has proposed $3.6 trillion in tax increases, including increasing the corporate tax rate by one-third to 28% along with a host of other tax increases on employers. Proponents of these tax increases have sought to defend the proposal by suggesting that the tax increases would only impact relatively few large corporations. But analysis of IRS and Census data reveals that there are 1.4 million small businesses that will be directly impacted by the proposed tax increases. Just as businesses are beginning to recover from the pandemic, rehiring, and raising wages the administration’s proposal would increase by one-third the tax rate paid by many employers.
There are 31,315 employers in Arizona that will see their taxes increase under the administration’s proposal, this includes 21,646 small businesses with fewer than 500 employees. If the administration’s proposed tax increase becomes law, 31,315 Arizona employers will face a combined federal - state tax rate of 31.5%, a rate even higher than the tax rate imposed in most European countries and even China.
As the table below highlights from the national data, employers in every sector of the economy will be impacted by these tax increases.
Make no mistake, the proposed tax increases will hit Arizona employers just as they are recovering from the pandemic. The result: higher taxes for Washington, but fewer jobs and lower wages for the people of Arizona.