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Fact Check: Harris Threatens New Tax Hikes for Small Business

September 09, 2024

Washington – Vice President Harris’s latest so-called “small business tax relief” proposal is actually intended to distract attention away from her longstanding plans to increase taxes on Main Street. Her proposed minimal deductions for start-up costs are little consolation for the small businesses that are targeted by her plan to impose a new 44.6 percent tax rate on Main Street businesses. These ideas have long been featured in the Biden-Harris Administration’s agenda to punish small business owners, and now Vice President Harris is seeking to take even more from the pockets of Main Street small business operators. House Committee on Ways and Means Chairman Jason Smith (MO-08) issued the following statement:

“Small businesses have more to fear from Vice President Harris’s small business tax increases than they do from today’s struggling economy. Harris remains committed to raising their tax rate to 44.6 percent by getting rid of the 20 percent deduction for small businesses that helped them compete, grow, invest, and hire in their local communities. She is seeking to tax Main Street at a rate more than 20 points higher than Communist China’s, while putting small businesses at a massive disadvantage to corporations.

“Her Mom and Pop Paycut puts billionaires over bartenders by levying new taxes on the hardworking owner-operator of a salon or electrical supply store, while billionaire passive investors enjoy lower tax benefits. Her support for 1099K reporting means anything from selling a used couch to driving an Uber will draw more scrutiny from the IRS.

“In fact, Harris’s record shows that she has consistently supported making life harder for Main Street, seeking more audits from the IRS, more paperwork for independent contractors, more headaches for businesses that declare losses, and even more hardship for families attempting to pass a business on from one generation to the next. Worse, more than half of all Americans work in small businesses – and they’ll be the ones who suffer.” 

The details:

President Harris has consistently sought to raise taxes on small business.

  • Harris is threatening a small business income tax hike to 44.6 percent that puts billionaires over bartenders. Small businesses file under the very rate that Harris wants to increase – including the very start-ups Harris claims she wants to support. She is also calling for a Mom and Pop Paycut by expanding the net investment income tax to owner-operators – billionaire passive investors face the same rate structure, while the hard working owner-operator of a salon or electrical supply store pays more — putting billionaires over bartenders. (Flashback: One-Pager: Democrats’ “Mom & Pop Paycut” is a Small Business Surtax on America’s Small Business Owners) 
  • Even the IRS doesn’t think it can protect small businesses from Harris’s increased audits. Vice President Harris cast the tie-breaking vote for a law that will ramp up audits for small businesses, while claiming otherwise in public. A recent Inspector General report now shows that the IRS can’t protect small businesses from getting hit by time-consuming audits they can’t afford. As part of the Fiscal Responsibility Act, House Republicans successfully passed a portion of the Family and Small Business Taxpayer Protection Act to protect small businesses from these audits – but Harris is doubling down.
  • Family businesses that pass from one generation to the next get it particularly bad in Vice President Harris’s tax plans. 
    • She wants to repeal the Trump Tax Cuts, which protected more family businesses from having to pay special taxes just to keep farms and restaurants run by the family.
    • She wants to increase the Death Tax to 55 percent, while lowering the threshold of small businesses that would be affected – essentially expanding and increasing the taxes families face when trying to continue the family business.
    • She wants a second, supercharged Death Tax. Not content to repeal protections for family businesses, and then to hit more of them with higher taxes, Harris wants to do away with longstanding tax policy that honored America’s tradition of supporting family businesses. 
  • Harris supports kicking small businesses while they’re down by taxing “passthroughs” with losses. Startups often experience losses, yet Harris cast the tie-breaking vote for a $52 billion tax hike on passthrough businesses with declared losses.