The Biden administration, and the Democrats at large, have been vocal in their support for small businesses and the working class. Reforms including tax breaks for the economically disadvantaged, increased support of struggling businesses, and workers’ rights are common stances highlighted in the party’s platform and recent executive orders. Despite Biden’s political leanings, it is important to remember that no President can completely shift the fiscal landscape by themselves. The proposed changes would first have to be approved by Congress.
Placing More Power in the Hands of Small Business and Workers
Considering the service of federal employees during the pandemic, Biden included in his legislative package steps needed to protect and empower federal employees. Changes include:
- Increase worker voice by restoring collective bargaining and worker protection.
- Establish a $15 minimum wage for federal employees.
- Provide emergency paid leave for federal workers.
Biden’s support for non-federal organizations includes establishing a network of benefit delivery teams across the state and federal levels to better help people and businesses access COVID-19 support services. Biden has been vocal in his demands that every business with fewer than 50 employees will be provided relief, particularly minority-owned businesses. A taskforce dedicated to supporting businesses as they navigate federal aid programs would be one of the first steps in overcoming the larger issue preventing many from receiving the support they should qualify for.
Leveraging the Tax Playing Field Between Large and Small Businesses
Biden’s determination to raise taxes counteracts Trump’s Tax Cuts and Jobs Act of 2017. If passed, the top corporate tax rate will rise from 21% to 28%. Biden’s Tax Plan also proposed the addition and expansion of several tax credits designed to promote companies struggling from recent layoffs and community improvement:
- Create a Manufacturing Communities Tax Credit to reduce the tax liability of businesses in communities impacted by workforce layoffs and government closures.
- Expand the New Markets Tax Credit to attract private investment to distressed communities.
- Provide a tax credit to small businesses that establish retirement savings plans.
- Expand opportunities for renewable-energy-related tax credits while stopping tax subsidies for fossil fuels.
Supporting American Companies and Manufactured Goods
On January 25th, Biden issued an Executive Order designed to support American-based companies. While existing laws currently require government agencies to give preferences to American firms when soliciting contracts, the execution of these parameters has not been consistently upheld.
This Order modifies the traditional understanding of domestic preferences to include the following stipulations:
- Increase the threshold and the difference in price over which government can buy products from a foreign supplier compared to domestic goods.
- Increase visibility and management of potential waivers to domestic preference laws.
- Mandate agencies to scout for new domestic supply partners through the Manufacturing Extension Partnership.
- Establish a cross-agency review of all domestic preferences to ensure all protocols are being followed.
Additionally, Biden proposed to increase the tax rate from 10.5% to 21% on Global Intangible Low Tax Income earned by foreign affiliates of US companies from intangible assets.