Joe Biden and Pete Buttigieg both said in the Democratic presidential debate that they wouldn’t raise taxes for small businesses, but both have tax-increase proposals aimed at these entities.
“Taxes on small businesses won’t go up,” Biden said during the debate in Las Vegas, Nevada.
The former vice president proposes increasing the top income tax rate from 37% to 39.6%, the rate that it was before the 2017 GOP tax cut legislation. That rate hike would also affect many small businesses, nearly three-quarters of which file through the individual side of the tax code, according to the National Federation of Independent Business.
Biden’s platform does not propose a tax cut to offset the tax increase.
Buttigieg, the former mayor of South Bend, Indiana, proposes ending the 20% deduction for small businesses that file their taxes through the individual side of the tax code, rather than as C corporations, created by the 2017 tax overhaul.
More than 14 million taxpayers claimed the pass-through deduction, as it is known, on their 2018 taxes, and a large majority had adjusted gross income between $100,000 and $200,000, according to CNBC.
Asked if he would raise taxes during Wednesday night’s debate, Buttigieg responded, “Not if they are small businesses.”
The tax increases are a potential risk for Biden and Buttigieg as they try to win over small-business owners to secure the Democratic presidential nomination, especially repealing the pass-through deduction. Kevin Kuhlman, a senior director of federal government relations at the NFIB, recently told the Washington Examiner that small-business owners hold this deduction in high regard.
“In our research, we found that 72% of business owners find that deduction to be important, and they’re using anything from it to invest in the business and invest in the employees by increasing compensation and creating jobs,” he said. “So, we have seen significant benefits from the implementation of the small-business deduction.”
[Read more: Small business approval of Trump hits record high of 64%: Poll]
