The Biden administration estimates 52% of small business owners in the state would face a tax hike under Sen. Rick Scott’s plan, with the typical business paying an extra $700 per year in taxes.
More than half of Wisconsin small business owners, including 80% of those who earn less than $50,000 per year, would face a significant tax increase under a Republican-proposed tax plan, according to a new White House analysis.
Earlier this year, Florida Sen. Rick Scott—who was put in charge of the Republican effort to win back control of the Senate—released a 60-page, 11-point plan for America, a grab bag of conservative priorities that he would push to enact if Republicans are victorious in November. Scott’s proposal—which Wisconsin Sen. Ron Johnson described as a “positive thing”—includes plans to raise taxes on the poorest Wisconsinites and potentially end Medicare, Social Security, Medicaid, and the Affordable Care Act.
Scott—who in 2018 was worth $260 million—did not provide details about how his plan would work, but a new White House analysis suggests it would also raise taxes on small businesses.
The analysis found that under Scott’s plan, 52% of small business owners in Wisconsin would face a tax hike, with the typical business paying an extra $700 per year in taxes. The Republican’s proposal would also disproportionately harm those small businesses earning under $50,000 per year, with 80% of such business owners experiencing a median tax increase of $500 per year.
Democratic Party of Wisconsin spokesperson Julia Hamelburg hammered Scott’s plan.
“Working families across our state deserve to know that if Republican politicians get their way, almost one in three Wisconsinites would see their taxes increase—including many small business owners,” Hamelburg said in a statement. “While Democrats are working to lower costs and cut taxes, Republicans continue to push an agenda that favors billionaires and large corporations over Main Street businesses.”
President Joe Biden has also criticized Scott, highlighting the exorbitantly wealthy senator’s desire to raise taxes on those who can least afford to pay more.
“We have a very different view than Sen. Scott and Republicans that want to raise taxes on the middle-class families and want to include half of small-business owners in that,” Biden said last week.
Biden, on the other hand, has introduced his own plan to help small businesses, which aims to:
- Offer more than $300 billion in loans and equity investments through 2030.
- Invest in programs that help entrepreneurs find the resources they need.
- Direct hundreds of billions of dollars in government contracts to small businesses.
- Reform the tax code to raise taxes on big corporations and help make things more fair for small businesses.
Biden’s efforts would build on what his administration has called the “small business boom” that’s occurred under his leadership.
In 2021, Americans applied to start 5.4 million new small businesses, a number 20% higher than any previous year on record. During the first three quarters of 2021, small businesses with fewer than 50 employees helped create 1.9 million jobs. These numbers were buoyed by Biden’s American Rescue plan, which delivered hundreds of billions of dollars in financial assistance to small businesses to help them get through the pandemic.
Wisconsin has experienced particularly strong growth, with the majority of counties seeing an increase in the number of small businesses between the third quarters of 2019 and 2021, according to research from the Economic Innovation Group.
Dane County saw a 6% increase in the number of total private business establishments from the third quarter of 2019 to the third quarter of 2021, while Milwaukee County experienced a 5% increase. Many smaller counties also benefited from growing entrepreneurship. Menominee County, for example, experienced a 16% increase in the number of businesses, while Crawford County saw a 13% uptick.
While there are many factors that contributed to this growth, the influx of federal and state aid is impossible to ignore. On top of the federal Paycheck Protection Program and other federal efforts, Wisconsin Gov. Tony Evers also directed well over $500 million in coronavirus relief funds to small businesses, according to a recent report from the independent Wisconsin Policy Forum.
“Wisconsin stood out by allocating much more of its ARPA funds toward payments to businesses and nonprofits and other economic development and workforce efforts,” the report reads. “Data shows Wisconsin has devoted nearly 58% of its ARPA funds to economic relief and development while other states have devoted only 5%.”
These efforts have paid off, but that success could be short-lived if the Scott plan were put in place.