The Gazette features an op-ed by S Corporation Association President Brian Reardon on how Americans really feel about raising taxes on individually- and family-owned businesses and farms:
The Senate needs to decide how to pay for the massive, $3.5 trillion spending plan announced last week, but according to a Punchbowl News poll, only 37% of congressional staffers believe it is likely Congress will pass a tax bill by the end of 2022. Among Democratic staffers, just half think it is likely.
Why so pessimistic? Maybe because Biden’s tax plans aren’t popular with voters. Contrary to what the White House might tell you, a new poll conducted on behalf of the S Corporation Association confirms that American voters do not support aggressive tax policies or those that target individually- and family-owned businesses and farms.
Changing the way we tax capital might be popular in some circles, but it is clear that voters don’t like the particulars. For example, the Winston Group asked voters whether they support the idea of applying two layers of tax on an estate when the owner dies — a new, higher capital gains tax on any appreciated assets, and then the traditional estate tax on the remainder of the estate. This “double death tax” is a core component of the Biden tax hike plan, but just 25% of voters favored the idea, while nearly 60% opposed it.
Another new idea is the mark-to-market taxation of unrealized capital gains. The plan would force investors and business owners to calculate their total net worth every year and then pay a tax on any increase, even if the gain exists on paper only. This policy would be a cornerstone to a significant hike in the capital gains rate, but it is unpopular with voters. Just 24 percent agree that unrealized gains should be taxed annually.
Expanding the death tax itself is not very popular either. More than six in ten voters said no to the simple question, “Do you favor or oppose increasing the estate tax, which taxes a person’s assets after death?” This should not be a surprise really. Americans have never liked the estate tax – they think taxing a lifetime of savings after a person dies is unfair and un-American.
After hearing they would apply to farms and family-owned businesses, respondents strengthened their opposition to increasing the top individual rates, doubling the capital gains tax, and capping the Section 199A pass-through deduction. These proposals are key parts of President Biden’s proposals, but they have never caught favor with voters. Perhaps that’s because more than 60 percent of voters believe existing taxes and regulations make it difficult for average Americans to start their own business. Increasing them would make it worse.