Republicans warn Democrats' proposed tax hikes 'capitalizing on attacking small businesses'

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Republican lawmakers during a GOP roundtable Tuesday condemned Democratic efforts to increase taxes on business, accusing them of "capitalizing on attacking small businesses."

The lawmakers accused the federal government of actively working against small businesses and smothering them through social programs that disincentivize workers.

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Oklahoma Republican Rep. Kevin Hern told small business owners present at the roundtable: "Your biggest competitor, unfortunately, today is the federal government."

Rep. Kevin Hern, R-Okla., sharply criticized Democratic proposals to raise taxes on businesses  (Photo By Tom Williams/CQ-Roll Call, Inc via Getty Images / Getty Images)

The lawmakers pointed to vaccine mandates, inflation and taxes as the biggest threats facing small businesses across the U.S.

House Minority Leader Kevin McCarthy, R-Calif., said recent proposals by Democratic leaders to raise taxes and help fund President Biden’s multitrillion-dollar infrastructure and social spending package will further cripple small businesses. 

In August, a review by the Treasury Department said 97% of all U.S. small businesses that file as an S-corporation will not see any tax hikes under Biden’s proposed corporate tax increase. 

Many small businesses file as S-corporations, as opposed to C-corporations, which means they do not pay a corporate tax. These small business owners instead "pass-through" tax payments and report business income as personal revenue. 

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Democratic lawmakers have proposed increasing the corporate tax rate to 28%, up from 21%.

But in response to questions from Fox News about the Treasury’s analysis on limited tax hikes for small businesses, GOP lawmakers challenged the review. 

"I don’t know how they say that without knowing what’s in the bill," McCarthy said. "I can’t believe with a straight face that anybody can give that report."

House Minority Leader Kevin McCarthy ripped Democrats’ proposed tax-and-spend bill.  (Photo by Win McNamee/Getty Images / Getty Images)

The minority leader said the multitrillion-dollar price tag will lead to inflation, which will, in turn, lead to increased revenue costs and incentivize business owners to source out manufacturing and employment overseas. 

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"The vast majority of businesses in America, 30 million … are small businesses," Hern told Fox News. "About 10% of Americans have a business. This means 90% of Americans out there truly don’t understand how the structure of a pass-through entity works and I think that’s why the Democrats are capitalizing on attacking small businesses because it’s an easy target."

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