Why Taxes for Small Businesses Suck

Capitalists exploit workers in order to create profit. That’s a given. But then there are people like me – small business owners, sole proprietors, and entrepreneurs. On the one hand, I own the means of production; so I’m like the capitalists, on the other hand, I’m the one sitting here building the websites; so I’m also a worker.

The benefit to being in this “middle class” is that I’ve escaped the exploitation of the capitalists. My financial destiny is in my own hands. Right? Well, not really. Since the capitalists can’t directly exploit the fruits of my labor for their profits, they’ll rig the tax code against me. This way, they maintain their profits, and someone else pays for the schools that educate their workers, the roads and public transit that bring the workers to their offices, and all the other public services necessary for a functioning society.

Tax Month Kicks Off with Lots of Tax News

There was a flurry of tax news to close out last week. On Wednesday, President Biden unveiled an infrastructure plan that’s widely been panned by Republicans as a trojan horse for raising taxes. It should be noted the tax plan laid out in the infrastructure bill only raises taxes on corporations. Then, in a miracle of timing, the Institute on Taxation and Economic Policy released a study finding 55 major corporations paid $0 in Federal Taxes on their 2020 profits.

Also happening at the end of last week (a bit closer to home), my accountant finished my taxes and I’ve got a $2,900 bill remaining in addition to what I’ve already paid in quarterly estimates.

How is it that my 2020 tax bill comes up to about $15,000 while the likes of Nike, HP, FedEx, and many other household names paid nothing.

Okay, some of them didn’t pay nothing. They got money back. That’s right, not only did HP not pay a dime in taxes on their profits, the government gave them a $24 million dollar refund. Nike saw a refund over $100 million. Treehouse Foods had an effective tax rate of -1,167.1%.

All told, these companies dodged $12 billion in taxes – $8.5 billion in tax avoidance and $3.5 billion in rebates.

Looking at Government Priorities

The best estimates are that the U.S. homeless population hovered around 570,000 in 2019. That same year, Congress allocated $208 million to the Emergency Solutions Grant Program – the federal government’s primary tool to fight homelessness. FedEx, saw a tax rebate of $230 million – more than the government spent to ensure one of the most basic needs of its citizens.

The rebates Duke Energy ($281 million rebate) and Cabot Oil & Gas ($32 million rebate) received were equal to the entire amount of money the federal government spent on its suicide prevention program for veterans. More broadly looking at mental health, the Substance Abuse and Mental Health Services Administration (SAMHSA) is seeking $5.7 billion to fund its operations for FY 2021. That’s less than half of what the 55 corporations avoided in tax.

Head Start, the federal program that delivers comprehensive early learning, health, nutrition, and family support services to children ages 3 through 5 living in poverty received less funding ($11.6 billion) than what these companies avoided in taxes.

I could go on, but I think you get my point.

Shifting Society’s Needs to Small Businesses

If everyone was paying their fair share in taxes, you wouldn’t hear me complaining about paying my taxes – both my income taxes and my self-employment taxes. But that’s not the case. The capitalists need an educated workforce. They need reliable electricity, water, roads, bridges, and transit. But are they willing to dip into their profits to pay for it? Nope! That’s cost that gets shifted to small businesses like mine that can’t afford an army of accountants, lobbyists, and lawyers.