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The administration proposes to pay for the AJP with the Made in America Tax Plan that, among other corporate tax changes, would partially roll back the 40% corporate tax rate cut passed in 2017. The new corporate tax rate would be 28%, which would still leave the rate 20% below the 35% rate just three years ago.

The Penn Wharton Budget Model projects all the proposed corporate tax changes in the TMATP would raise almost all of the cost of the AJP: $2.1 trillion over 10 years.

Opponents of the new corporate tax rate would like the public to believe that it will harm the nation’s small businesses. “(I)t’s a tax increase on small businesses, on job creators in the United States of America,” said one Republican senator.

Yes, small businesses are the real job creators that represent 99.9% of all businesses and that have created two-thirds of all new jobs since the 2008 Great Recession.

But the reality is the change in the corporate tax rate will impact very few of our more than 30 million small businesses. Only a very small percentage of small businesses are C-corporations that will pay a slightly higher corporate tax rate. That is because small businesses are overwhelmingly sole proprietors, limited liability companies and S-corporations, all of which pass business profits through to their owners who pay the taxes at their individual tax rate.

Biden is also expected to propose raising taxes on personal incomes of more than $400,000. So will small business owners pay higher individual taxes under this tax plan?

No. Very few small business owners make more than $400,000 a year. In fact, 83% of small business owners make less than $100,000, with the average income being $66,373 in 2019.

The 2017 corporate tax cuts masqueraded as a plan to enable big businesses to invest in growing their operations, employ more workers and pay higher wages. The tax cuts were promised to pay for themselves by generating more economic activity overall, resulting in increased tax revenue despite the lower rate.

Instead, corporations overwhelmingly used their windfall for record-breaking stock buybacks that artificially inflate the value of their stocks to benefit their shareholders and executives. As a result, corporate income taxes decreased by $100 billion, thus increasing the federal deficit by 26%.

In fact, big corporations have used legal deductions, tax breaks and other tax loopholes to lower their effective tax rates to well below the 21% tax rate that took effect in 2018. About 400 of the Fortune 500 companies paid an effective tax rate of only 11.3% in 2018. Last year, 55 of the country’s largest businesses (think FedEx, Nike and Archer-Daniels-Midland) paid no federal taxes despite bringing in billions in profits.

The AJP’s associated tax changes will begin the process of making large corporations pay their fair share toward the services of the federal government from which they benefit.

The bottom line is the AJP and its tax provisions will not harm small businesses but instead, through bold infrastructure investments, will stimulate local economies and benefit small businesses that provide goods and services.

The result will be the economic benefits the 2017 corporate tax cuts promised and failed to deliver.