Federal COVID-19 unemployment benefits are set to expire in September, and that’s great news for small businesses. Unfortunately, the real fight to save small businesses is only beginning as President Joe Biden seeks to implement an economic agenda that is anti-small business.
Though clearly well-intentioned, federal COVID-19 assistance ended up incentivizing too many workers to stay home rather than return to work and has been a continued impediment to full economic recovery.
Although the economy has been steadily adding jobs each month this year, the United States is still down about 7 million jobs compared to before the pandemic, and weekly initial jobless claims continue to hover around 400,000 — roughly twice the pre-pandemic rate.
It’s not hard to see why. As of July 10, more than 9 million people were receiving federal COVID-19 benefits, and 7.5 million are expected to still be receiving them when they expire on Sept. 6.
A recent study by the JPMorgan Chase Institute found that with the addition of federal COVID-19 benefits, nearly half of jobless workers make as much money, or more, than they did with their old paychecks. This is why over half the states in the country have already moved to end federal COVID-19 benefits early.
“Businesses across the state continue to say they would grow and expand if it wasn’t for the lack of workers. ‘Help Wanted’ signs line our streets,” said South Dakota Labor and Regulation Secretary Marcia Hultman when the state cut federal COVID-19 benefits in May. “South Dakota is, and has been, ‘Open for Business.’ Ending these programs is a necessary step towards recovery, growth, and getting people back to work.”
Ending these programs is a necessary step toward recovery and growth for the entire country. This is especially true given the further challenges small businesses are facing from the Democratic agenda.
Biden’s proposed $3.5 trillion budget, which is in addition to the economically damaging trillion-dollar infrastructure package that even some Republicans supported, is packed with provisions that will harm small businesses, including expanded benefits that would extend and could even worsen the labor shortage. It also imposes burdensome regulations that would further prevent small-business growth and may even put some out of business altogether. Even more, Biden’s desired record-setting spending would likely further drive up inflation, which is already hammering small businesses across America.
Then, there are the taxes.
Someone needs to pay for the spending spree envisioned by Biden and his establishment cronies, and small businesses are set to pay much of the price tag. Biden is seeking to increase taxes on small businesses structured as corporations by a full third. Over 1 million small businesses in this country are registered as corporations, and a 33% tax increase on the heels of a pandemic would be a further step back.
On top of that, Biden’s proposed capital gains tax hike would have entrepreneurs who sell their businesses pay about 50% of their profits to the tax man, and Sen. Ron Wyden’s deceptively titled Small Business Tax Fairness Act will actually cut the 20% small-business tax deduction, which was a key pillar of the booming economy under former President Donald Trump before the pandemic.
The coronavirus lockdowns and overly generous federal COVID-19 benefits devastated America’s small-business economy. It’s only now getting back on its feet, but unfortunately, Biden seems all too eager to put it back on its knees. Workers need to be encouraged to go to work, not incentivized to stay home, and small businesses should be provided the freedom to thrive instead of being burdened with strangling taxes and regulations.
Now more than ever, politicians in Washington should embrace the free market principles that gave this country the most powerful and dynamic economy on Earth. The future of small businesses depends on it.
Papa John Schnatter is the founder and former chairman and CEO of Papa John’s International.
