If you wanted to find the group getting the rawest deal in 2021 America, you might start with small-business owners. Many are finding themselves working 60- or 80-hour weeks just to scrape by. During the height of COVID-19, these companies were especially beaten down. Between Jan. 1, 2020, and Dec. 31, 2020, about 30% of U.S. small businesses closed, while total small-business revenue decreased by 31%, according to Economic Tracker. During the same period, the stock market boomed, and multinational corporations continued to thrive. The effects of this economic destruction are apparent in communities all over the country. Boarded-up storefronts on main streets across America are the norm.
Given this dynamic, it’s almost incomprehensible that Senate Republicans are about to help pass an infrastructure package that unleashes the IRS to collect more revenue through aggressive policing of small businesses.
Our tax code is massively complex. Huge companies have armies of lawyers and accountants to navigate the complexity. As a result, they often pay extremely low tax rates. Small businesses do not have this advantage. A dentist in America will often end up paying higher effective taxes than a billionaire hedge fund owner. The dentist makes a good living, but when you add in education, health care and other expenses, it would be hard to call him rich. We have had major debates on how progressive the tax code should be (should the rich pay higher wages, or should we have a flat tax system, for example), but nobody outwardly advocates for a regressive tax system, where the rich pay less. That’s precisely what we have at the top end of the tax scale. People are on to it, and it’s leading to much of the political dysfunction we’re experiencing.