Small business groups tear apart Manchin-Schumer deal: ‘Misery for many more Americans’

Groups representing small business interests criticized the deal announced Wednesday by Sen. Joe Manchin, DW.Va., saying it would increase inflation and hurt employment.

The groups say the agreement, titled the Inflation Reduction Act, will increase pressure on small businesses already struggling to stay afloat amid record high prices and slowing economic growth.

The legislation was unveiled after weeks of negotiations between Manchin and Senate Majority Leader Chuck Schumer, D-N.Y., who said it would ensure corporations and the wealthy “pay their fair share.”

“We all know that taxes are going down,” said Alfredo Ortiz, president of the Job Creators Network, in an interview with FOX Business. “So it’s either going to be an increase in costs and ultimately prices for the consumer, which is inflationary, or it’s going to be a job killer.” At the end of the day, you have several levers to pull. “

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“Taxes are considered input costs,” Ortiz added. “If costs go up, taxes will go up, prices will go up, which again is inflationary and will affect the average small business owner, the average American consumer.”

The deflationary bill that President Biden endorsed would cost an estimated $433 billion, most of which would be invested in climate regulations, while increasing tax revenue by $739 billion. The bill ensures that large corporations pay at least 15% in taxes, which alone would increase tax revenue by $313 billion and strengthen IRS enforcement, raising tax revenue by another $124 billion.

The legislation also closes the carried interest loophole, which allows private equity fund managers to pay lower taxes on certain income. This provision would increase revenue by $14 billion.

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“The Schumer-Manchin tax hike deal is presented as a tax hike that will only affect big corporations and the wealthy. Make no mistake,” Small Business and Entrepreneurship Council President Karen Kerrigan said in an email to FOX Business. “The effects of these tax increases will be felt and borne by ordinary Americans and our nation’s small businesses.

“Increasing taxes on carried interest means that many entrepreneurial firms and small businesses across sectors will not have access to the capital they need to compete, scale, innovate and deal with challenging economic conditions. It will only hurt local economies and workers and, more broadly, undermine U.S. competitiveness.”

Manchin and Schumer agreed to a cut budget Wednesday that would raise taxes on the wealthy and corporations.

Kerrigan added that the 15% minimum corporate tax would hit workers and small businesses that rely on large companies for supplies.

“Our economy faces dangerous headwinds,” she continued. “America’s businesses and investors need as much of their capital as possible to heal supply chains, support their workers and weather disruptive inflation.” Instead of piling up painful government spending that ultimately hurts workers and small businesses, policies should provide relief and stability.”

U.S. economic growth fell 0.9 percent in the second quarter after a 1.6 percent decline in the first quarter, according to a Commerce Department report released Thursday. Consecutive quarters of negative growth suggest that the US has technically entered a recession.

Chuck Schumer's reconciliation bill

Senate Majority Leader Chuck Schumer, DNY, speaks to reporters on Sept. 28, 2021. (AP Photo/J. Scott Applewhite/AP Newsroom)

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Meanwhile, inflation jumped 9.1% year-on-year in June, the highest increase since 1981.

More than half of small businesses report that inflation has a significant impact on their business, while another 35 percent say it has a moderate impact, a recent survey by the National Federation of Independent Business found. Higher energy prices have negatively affected 96% of small businesses, according to the survey.

“The so-called ‘Cut Inflation Act of 2022’ will make 2022 and beyond painful for all of America,” Kerrigan told FOX Business. “Instead of reducing inflation, it will fuel it and make many more Americans miserable.”

Joe Manchin

Sen. Joe Manchin, Democrat of West Virginia and chairman of the Senate Energy and Natural Resources Committee, speaks during a press conference at the CERAWeek 2022 conference in Houston on March 11, 2022. (F. Carter Smith/Bloomberg via Getty Images/Getty Images)

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In addition, the Chamber of Commerce, the nation’s largest business advocacy group, encouraged Congress to reject the Inflation Reduction Act on Thursday.

“This legislation includes taxes that would discourage investment and undermine economic growth and price controls that would limit American innovation,” said Chamber of Commerce Chief Policy Officer Neil Bradley. “Both will make our economic problems worse.”

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