President Donald Trump has promised to create millions of new high-paying jobs. One easy first step to doing that is to repeal Biden regulations on America’s 4 million business partnerships (sometimes known as S corporations) that are prolific job creators. The latest estimates find 10 million Americans employed by these business partnerships, with $800 billion paid in worker salaries and benefits.
As an example of the importance of this business model, “90 percent of Microsoft’s commercial revenue flows directly through our partner ecosystem,” according to a post on the Official Microsoft Blog.
The profits from these enterprises are passed through to the 28 million partners, who make tax payments based on their share of those earnings.
These have been the tax rules governing partnerships for many decades. The Biden administration didn’t like the tax rules, so instead of asking Congress to change them, then-President Joe Biden’s Treasury Department worked through the back door to unilaterally modify the rules as part of its “fairness” agenda.
The Biden crackdown treated business partners as tax cheats. When the IRS proposed hiring 87,000 employees to harass companies and individuals, tax collectors were to be hired to, among other things, expand enforcement focusing on complex partnerships. The 4 million business partnerships became an overnight suspect class, as did the tax returns of millions of partners.
To pry money out of these partnerships, then-Treasury Secretary Janet Yellen created a now-politically motivated unit to investigate and audit partnerships. It should be disbanded.
The Biden team even wanted to create a retroactive tax (which should be illegal) by changing the rules and applying them going back six years in time. So a tax structure that may have been perfectly legal in the past could now trigger investigations, fines, and litigation.
More than 90% of partnerships are small businesses, according to an Ernst & Young study prepared for the Small Business & Entrepreneurship Council last year. The business partnership arrangement allows these firms to have ready access to needed capital to expand their operations. In all, these companies generated $1.3 trillion to our GDP.
These partnership arrangements allow promising small companies to grow into large ones. This uniquely American business structure is a hallmark of U.S. entrepreneurial success – a path for businesses to go from good to great.
It isn’t broken. The system works. That’s why the Trump Treasury Department needs to immediately command the IRS to cease and desist the Biden witch hunt against these partnerships. It’s a war on wealth. A war on U.S. businesses. And it’s a direct assault on the Trump promise to “make America great again.”
Stephen Moore is a visiting fellow at the Heritage Foundation. He is also an economic advisor to the Trump campaign. His new book, coauthored with Arthur Laffer, is “The Trump Economic Miracle.”
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Retroactive tax? How about retroactive abortion on all the perpetrators of the deliberate mess they ‘ve created. Pickpockets and thieves.
It is great to finally have a businessman at the helm like Pres. Trump who understands that Small Businesses are the life-blood of our economy. Pres. Trump is for economic growth for all, while Biden’s was for over regulation, anti business and pro-taxation, reckless spending and trillions in DEBT…..Biden’s regime was a nightmare of over-regulations for small businesses that thousands of them folded, which then led to huge unemployment. Think when you vote if you care about your daily bread. May God bless all voters with wisdom.
S corporations themselves don’t pay taxes. Income is passed through to individual shareholders who are required to file individual tax returns. Herein lies the problem. Underreporting of S Corporation income is one of the main contributors to the “tax gap” (difference between taxes owed and taxes paid). No one wants to hurt small business owners. We just want people to pay the taxes they owe like the rest of us.
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