‘Build Back Better’ agenda should not punish small businesses

In the United States, small businesses are once again opening their doors to serving the needs of our communities. But here in Illinois, our unemployment rate still lags behind the rest of the country. We have the highest unemployment rate of any state in the Midwest with 433,000 Illinois people still looking for work.

In order for Illinois to get back on track, our elected leaders must focus on supporting the state’s top economic drivers – Illinois’ 1.2 million small businesses, which make up 45 percent of the state’s total workforce. These small businesses helped us get through the pandemic and now they will guide us to recovery. However, a new proposal from President Joe Biden threatens to undermine those middle-class jobs that drive the president’s “better build” agenda.

In April, President Biden unveiled his American Families Plan, an extensive $ 1.8 trillion program to promote childcare and paid family vacations. To pay for this new program, the President approved a bill known as the STEP Act that increases the tax burden on estates and trusts left by deceased relatives for the next generation. This new tax could be a “killer” for small businesses or farms.

Currently, if the owner of a property – for example a small manufacturer – dies and transfers the business to an heir, the heirs do not have to pay capital gains taxes on an increased value of the property while the original owner was still alive. This is known as the “ground floor” and has helped generations of family businesses continue to operate.

The proposed STEP Act deserves the name “zombie tax” as it retroactively imposes a new tax on the inherited company. Never in our history have hereditary taxpayers been forced to go back in time and correctly assess the original value of assets that could be decades old. And if the heirs of a small business or farm don’t have the money to pay this new zombie tax, they could be forced to cut wages, cut workers’ hours, or even sell parts of the business or farm, to cover this new “zombie” “bill.

This proposal, if implemented, will undermine middle class families, farmers and taxpayers while discouraging entrepreneurship and job growth. A recent study for the Family Business Estate Tax Coalition, which includes nearly 60 organizations representing family businesses, warns of the harmful effects of a zombie tax. The study shows that the STEP Act would cost Americans 800,000 jobs over the next 10 years and lower workers’ wages by $ 32 for every $ 100 raised by taxing capital gains on death.

Instead of creating new tax burdens that put small businesses at risk, let us remove the barriers that keep our state’s unemployment rate high. Our leaders in Congress, including Senators Richard Durbin and Tammy Duckworth, must stand up for common sense and tell President Biden that punishing small businesses will not help America build better.

• Steve Rauschenberger is President of the Technology & Manufacturing Association, a Schaumburg-based agency that acts as a comprehensive resource for manufacturers in the Midwest.