Yesterday was American Business Women’s Day. It celebrates the accomplishments and legacies of women-owned businesses and women in the workforce.
Women, especially minority women, are increasingly starting their own enterprises and changing the face of industries across the country. Yet, they face hurdles to growth including securing capital, government regulations and the pandemic.
Now, President Biden and Democrats in Congress are desperately attempting to advance a $3.5 trillion budget bill that is funded, in part, by tax increases that will hammer small businesses.
They also want to greenlight labor regulations that would eliminate income-generating activities for women and increase costs for employers.
President Biden’s talk about equity rings hollow given that his proposed tax increases and labor regulations would hobble women and minority entrepreneurship and business growth.
Democrats propose raising the top income tax rate to 39.6%.
Ignore the "tax the rich" rhetoric over Rep. Alexandria Ocasio-Cortez's Met Gala dress.
This increase will hit entrepreneurs and small businesses organized as pass-through entities such as LLCs, sole proprietorships, partnerships and S-corporations.
Women and people of color, like others who own businesses, "pass through" their income to be taxed under individual income taxes.
In fact, of the nation’s 26 million businesses in 2014, 95% were pass-throughs.
The 2017 tax cuts gave small business owners tax relief, but President Biden and congressional Democrats want to claw that back to support partisan out-of-control spending.
As a result, The Tax Foundation finds that more than half of all pass-through income would be taxed at this new, higher rate.
There are other tax increases in the bill such as raising the corporate tax rate from 21% to 26.5%, which will hit at least 1 million small businesses that are corporations.
Workers suffer when corporate taxes are hiked.
Of the nearly 13 million women-owned businesses in the U.S. in 2019, minority women accounted for half of them according to the most recent available data.
Women of color owned an estimated 6.4 million businesses. Beyond Hollywood, music, and entertainment, minority women are founding venture capital firms; building beauty and wellness brands; and even starting trucking schools.
Prior to the pandemic, the number of businesses started by minority women grew at a rapid pace of 43%, more than double the rate of all women-owned businesses (21%) and over four times the rate for all firms (9%).
Businesses owned by black women grew at a whopping 50% alone. The economy was booming and women were jumping at the chance to carve their own slice of the pie.
Many small businesses folded during the pandemic, but that has not stopped women from pursuing small business ownership. The ease of starting a business, even with little capital for investment, has been aided by technology.
Young women with a passion can source vendors for their products, find mentors to guide them, hire contractors to help with various aspects of their business, and find customers worldwide all because of the technology at their fingertips.
Technology has spurred a world of income-generating opportunities leveraging people’s time, knowledge and resources. This 1099-income may be a sole source of support or it may be supplemental to W-2 employment.
Independent contracting or freelancing is wildly popular today. At least a third of the workforce — some 59 million Americans — have freelanced in the past year, earning 1099-income. Nearly half (46%) are women. Flexibility is one of the top reasons that women choose independent contract work. Female workers in the digital gig economy say that not only is flexibility their top motivator, but nearly two out of three (61%) do not want to be employees.
Independent contracting does not guarantee a specific wage or benefits. Knowing this, workers opt for this form of employment because they can work for whomever, whenever, and however, they choose.
President Biden and congressional Democrats are actively working to remove those employment choices from workers, especially women and minorities, by making it more difficult to be classified as an independent contractor.
They want to implement a more stringent ABC test to determine whether a worker is an independent contractor or at least heavily penalize businesses that misclassify workers as contractors rather than as employees based upon a more stringent definition.
That means that businesses will soon just move away from offering these flexible working options. Policymakers pushing these restrictions operate under the outdated notion that every worker needs to be someone else’s employee (and unionizable). This is a solution in search of a problem.
Restricting independent contracting nationwide will cause a world of problems for minority women who earn 1099-income whether through selling clothing items online, performing as a musician or catering events.
Despite the rapid growth of minority women-owned businesses, their firms tend to be small in size and headcount. The $422.5 billion in revenue they generated comprised 23% of the total revenue of women-owned businesses and the 2.4 million people they employed is just a quarter of total women-owned businesses’ employment. The Bernie-Biden budget bill will stunt these minority-women-owned small businesses further.
All small businesses face an even more uncertain future than they did during the pandemic if the president and congressional Democrats succeed in ramming through trillions in reckless spending and oppressive labor restrictions.
If President Biden truly cares about minority women business owners, he will back off this spending plan.
Patrice Onwuka is a political commentator and director of the Center for Economic Opportunity at the Independent Women’s Forum. Patrice is also an adjunct senior fellow with The Philanthropy Roundtable and a Tony Blankley Fellow at The Steamboat Institute. Follow her on Twitter: @PatricePinkFile Read Patrice Lee Onwuka's Reports — More Here.