To kick off National Small Business Week, the White House released a report on the state of small businesses. “The Small Business Boom under the Biden-Harris Administration” reported on how investments in the small business economy have led to a record recovery on Main Street, and the impact of current and proposed policies.
The Biden-Harris Administration continues to take a bottom-up approach with its economic agenda to spur recovery. Its efforts included providing families with greater financial security and delivering more than $450 billion in emergency relief to small businesses. The report analyzed their outcomes a year later and a proposed minimum tax on the middle class. Here are three key takeaways.
1. More Americans are starting new businesses than ever before
In 2021, Americans applied to start 5.4 million new businesses, which is 20% more than any year on record. Small businesses are also creating more jobs than ever before, as businesses with fewer than 50 workers created 1.9 million jobs in the first three quarters of 2021 alone. This is the highest rate of small business job creation ever recorded in one single year. This small business boom has been particularly strong for entrepreneurs of color. For example, Hispanic entrepreneurs started new businesses in 2021 at a rate of 23% faster than pre-pandemic levels, the fastest rate in more than a decade.
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2. The proposed minimum tax on the middle-class will hurt small businesses
The report also projects that a proposed plan by Congressional Republicans to set a minimum tax on the middle class would be disastrous for Main Street. The more than 12 million small business owners are generally members of the middle class. This proposal would raise taxes on nearly half of them, including 82% who are making less than $50,000 per year, by an average of almost $1,200.
3. There is room to do more
While there is plenty to celebrate, the report also makes it clear that there is more opportunity to invest in the success of small businesses, as the Biden-Harris Administration lays out its plans to keep this economic momentum going. This four-pillar strategy includes: 1) expanding access to capital, 2) investing in business assistance programs that help new and established entrepreneurs find the resources they need to grow, 3) ensuring hundreds of billions of dollars in government contracts go to small businesses, and 4) reforming the tax code to create a level playing field for small businesses.
Small businesses create two-thirds of all new jobs and employ half of all workers in the United States. This report shows why we need to invest in small business and entrepreneurship in America.