Bill Overview
Title: Small Business Owner Tax Relief Act of 2022
Description: This bill increases the tax deduction for the payroll taxes of small businesses and imposes an excise tax on corporations for their stock repurchases. The bill allows self-employed taxpayers earning less than $400,000 in a taxable year to deduct three-quarters (currently, one-half) of their payroll taxes. The bill also imposes an excise tax of 0.8% on the fair market value of any stock of a publicly traded domestic corporation that is repurchased by the corporation during the taxable year.
Sponsors: Rep. Craig, Angie [D-MN-2]
Target Audience
Population: Self-employed individuals and small business owners
Estimated Size: 8000000
- The bill affects small business owners who will benefit from an increased tax deduction on payroll taxes.
- Small business owners in the U.S. comprise a significant portion of the overall business landscape.
- Many self-employed individuals fall into the category of small business owners.
- The legislation introduces an excise tax on large publicly traded corporations for stock repurchases.
- This could indirectly affect investors and employees of large corporations through corporate financial strategies.
Reasoning
- The Small Business Owner Tax Relief Act of 2022 will mostly impact small business owners, especially those who are self-employed and earn under $400,000 annually by increasing their payroll tax deduction.
- The corporation excise tax on stock repurchases might primarily affect large businesses and possibly their investors, but the direct impact on individuals' Cantril wellbeing scores may not be substantial unless these individuals are heavily invested in such corporations.
- The budget constraints suggest that the financial relief provided to self-employed individuals is significant but may only offer moderate improvements in general wellbeing due to the diverse financial responsibilities of small business owners.
- Including a mix of individuals that range from heavily impacted to not impacted provides a comprehensive view of the policy’s reach and potential benefit distribution.
- Considering the policy's financial and population target, simulated individuals were picked based on common profiles of small business owners, as well as individuals indirectly affected by corporate stock repurchase policies.
Simulated Interviews
freelance graphic designer (Austin, TX)
Age: 34 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- I'm always looking for ways to reduce my tax burden.
- An increase in payroll tax deductions would definitely help ease some of the financial pressure.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 5 |
software consultant (San Francisco, CA)
Age: 52 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 7/20
Statement of Opinion:
- Any tax relief is welcome, but at this income level, many strategies are already in place to manage taxes.
- The policy helps but isn't a gamechanger.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
owner of a small boutique (Chicago, IL)
Age: 40 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- This tax relief on payroll taxes would free up some money to potentially hire more staff or improve services.
- Considering the tight margins small businesses often face, every bit helps.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 4 |
| Year 20 | 6 | 3 |
independent contractor in tech support (Los Angeles, CA)
Age: 29 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 11/20
Statement of Opinion:
- The increased tax relief would definitely add up over time and offer some breathing room.
- It's nice to see policies that recognize the challenges small business owners face.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
corporate employee (Portland, OR)
Age: 45 | Gender: other
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 15/20
Statement of Opinion:
- Not directly affected by this tax bill.
- Another excise tax on corporations might mean fewer raises or bonuses, but it's hard to say.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
retired entrepreneur (Miami, FL)
Age: 60 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 5/20
Statement of Opinion:
- It's an interesting approach, but as I'm retired now, it doesn't really affect me.
- I can see it being beneficial for current business owners.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
partner in a law firm (New York, NY)
Age: 38 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 0.0 years
Commonness: 6/20
Statement of Opinion:
- This policy doesn't affect me since my income is too high to qualify.
- For those it impacts, it's a helpful change.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 9 | 9 |
| Year 3 | 9 | 9 |
| Year 5 | 9 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
small-scale manufacturer (Denver, CO)
Age: 50 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 9/20
Statement of Opinion:
- Reducing the payroll tax burden will help stabilize my business operations.
- It's a progressive step for small business owners who often operate on slim margins.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
investment banker (Atlanta, GA)
Age: 55 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 4/20
Statement of Opinion:
- The excise tax might minimally impact my work depending on corporate strategies around buybacks.
- No direct effect on my personal wellbeing.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
real estate agent (Houston, TX)
Age: 42 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- Every tax deduction helps reduce costs.
- This policy gives businesses like mine more flexibility in financial planning.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 7 | 7 |
Cost Estimates
Year 1: $1200000000 (Low: $1000000000, High: $1500000000)
Year 2: $1236000000 (Low: $1030000000, High: $1545000000)
Year 3: $1273080000 (Low: $1060900000, High: $1591350000)
Year 5: $1335304012 (Low: $1125000000, High: $1692525000)
Year 10: $1570670994 (Low: $1325000000, High: $2019529250)
Year 100: $6581289568 (Low: $5555000000, High: $8516525000)
Key Considerations
- The policy could effectively support small businesses and self-employed individuals by reducing their tax liabilities, potentially increasing their investment capacity.
- The secondary impact on large corporations due to the excise tax may adjust corporate financial strategies regarding stock buybacks.
- Monitoring the trade-off between revenue loss from tax deductions and gain from excise taxes is crucial for evaluating overall fiscal impact.