Plan increase tax hikes spur recession

No one planned it this way, but business taxes are going up just as the economy faces the risk of going into a recession. A combination of tax increases pushed through by Democrats, as well as ones created by Republicans years ago, would add to the strain on employers’ finances if a downturn hits, as some economists are predicting. Altogether, the hikes — which range from a brand new corporate minimum tax to restrictions on some key deductions — are projected to cost businesses more than $100 billion this year, which is about one-quarter of their total tax bill for 2022. Lawmakers are facing demands from the business community to rescind the provisions, which will grow louder if the economy continues to weaken. The prospect of Washington doing anything about them or anything else to help growth seems dim, though, with Congress under divided control and House Republicans hardly demonstrating unity in the early going. “This is a particularly challenging moment in time,” said Chris Netram, managing vice president for tax at the National Association of Manufacturers. “If you layer on tax increases on top of a slowing economy, what does that do for business? It puts our guys in a bind.” It’s the exact opposite of what usually happens when bad times hit. Normally, lawmakers turn to the tax system to help cushion the blow for both individuals and employers, by finding ways to lower taxes. In the initial wake of the coronavirus pandemic, lawmakers sent checks to millions of Americans, among other changes, while making it easier for businesses to qualify for refunds. Business advocates had hoped lawmakers would turn off at least some of the hikes during last month’s lame duck session of Congress, though that fell apart over a partisan dispute over Democrats’ demands to also expand the Child Tax Credit.