The Joe Biden administration is apparently confused about how public policy affects business and the economy.

An executive order issued in July, for example, tried to assert more regulation of business would lead to more competition in the marketplace. That didn’t make any sense. More recently,  a  “fact sheet” from the administration asserts tax increases are good for small business. This “fact sheet” is filled with rehashed, misleading information that tries to make it seem like President Biden’s proposed tax increases won’t touch small business and somehow or another actually would be good for small business. 

The assertions include:

“According to a new Treasury Department analysis, the president’s agenda will protect 97 percent of small business owners from income tax rate increases while delivering tax cuts to more than 3.9 million entrepreneurs.”

“President Biden’s proposal to restore the corporate tax rate half way back to its pre-2018 level would not affect any small businesses that file taxes as a pass-through entity (LLCs, S-corps, and sole proprietorships). That’s nearly every small business in America.”

President Biden’s proposal to increase the top personal income tax rate “would affect less than 3 percent of small business owners.”

Sounds great, right? Well, no, it doesn’t.

Tax increases always rank as economic negatives, especially during tough economic times. That includes President Biden’s plans for tax increases on business, including jacking up the corporate income tax rate from 20 percent to 28 percent as well as pushing for a global minimum tax.

When the administration first spun the idea these tax increases would be good for small business, the Small Business and Entrepreneurship Council responded with an analysis showing the contrary. Consider:

If 3 percent of 30 million small businesses face higher taxes, that would still include 900,000 small businesses. Why would it possibly be a good idea to jack up taxes on nearly 1 million small businesses? For that matter, why does it make any sense to raise taxes on large businesses, either?

Let’s take a closer look at the numbers and small business effects.

First, the White House ignores the fact most C corporations are small businesses. The U.S. Small Business Administration defines small businesses as those having fewer than 500 employees. It turns out that 99.89 percent of employer corporations (based on the latest Census Bureau data) have fewer than 500 employees. That’s 933,000 businesses facing a tax increase.

What about nonemployer corporations? Based on the latest Census Bureau data, another 379,000 of those businesses face a tax increase.

If 2.6 percent of pass-through small businesses face a tax increase, that’s about 790,000 businesses.

Based on these numbers, at least 2.1 million small businesses face higher taxes under the Biden plan. 

Considering there are only 20,000 large business with 500 or more employees in the U.S., the ratio of small to large businesses directly affected by the Biden tax increases would be 105 to 1.

And, of course, there’s more.

The “fact sheet” ignores that President Biden and Congress have proposed a near doubling of the top federal capital gains tax rate — from a total of 23.8 percent to 43.4 percent — as well as eliminating the step-up basis in gains at death. Given capital gains tax is a direct tax on entrepreneurship and investment, it reduces resources and incentives for starting up, building and investing in small businesses. Given the capital gains tax isn’t indexed for inflation and most states pile on with their own capital gains levies, the Biden agenda becomes highly destructive to entrepreneurs and small businesses.

Increasing personal income tax rates on upper-income earners doesn’t simply affect those earners. Many of those individuals are business owners and have the accumulated wealth to make investments in new and expanding small businesses. 

Any global tax accord that seeks to set minimum rates and impose higher taxes on certain businesses — as opposed to free trade agreements to reduce taxes and other governmental burdens – works against economic growth.

Even in politics, trying to assert increased taxes are good for small business is like saying up is down, two plus two equals three and the sun rises in the west and sets in the east. It’s a bizarre fantasy no one should take seriously.

Raymond Keating is chief economist for the Small Business & Entrepreneurship Council. For more information, log on to www.sbecouncil.org.