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Majority of Small Businesses to see tax hike under Obama Plan

cpwill

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on top of all their increased payroll taxes (thank you obamacare) and costs of doing business (yay increased regulation!) as well as increased difficulty of getting access to credit (thank you new bank bill); ... we've decided to increase their tax rates.

gosh. i'm sure this will make it so much easier for them to hire new people.


Majority of Small Business Sector Facing Higher Taxes Under Obama Plan


* The Obama Administration and Congressional Democrats have said that they want to raise taxes in the top two income tax rates in January 2011. Under their plan, the 33 percent rate will rise to 36 percent, and the 35 percent rate will rise to 39.6 percent automatically in January. These rates affect families and small business owners earning at least $200,000 per year

* Unlike corporations, small businesses usually don’t pay their own taxes. Rather, business profits flow through to the business owner. The business owner pays taxes on her small business by adding the profits to her income tax form. Therefore, personal income taxes are the same thing as small business taxes....

There were 30 million tax returns reporting small business income in 2008. On net (profits reduced by losses), these owners reported business profits of $981 billion. A large chunk of this net profit--$488 billion—faced taxation in households making more than $200,000 per year. A majority of small business profits will face a tax rate hike under the Obama-Pelosi-Reid plan...
 

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Villiage Idiot
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Is it just the top two? I thought that if they allowed the Bush tax cuts to expire that all the tax rates would go up (because the were all cut under the Bush tax cuts). If I am correct about this (I am not sure that I am), then everyone who currently pays taxes will pay more in taxes. Currently the lowest tax rate is just 10%, that rate would go up by half to the 15% level. So if I am correct, then not only will every current federal tax payer pay more in taxes, the lowest income earning federal taxpayers will actually have their taxes raised by a larger percentage than the highest income earners.

Am I wrong about this: » 2011 Federal Income Tax Brackets (IRS Tax Rates)

If it is just the top two tax rates though, I really don't believe tat would be the "majority" of small business owners. Most small businesses really don't make a lot of money. I would say that fewer than 1 out of 20 small businesses owners makes $200k or more.
 

cpwill

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well it's nice that you want to throw out that guesstimate, but it looks like the IRS disagrees.
 

Lord Tammerlain

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The business is not facing a tax hike, it is the income of the owner that is being taxed

It is an income tax they face not a business tax. If they dont want to pay change the structure of the business
 

justabubba

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let me get this right
the OP has posted a thread in which he laments the plight of those unfortunates whose annual income exceeds $200,000 (individually, $250,000 jointly) generated by profits from their small business
that poor businessman who writes off a portion of his meals as a business expense. who drives the company car, which was expensed thru the company, whose vacations are quite possibly also found to be a business deduction. not to mention the non-cash depreciation he was able to write off against assets. things the wage earner is denied
those poor business owners with their quarter million dollar plus net profits ... having to actually pay a fair share of taxes
cry me a river
 

obvious Child

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majority of small business profits will face a tax rate hike under the Obama-Pelosi-Reid plan...
Which doesn't tell me anything of value.

Statutory tax rates don't mean squat. Effective marginal is what matters. I got plenty of clients who appear initially in the highest tax bracket but have effective marginal tax rates well below mine and I frankly don't make squat.

I've venture a sizable portion of the individuals I do are in the low 20% marginal effective tax rate.
 

Dav

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let me get this right
the OP has posted a thread in which he laments the plight of those unfortunates whose annual income exceeds $200,000 (individually, $250,000 jointly) generated by profits from their small business
that poor businessman who writes off a portion of his meals as a business expense. who drives the company car, which was expensed thru the company, whose vacations are quite possibly also found to be a business deduction. not to mention the non-cash depreciation he was able to write off against assets. things the wage earner is denied
those poor business owners with their quarter million dollar plus net profits ... having to actually pay a fair share of taxes
cry me a river
I just had a crazy idea. Maybe some people base their views on taxes on actual economics rather than raw emotions about who they feel "suffers" more.
 

oldreliable67

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having to actually pay a fair share of taxes
And how would you determine exactly what this hypothetical small business owner's "fair share" of taxes would be?
 

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Villiage Idiot
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And how would you determine exactly what this hypothetical small business owner's "fair share" of taxes would be?
If "fair" means that we pay taxes according the benefits that we recieve from our system, then the more one makes the more one benefits. So I would think that it is highly logical to determine ones share of the tax burdon by ones share of income.
 
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