- The Second Annual Pat Quinn Income Tax Increase Proposal
- How the FCC Plans to Tax the Internet
- How the FCC Plans to Tax the Internet (Stop eTaxes Site »)
- Oh, the Irony! It's Sunshine Week, So Let's Push Healthcare Bill Through Without Even Voting On It!? (CFA Site »)
Tuesday, March 16, 2010
- Wisconsin Gubernatorial Candidate Scott Walker Signs Taxpayer Protection Pledge
- Why Do We Get Health Insurance from Our Employers Anyway? (ASA Site »)
- The Enormous Price Tag of Government Run Healthcare (ASA Site »)
- Call for Sunshine Week: "Just Give Us The Earmark Data" (CFA Site »)
- PA-12 Special Election Update: Tim Burns Signs the Taxpayer Protection Pledge
- How Government Accounting Works
- ATRF Analysis: The Importance of International Tax Competition
- How Tax Preparation "Simplification" Will Lead to Tax Hikes
- GAO: Implementation of Coburn-Obama Still Lacking in Some Areas (CFA Site »)
Monday, March 15, 2010
- Latest Developments In The Fight To Stop A Govt Internet Takeover
- State of Illinois Launches Sunshine Portal (CFA Site »)
- China Buys Our Debt, We Give Them Renewable Energy Stimulus Jobs...Seems About Right
- ATR Urges Governor McDonnell to Sign Bill to Abolish State Run Tax Filing
- Saving the Sea Turtles...But at What Cost? (PRA Site »)
- Craig Miller Signs Taxpayer Protection Pledge in FL-24
- Next Week is Sunshine Week! (CFA Site »)
- The Economics of #StimulusFail
- Missouri Unions and Andy Stern on the Same Page: Raise Taxes (AWF Site »)
- Obamacare, Free Trade, & Our Economic Prosperity
Friday, March 12, 2010
- Rusty Bowers Signs the Taxpayer Protection Pledge for AZ-01 Race
- Ask Your Virginia Legislator to Vote "NO" on Any Budget Containing Higher Taxes
-
ATR Supports H.R. 4781, the
"Keeping American Businesses
Competitive Act of 2010" - Ronald Reagan Legacy Project Urges Naming of California High School After Reagan
- Democrats Attempt to Subvert Congress in Hopes of Carbon Regulation
- Economic Issues Dominate at the Bloggers Briefing
- Pushback Against EPA’s Attempts to Regulate Carbon Emissions Grows
- Minnesota Gubernatorial Candidate Running on a Platform of Tax Hikes
Thursday, March 11, 2010
- Michigan Jobs Ain't What They Used To Be...Unless You Work For The Government
- ATR and CFA Support Earmark Moratorium
- Voter Fraud in the Name of Tax Hikes
- Ballooning Deficits in Greece Foreshadowing Future for the U.S.? (ASA Site »)
- Green Jobs FAIL
- The Evergreen Tax and Fee Spree
- ATR Staffer Testifies Before U.S. House Energy & Commerce Select Committee
Wednesday, March 10, 2010
- The endemic rot in government run health care
- The Debt Panel's 800-lb. Gorilla: Why Andy Stern Stands Out
- The Left Agree: Obamacare Ushers In Their Radical Ideological Agenda
- We Ought Focus On Cutting Taxes & Spending, Not Deficits
- The Debt Panel's 800-lb. Gorilla (AWF Site »)
-
Does the Obamacare Investment Surtax
Apply to Capital Gains? - ATR Urges Opposition to Sen. Isakson Pension Bailout
- Taxpayers to Legislators: Clean Virginia Budget of Taxes
- ATR Supports the Georgia JOBS Act
Tuesday, March 9, 2010
- ATR Urges Utah Governor Herbert to Veto Tax Increase
- More on the VAT
- Public Sector Jobs
- How 550,000 jobs were destroyed by the minimum wage hike
- How Obamacare Will Hurt Poor Women & Children Most
- Federal Workers Make $11,000 More Than Private Sector Workers, and There’s More of Them (AWF Site »)
Monday, March 8, 2010
- Legislation Introduced to Put Ronald Reagan on the $50 Bill
- Pledge Signer Wins Illinois Republican Gubernatorial Primary
- "Net Neutrality" To Kill Jobs
- NY Supreme Court Votes to Evict Residents and Close Businesses (PRA Site »)
- California US Senate Candidates Square Off in First Debate
Friday, March 5, 2010
- ATR and CFA Support the Spending Limit Amendment
- Utah Representative Breaks Tax Pledge
- AWF Will Rate Vote on House Jobs Bill (AWF Site »)
- Energy Tax Hike Series: Use it or Lose it Tax
Thursday, March 4, 2010
- The reliability of spending "estimates"
- Utah State Senator Tries to Sweeten Tax Hike with Pork
- Obama Administration Makes Attempt to Seize Millions of Acres Across America (PRA Site »)
- More "Stimulus" Boondoggles - Social Engineering and Lobbying for Higher Taxes
- Energy Tax Hike Series: Raises Taxes on Tertiary Injectants
Wednesday, March 3, 2010
- Is This Reality or a Science Fiction Dystopia?
Tuesday, March 2, 2010
The Obama Budget and Small Business
From Ryan Ellis on Tuesday, February 2, 2010 4:32 PM
President Obama today is touting all the advantages his budget has for small businesses. In particular, he's talking about using TARP funding (supposedly temporary, to be paid back to taxpayers) for small business lending.
Even if you limit yourself to the tax side of things, though, there are some pro-small business crumbs in the Obama budget: small business expensing is extended, a new jobs credit is created, and small business stock is exempted from capital gains. Good things, all, to one degree or another.
But there is one bad--very bad--tax increase on the small business sector in the Obama budget. Under his plan, the top two income tax rates increase from 33 and 35 percent to 36 and 39.6 percent. We've documented before that two-thirds of small business profits pay taxes in these bracket levels. Small businesses pass their profits through to their owners, who pay income tax on them. To raise taxes on "the rich" is a laser-beam tax hike aimed at small employers.
Small business owners also have to pay the Medicare portion of the self-employment tax at the high margin. Furthermore, they will face a phaseout of their itemized deductions (Pease) and personal exemptions (PEP) under the Obama budget, unlike 2010 law.
What does that mean for the marginal tax rate on small business activity? Assuming a 5 percent state income tax rate, the calculation is the following for a sole proprietor or general partner (S-corporation owners don't have to pay Medicare tax, so it will be slightly smaller for them):
| Tax | Rate |
| Federal Income | 39.6% |
| State Income | 5.0% |
| Self Employment | 2.9% |
| SE Deduction | (0.65%) |
| PEP and Pease | 2.34% |
| Total | 49.19% |
So, the top marginal tax rate on small business income will rise to 49.19 percent by my reckoning, up from about 41 percent today. This is a huge increase in the tax rate on most small business profits. I wonder if President Obama will be sharing this with entrepreneurs today?
Related Articles
How the FCC Plans to Tax the Internet - Tuesday, March 16, 2010 3:42 PM
ATRF Analysis: The Importance of International Tax Competition - Monday, March 15, 2010 11:24 AM
How Tax Preparation "Simplification" Will Lead to Tax Hikes - Monday, March 15, 2010 11:04 AM
China Buys Our Debt, We Give Them Renewable Energy Stimulus Jobs...Seems About Right - Friday, March 12, 2010 4:24 PM
Urge Gov. McDonnell to Privatize Tax Preparation and Filing - Friday, March 12, 2010 4:20 PM
Comments
It's obvious that the president, as well as many others, don't appreciate how measures ostensibly aimed at seizing wealth from the so-called "super-rich" actually have far-reaching repercussions - including, as this points out, on small businesses.
>> Phil Tuesday, February 2, 2010 4:48 PM
what are the current corporate taxes and dont these also affect these small businesses?
>> Clint Tuesday, February 2, 2010 5:21 PM
The corporate income tax rate is currently 35 percent. Most small businesses are not "C-corporations." Mostly, the CIT is paid by large businesses. This is also a very destructive tax to our economy.
>> Rellis Tuesday, February 2, 2010 6:25 PM