The Small Business Surtax

[FirefightnRick]

http://online.wsj.com/article/SB124753106668435899.html

Every detail isn't known, but late last week Ways and Means Chairman Charlie Rangel disclosed that his draft bill would impose a "surtax" on individuals with adjusted gross income of more than $280,000 a year. This would hit job creators especially hard because more than six of every 10 who earn that much are small business owners, operators or investors, according to a 2007 Treasury study. That study also found that almost half of the income taxed at this highest rate is small business income from the more than 500,000 sole proprietorships and subchapter S corporations whose owners pay the individual rate.

Mr. Rangel and House Democrats are also banking on the idea that raising tax rates by 20% will raise 20% more tax revenue, but that's like telling Wal-Mart it can raise prices by 20% and get 20% more profit. When taxes on the rich rise, their reported income tends to decline. The last time the top federal income tax rate was 50%, the richest 1% paid only about 25% of all income taxes. Today, at a 35% rate they pay nearly 40%......A new study by the Kaufman Foundation finds that small business entrepreneurs have led America out of its last seven post-World War II recessions. They also generate about two of every three new jobs during a recovery. The more the Obama Democrats reveal of their policies, the more it's clear that they prize income redistribution above all else, including job creation and economic growth.

Rick

Edited July 15, 2009 by FirefightnRick

[eulesseagle]

FFR-

Nothing personal buddy but the only articles you seem to post are "all" the taxes the American people are getting ready to pay under the current administration. What gives?? Why don't you abide by the words of V.P. Biden when he said, "It is unpatriotic not to pay more taxes." Come on FFR be more patriotic....there are causes & inequalities out there like global warming (Kyoto/Cap & Trade), sur taxing the rich, naturalization of illegals, taxing products that make us obese.........you know all those and more that need the redistribution of our personal financial resources. Don't you feel guilty that you make more than a 16 year old at McDonalds?

Edited July 15, 2009 by eulesseagle

[eeally]

if you make $280,000 then I don't think you are having many problems!!!!

Yes tax them at a higher rate!

I guess we agree to disagree.

[hickoryhouse]

individual... yes, small business no. There are many smal business out there that file as individuals. This tax would make it harder for these business to survive.

[Censored by Laurie]

individual... yes, small business no. There are many smal business out there that file as individuals. This tax would make it harder for these business to survive.

Where...under for argument's sake, our current tax code...would be the advantage in a small business filing as an individual?

[hickoryhouse]

For the sake of argument... I have no idea why one would do such a thing when incorporating is relatively easy. However, incorporating makes infusing an individual owner's capital a little more difficult as the accounting is more precise and there is more to keep track of.

The advantage of filing as an individual when the company is in its infancy is that as an individual owner you can control the money flow more easily. For example. Tom Hicks has plenty of cash however because of different accounting and tax rules he would have a difficult job infusing his own money into the corporation.

I am in no way an expert but this is the basics of my understanding. I currently work for a small company that is only 4 years old and the owner filed its info for the first year or so before he incorporated.

Additionally, I would argue that there are thousands of Mom and Pop shops, restaurants, and services that are single shop operations that this would effect as well. Perhaps they don't know to incoporate i don't know.

[Guest JohnDenver]

V.P. Biden when he said, "It is unpatriotic not to pay more taxes."

The quote was absurd, but at least get it right. You don't have to slant it more than it is.. The premise though, I don't disagree with. I am willing to pay for the (American) services that I get from taxes, which I guess makes me feel patriotic.

[KRAM1]

Many small businessmen incorporate under sub Chapter S of the IRS code. This allows for corp. profits to flow to the owner and be taxed at the owner's individual tax rate. If they incorporate other than under sub chapter S the corporation would pay income taxes and they would pay individual income taxes on their salary, bonus, etc. A bit of double taxation if you are a small business, one owner sort of operation. In it's simplest definition, that's why sub chapter S was developed...to avoid the possible double taxation. It is, of course, more complex than that, but just keeping it real simple and discussing only one benefit of the sub chapter s provision.

As I understand the House proposal on health care...all small businesses with revenues of $250,000 or great would be required to carry health insurance for their employees or pay a fine of between 6-8%. This will certainly cause many small business to stop growing in order to avoid the penalty or requirement to carry health care for their employees, will lead to business failures and loss of jobs throughout the small business sector. And, the small business sector is the "engine" that runs the nation's economy. How's that for hurting the hand that feeds you? Just a poorly thought out proposal that folks are attempting to force upon the American public for the sake of speed. The thing is over 1000 pages long, and like the "cap and Trade Bill" recently passed no congressman has read the thing!!!!!

Amazing stuff going on in Washington these days. Is it any wonder that California is about to fall off the fiscal cliff when the state produces political leaders in the ilk of Nancy Pelosi????

P.S. one should probably never try to quote Joe Biden as even he has no idea what he is saying most of the time. He far surpasses Dan Quayle for comedic speaking!!!!

Edited July 15, 2009 by KRAM1

[eulesseagle]

KRAM1-

You got it right about VP Biden.......a true "Gaff-A-Thon" in perpetual motion. Got to love his tan and white teeth....all he needs is some sort of "cool" looking polyester suit, white belt, white shoes and some kinds of B.G's looking shirt. He almost reminds me of that weatherman on the Mary Tyler Moore Show.....Ted or somebody?

[yyz28]

if you make $280,000 then I don't think you are having many problems!!!!

Yes tax them at a higher rate!

I guess we agree to disagree.

When is enough enough? Huh? The top 1% in this country make 21% of the income, pay 39% of all the taxes. The top 5% earn 36% of the income, pay 60% of the taxes. (they paid 56% of the taxes in 2000, by the way, BEFORE the Bush Tax Cuts "for the Rich".

The top income tax rate returns to 39.6% in 2010. ...then take the property taxes, sales taxes, fica taxes, social security taxes, fuel taxes and all the other taxes we all pay and add them up. Oh, and then tack on the surtax? Are you satisfied now? ...or do you STILL think they aren't paying enough? When have they paid enough? Huh? When does it stop? 60% of their income in taxes? 70%? 80%? When someone has to turn over 80% of the income they make by spending their time (labor, be it intellectual or manual = time) which is a limited resource to the Government, he or she is no longer FREE. Its ok when its happening to the Rich, because you don't "think" they "are having many problems" but once they are squeezed into non production, where do you think the Government is going to turn to pay for this stuff next?

WE CAN NOT TAX OURSELVES INTO PROSPERITY. We simply can't. We can't keep creating social program after social program in violation of the constitution and expect to keep all the balls in the air. The debt is out of control. These deficits are insane. Inflation and out of control interest rates are around the corner and higher energy bills and higher taxes through cap and trade and higher taxes on businesses and individuals who are the investors though this health care plan, added with the collapse of the private healthcare industry (which WILL happen immediately upon a government plan being in place) will only make this economy worse, and may be the final two nails in this country's rapidly coming together coffin. WE CAN NOT SUSTAIN THESE PROGRAMS WITHOUT ASKING THE GENERATIONS WHO AREN'T HERE YET TO PAY FOR THEM! OUR decisions and OUR desire for more goodies from the government will ENSURE that our kids, grandkids and great grandkids have a lower quality of life than we have hand and our parents have had for the first time in this country's history.