In recent days, the administration has made it clear that it wants the top income tax rates to rise next year as scheduled. This is a very serious blow to job creation.
About three quarters of the new jobs created in the US come from small businesses. They are the real engine for reducing unemployment. Most small businesses are taxes either as sole proprietorships or as Subchapter S corporations. Ryan Ellis reports on the Americans for Tax Reform site that according to the IRS in 2008 these small businesses reported a total of $981 billion in profits. Of that total, fully $488 billion would face a tax increase if the rates rise as Obama wants. So fully half of the profits of small business would get hit with higher taxes if the rate rise goes ahead.
it is hard to imagine a better way to damage the economic outlook than to raise taxes on small businesses. Every dollar paid in additional taxes means less investment, fewer new employees and slower growth. Obama claims to be focused like a laser on jobs. The truth is that his administration only focuses like a laser on jobs if the laser is a death ray.
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