Senator Obama, In your campaign you have stated your proposed tax increases on families making 250k or more (165k for individuals) would not impact 98% of small businesses. I have tried but am unable to understand your logic.
First let me define a small business, according to the SBA and Congress. Depending on their industry, small businesses are limited by either income or their number of employees; the highest income limit is $7 million, and the highest employee limit is 1000. Clearly a small business is not limited to a two-person “mom and pop” operation. Now let’s go over some of the business entities used by small businesses. There are sole proprietorships, general partnerships, limited partnerships, limited liability companies, and s-corps. While their structures differ, they all share one thing in common: they are treated as pass-through entities, for tax purposes. This allows small business owners to avoid double-taxation, in which their business’s income would be taxed at the corporate rate, and then the owner’s income from the business would be individually taxed. This [pass- through] means that regardless of the salary the business owners pay themselves (which according to the IRS must be “reasonable”), they are taxed individually on the overall earnings of the business, in proportion to their ownership. Any income earned from the business is filed on their personal tax statements. This prevents someone from setting up a shell company for the purpose of avoiding tax liabilities; e.g. business earns 500k, owner pays himself $1200 salary, and the business retains the earnings so the owner is not liable. Finally, I will address the 98% that would supposedly not be affected. The following numbers are from the most recent 2002 SBA research study*; keep in mind current numbers are most likely higher. 2,108,427 - number of small businesses making 500k or more annually 35% - the percentage of small businesses that comprise the 500k number above 101,729,850 - the number of jobs the above 35% provide this nation 91% - the percentage of small business jobs the above number represents 80% - the percentage of total jobs created by small businesses This means at least 35% of small businesses would be negatively impacted by higher tax rates, which in turn could affect somewhere around 70% of all jobs in the US. Given this analysis, how can you publicly state that 98% of small business owners, and further- their employees and the economy, would not be affected by your tax policies? *Source: U.S. Small Business Administration, Office of Advocacy, based on data provided by the U.S. Census Bureau. (The nonpartisan Tax Foundation estimates Obama’s tax proposals would affect 50% of small businesses.) October 24th, 2008 | by Chris Santiago | published in Economy, Featured --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. -~----------~----~----~----~------~----~------~--~---
