Thursday, February 26, 2009

Obama Tax a Job Killer? A Tax on Small Businesses? Republican Myth Exposed.

With the release of Obama's budget proposal, causing cardiac arrest for Republicans who have never spent money for the future security of our country, the talking point your going to hear most is the devastating effect of the increase of taxes on those making more than $250,000.

Republicans will insist that the increase will kill jobs because the tax hit the job creators, small businesses. A complete lie. Here's the story as told by Keith Olbermann:

Republicans and other critics, knowing they will get little mileage from defending the rich, instead are casting the plan as a tax hit on people who run industrious little companies driving job growth.

That's not likely, according to one in-depth analysis, which found that more than 95 percent of small business owners would be off the hook.

Critics reason that owners of many small companies report business income on their personal tax returns instead of filing corporate taxes. But for one thing, most small businesses don't create jobs. They tend to be lawyers, accountants and other professionals who earn some of their money from partnerships or otherwise organize themselves as a business entity. As well, many small businesses with employees don't earn enough to put their owners over the threshold for the higher tax rates.

Obama also proposes to eliminate capital gains taxes on small businesses and make a research tax credit permanent. An independent analysis estimated that 75.5 percent of all U.S. households would get his tax credit for workers. A higher percentage of working families would get it.

THE CLAIMS: "In fact, a majority of those penalized by the proposed tax increase in this budget are small businesses." - Republican Rep. Eric Cantor of Virginia. "Small businesses and the entrepreneurs who lead them have been the primary drivers of job growth over the past decade. This plan would punish them with higher taxes, resulting in less government revenue, less economic growth, and fewer jobs - not more." - Bruce Josten of the U.S. Chamber of Commerce.

THE FACTS: The U.S. has roughly 6 million businesses that employ people, and 20 million businesses without employees. The latter group includes solo operators, professionals in partnerships and those who organize themselves as a business for tax purposes but earn little if any income from the enterprise.

Small businesses are defined as having fewer than 500 workers each. Sizable companies within that group wouldn't be snagged by Obama's personal tax rates simply because they are too large to report income on the individual return of the owner. Many truly small operations simply don't make enough to qualify for the tax hit.

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