Under Senator Obama’s proposed plan, “The top 35% marginal income tax rate rises to 39.6% adding the state income tax, the Medicare tax, the effect of the deduction phaseout and Obama’s new Social Security tax increases the total combined marginal tax rate on additional labor earnings (or small business income) from 44.6% to a whopping 62.3%.” (Michael Boskin, “A Closer Look at Obamanomics.”)
too bad that’s all BS. Today the top rate federal earned income is 35%, it will go to 39%. State taxes are the business of each state, not barack obama, some states have 0% income tax. Any raise in SS and Medicare doesn’t affect you since its on earned income, if you take income for S Corp/LLC it’s K1 income, which is not earned income, so that claim is also wrong.
It’s not very hard to read that paragraph and see that a small business person who has any clue of how to organize to reduce their tax burden would see their rate move from 35% to 39%. You pay yourself $100k a year, where you pay SS and Medicare tax, then the rest as dividend(schedule e actually) which would be taxed at 28% and 39%. If your state taxes are too high, change your state government.