Taxes on small businesses could be as high as 62.3%: Most Americans would agree that paying more than 50 percent in taxes is simply too much. Yet, Senator Obama’s plan calls for tax increases that would raise total tax rates to well over 62 percent for millions of small businesses.
Fact: 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.”)
Fact: “The business income from sole proprietorships, farm proprietorships, partnerships, S corporations, etc., is all taxed at the owners’ individual income tax rates. This year 34 million business owners are expected to receive this type of income and pay tax on this income through the individual income tax. These businesses are typically small and often entrepreneurial in nature, and a source of innovation and risk-taking in the economy. Moreover, these business owners are frequently subject to the highest individual income tax rates.” (” Topics Related to the President’s Tax Relief,” U.S. Department of the Treasury, May 2008)
Fact: “About one-third of the workers affected by raising the Social Security earnings cap would be small business owners.” (Michael Tanner, “Keep The Cap,” The Cato Institute, http://www.cato.org, 6/8/05)