Obama tax hikes could hit up to 1.3 million small businesses
Barack Obama’s plan to raise the top two federal income tax rates would increase taxes on between 663,000 to 1.3 million small businesses that file taxes under personal income categories, according to rival analyses.
The Tax Foundation contends the Obama’s tax increases could amount to a $30 billion annual tax increase on 1.3 million small businesses in higher brackets. Another analysis by the Tax Policy Center says 663,000 of the 34 million personal income tax filers who claim business income are in the top two rates eyed by Obama.
Many of those small businesses are startups, sole proprietorships and home-based companies. Other small firms file under traditional business tax categories.
Obama is calling for personal income tax rates to increase from 33 percent and 35 percent to 36 and 39.6 percent, respectively in the two top brackets. The Illinois Democrat also wants to adjust current brackets so the increases would impact those making $250,000 or more.
Half of the small businesses filing individual returns fit into middle income tax brackets Obama said he will leave alone, according to the Tax Policy Center.
The current 33 percent bracket affects married couples making between $200,000 and $357,000 and singles earning $164,000 to $357,000. The 35 percent rates now applies to single and married income of $358,000 or more.
The Obama camp also points to other benefits in his tax plan for small businesses including zero capital gains for startup firms, two-year tax credits for domestic job creation, middle and lower-income tax rebates, and credits for mortgage interest, college and health insurance.
Arizona Sen. John McCain said he wants to keep personal income tax rates at current levels and favors a 10 percent cut in corporate income taxes. He also has proposed a 7.5 percent, two-year reduction in the capital gains tax.
The McCain campaign and some small businesses say Obama’s tax increases on higher incomes are just the beginning of spending plans that will prompt future tax increases on