Monday, August 02, 2010

Who Would Obama Tax Increases Hit?

From the Wall Street Journal:

Some conservatives and moderate Democrats say that letting the Bush Administrations tax cuts expire only for top earners, as President Obama has proposed, would actually hurt small business.

Sen. Jon Kyl (R. Ariz.) said the increased tax rates that would result would “clobber small businesses.”

“Small businesses generated roughly 64 percent of net new jobs in the past 15 years,” he wrote in response to a Washington Post editorial. “Of the almost 120 million private-sector workers in the United States, slightly more than half work for small businesses. So if we’re trying to promote economic policies that create jobs, why raise taxes on the job creators?”

Democrats counter that the taxes would mainly hit wealthy–a group voters typically are much happier to tax than small business. They point out that taxes would rise only for those households earning $250,000 or more.

So who would be hurt? Small businesses or rich people?

The Tax Policy Center, a venture of the Urban Institute and Brookings Institution, just released an analysis of IRS figures showing how many of those top earners–whose rate would jump to 39.6%–also are small-business owners.

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