Earlier this week, President Obama spoke to a group of news reporters about his budget proposal, and employees of a North Carolina-based LED lighting company, Cree, Inc. His message was the usual political pabulum laced with a fair amount of feigned recognition about how important promoting small businesses can be in turning the economy around and improving the abysmal 9.1% unemployment rate. While President Obama noted that small businesses account for 64% of all American jobs, he still espouses the Democratic Party’s mantra of raising taxes against America’s wealthiest. But is it really just double talk?
Several IRS attorneys considered the President’s comments as nothing more than political rhetoric which doesn’t match-up with Obamas budget proposal seeking to increase the top marginal income tax rate from 35% to 39.6%. These IRS tax lawyers say such an increase, if adopted, would produce something approaching $709 billion dollars in tax increases over the next ten years. So how would taxing America’s wealthiest affect small businesses?
IRS tax attorneys point out that in North Carolina, the back-drop for President Obama’s speech, IRS date shows that out of 4.2 million individual tax returns filed in the state, nearly 660,000 were sole proprietorships. When you add partnerships and S-Corps, the number increases to approximately 825,000 small businesses. IRS attorneys say that represents more than 19.5% of all individual income tax returns filed in the State.
Those numbers are particularly significant because, according to IRS tax attorneys, the individual income tax system is the one which taxes small business profits. In other words, while President Obama says he wants to help small businesses grow and add jobs to our beleaguered economy, his budget is proposing to take from small businesses the one thing they need to grow, MONEY.
Democratic lawmakers maintain that America’s wealthiest have been making huge profits and are not reinvesting them in the economy. In light of the President’s proposed budget, and the apparent insincerity of his remarks given his budget proposal, is it any wonder why small businesses are waiting for a clearer message before reinvesting their hard-earned dollars? IRS attorneys who represent many of these small businesses suggest reinvesting profits to grow a small business while being taxed an additional 13% more (from 35% to 39.6%) would likely put most of their clients out of business.
With the 2012 Presidential election soon approaching, voters will have a clear choice between helping small businesses grow and increasing the number of jobs in America, or voting for President Obama.
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