July 29, 2009
Tax-News.com Cites Tax Foundation Data on Health Care Surtax’s Impact on Small Businesses
"US Business Income Set to Take Double Tax Hit"
By Mike Godfrey
The total average tax rate on business income in the US would rise by almost 6% as a result of tax plans currently under consideration by Congress and the Obama administration, according to a new report.
The Tax Foundation, a non-partisan fiscal policy think tank, has calculated that the proposed health surtaxes approved by the House Ways and Means Committee, combined with the reversion of the top federal tax rate on wages to 39.6% at the end of next year would mean "a significant tax hike" on business income in 2011.
The report said that the total average tax rate on business income would increase from 23.7% to 29.5%, assuming business income is the last dollar of income earned.
"The US business sector includes millions of 'non-corporate' businesses that pay their taxes on the individual income tax returns of their owners," Tax Foundation President Scott Hodge said. "That means new tax hikes on personal income, which may soon bring total rates over 50% in most states, will be hurting small businesses. Some pundits like to cite the statistic that only 4% of the 36 million tax returns with 'business' income are subject to the surtax, but that 4% of tax returns earns 60% of the USD882bn in total 'business' income."
