According to the Tax Foundation, President Obama’s push for new taxes on those income earners above $250,000 would devastate small business owners.
Analyzing IRS reports from 2009, the Tax Foundation shows that small businesses would be hit the hardest by this tax increase.
Using IRS data from 2009, businesses that file as S-Corporations would most likely be hit the hardest. S-Corporations, unlike C-Corporations or LLC’s, do not pay corporate tax rates. Instead, they pass their income onto shareholders who then pay the tax themselves as individuals. S-Corps are normally small businesses that are owned by either a single individual or a family.
According to the study, 85% of S-Corps or Net Partnerships make over $250,000.
“No matter how you cut the data, the fact is that hiking the top individual income tax rates would amount to one of the largest single tax increases on individually owned businesses in modern history and a threat to the long-term economic health of the nation,” the Tax Foundation argues.