It seems a href=”http://www.washingtonpost.com/wp-dyn/content/article/2009/04/26/AR2009042602838_pf.html”that many small businesses are bracing /afor a tax battle, according to this emWashington Post /emarticle (via a href=”http://nalert.blogspot.com/2009/04/small-businesses-brace-for-tax-battle.html”Newsalert)/a: br /br /blockquoteBusiness groups say they’re bracing for even more battles with the administration. br /br /”They’re desperate for revenue. And therein lies the concern of the broader business community,” said R. Bruce Josten, chief lobbyist for the U.S. Chamber of Commerce. br /br /”We’re going to be a permanent target, and we understand that,” added Catherine Schultz, vice president for tax policy at the National Foreign Trade Council. “The way they see it, corporations don’t vote.” /blockquotebr /br /A nurse turned entrepreneur is used as an example of how much the extra tax would cost, to her pocket book as well as her ability to expand and hire:br /br /blockquoteThe accountant, Carroll Hurst, said Johnson is unlikely to owe any federal taxes this year due to accounting changes that confer a one-time tax benefit. But in a typical year, he said, Johnson and her husband earn about $515,000 from various entities related to the schools. They claim around $90,000 in deductions — much of it contributions to charity — reducing their taxable income to around $425,000. Johnson said the sum they take home in wages is “substantially less.” br /br /In a typical year, Johnson’s federal tax bill would be about $120,000. But starting in 2011, the higher marginal rates would add about $13,000 a year, Hurst said. Capping the value of itemized deductions at 28 percent would add another $10,000, for a total increase of $23,000. br /br /And Johnson’s tax bill stands to grow dramatically if Obama were to revive a plan to apply Social Security tax to income over $250,000 instead of capping it at the current $106,800. Because Johnson is an employee and an employer, she would have to pay both portions of the tax, Hurst said, tacking another $30,000 onto her bill. br /br /Johnson said such an increase would force her to consider scaling back operations. /blockquotebr /br /My prediction? More and more businesses like Johnson’s will decrease hiring and expansion, and/or “go John Galt.” People will wonder why their opportunities are drying up and look to the government for help, not really understanding that the government created the mess to begin with.
April 28, 2009 - 2:57 am