40% tax for small businesses?!?!

[gigabitdrew]

Can this really be the case? Maybe I don't have all of the facts, but I've read a couple of different articles now that say the income tax on a small business under Obama's plan is 39.6%... and big business is only 28%?

OK, so if i'm thinking of opening up my own small business... I've got to plan on the government taking about half of my earnings... meaning I've got to do over twice the business to cover my cost... making it nearly impossible to grow my business. Talk about being burdened right out of the gate.

So, is this right?

 

[Katzndogz]

It is correct. Small business cannot donate the kind of money to democrats that multi national corporations can. The object is to crush small business out of existence.

 

[DGS49]

Most small businesses report their income under what is called, "Subchapter S." Under subchapter S the business itself does not pay income taxes; the profits are simply funnelled to the owners, who pay the tax on their personal income. This is probably what is being referred to. The business owner would ( if the business is profitable) pay the higher maximum tax on his personal income.

There is nothing stopping a small business from being a "C-Corp," and paying business income tax at the lower rate. Then the owner can pay himself a salary - which is taxed normally - plus tax on any dividends that he takes from the business.

Obviously, the business owner will make the choice of Subchapter S or C-Corp based on his own circumstances and prospects.

I am not aware of any change that the Obama Administration is proposing, but regardless, all tax laws originate in the House of Representatives (which is currently controlled by Republicans), so his thoughts and proposals on income taxes are nothing more than suggestions.

 

[gigabitdrew]

Most small businesses report their income under what is called, "Subchapter S." Under subchapter S the business itself does not pay income taxes; the profits are simply funnelled to the owners, who pay the tax on their personal income. This is probably what is being referred to. The business owner would ( if the business is profitable) pay the higher maximum tax on his personal income.

There is nothing stopping a small business from being a "C-Corp," and paying business income tax at the lower rate. Then the owner can pay himself a salary - which is taxed normally - plus tax on any dividends that he takes from the business.

Obviously, the business owner will make the choice of Subchapter S or C-Corp based on his own circumstances and prospects.

I am not aware of any change that the Obama Administration is proposing, but regardless, all tax laws originate in the House of Representatives (which is currently controlled by Republicans), so his thoughts and proposals on income taxes are nothing more than suggestions.

OK... as an individual I am wanting to start a small business... and I plan to start of hiring 5-6 people. You are saying that I can create a "C-Corp" instead of an "S-Corp" and automatically be in the lower tax bracket... without regard to number of empolyees, gross income, or any other identifiable metric. Interesting.

So, since most people in the country work for small businesses, you know "main street" vs "wall street"... why would this even be considered if you are trying grow your economy? Obviously there is more here than I understand... but just from the general idea that small businesses pay a much higher rate of income tax is mindblowing.

 

[National Socialist]

Its perfect if your goal is to destroy business's that don't need to depend on government handouts and only have corporations that do depend on government which in turn gives them a say so in what goes on...

 

[OriginalShroom]

Just more proof exactly how much Obama and the Democrats actually support the Small business man and woman.