President Obama responds to the Republicans' charge his tax hike would hurt small business

[flpoljunkie]

Obama went on to take questions from KCNC viewers, as read by Boyd. One was about whether higher taxes would hurt small businesses and farms in Colorado. Obama replied: “The truth is, is that only about two percent of small business owners make more than $250,000 a year. What we’ve said is that there is a way of protecting middle class families, those farmers, those small business owners that are out there, but making sure those folks that are millionaires and billionaires pay a little bit more."

http://www.politico.com/politico44/perm/0411/swing_state_tv_49eb27c9-c39f-4b96-9d04-e6c4f57b40cd.html

[dkf]

1. I wonder what kind of loophole would need to be created to do this.

And how exploitable it is.

The corporate tax rates are jokes...it's the loopholes and the exemptions that are the big deal.

[flpoljunkie]

2. The loophole for 'small business' income is in the tax code now. More from CBPP...

Moreover, many of the roughly 650,000 filers with small-business income who face one of the top two tax rates are merely passive investors who have nothing to do with running the business. This is because the Tax Policy Center data cited above use the Treasury Department’s relatively broad definition of “small business.” Under the Treasury definition, for example, the $84 of income President Bush received in 2001 from a passive investment in an oil and gas company7 made him a “small-business owner.” About 35 percent of “small-business owners” with incomes above $200,000, and about 58 percent of “small-business owners” with incomes over $1 million, received some or all of their business income in the form of passive investments. The Treasury definition also counts as “small-business income” the fees that CEOs are paid for sitting on corporate boards.

In short, few small businesses see any benefit from reductions in the top two income tax rates. The imagined impact on small businesses is a poor justification for extending the current top two rates, which would increase the deficit by $450 billion over the next ten years.

http://www.cbpp.org/files/8-29-08tax.pdf

[dkf]

3. So he would not add anything to the tax code because they are protected already?

"there is a way of protecting middle class families, those farmers, those small business owners that are out there"

There would be no added shenanigans needed in the tax code to do as he says?

[flpoljunkie]

4. Yes. 98.1% of small businesses would not be affected by Obama's tax hike on those making over $250K

And, that includes the people who are not really small businesses, but are able to classify themselves as such because of our screwy tax code.