Would ending the Bush tax cuts on the rich hurt small business?
For politicians, being "for'' is like being for mom and apple pie. That's why President Obama invited two restaurant owners named Pancake and Wheat to the White House in June to promote a bill to increase small-business lending, and why he recently visited with local business owners at the Tastee Shop Shop in Edison, N.J.
So it was probably inevitable that small busines would end up at the center of the war over extending the Bush tax cuts for the top 2 percent of households with incomes above $250,000. Republicans claim this would be a disaster for small business owners, because "50 percent'' of small business income would be "captured" by the higher tax rates. Democrats say that's baloney, because only 3 percent of small business owners make enough money to be in the top bracket.
Who's right? Over at the Fiscal Times, I dissected the issue. Short answer: the Republicans are right, but only if your idea of "small business'' includes income from hedge fund investments, royalties, real estate partnerships and that trust fund your rich grandfather left you. Here are the details:
According to the Joint Tax Committee, which analyzed President Obama’s tax proposal, taxpayers will report $1 trillion in business income on their individual tax returns in 2011. And just as Republicans claim, about 50 percent of that income is expected to be reported by people in the top two tax brackets.