Business Income Would Take Double Hit from New Surtax, Expiring Tax Cuts
July 17, 2009
Proposed health care surtaxes approved by the House Ways and Means Committee, combined with the reversion of the top federal tax rate on wages to 39.6% at the end of next year would mean “a significant tax hike” on business income in 2011, according to a Tax Foundation Fiscal Fact.
According to Tax Foundation President Scott Hodge, author of the new report:
The U.S. business sector includes millions of “non-corporate” businesses that pay their taxes on the individual income tax returns of their owners. That means new tax hikes on personal income, which may soon bring total rates over 50% in most states, will be hurting small businesses. Some pundits like to cite the statistic that only 4% of the 36 million tax returns with ‘business’ income are subject to the surtax, but that 4% of tax returns earns 60% of the $882 billion in total “business” income.