The current debate over the fiscal cliff seems to be centered around whether the threshold for taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. increases should be $200,000 to $250,000 (as the President wants) or $1 million (John Boehner's "Plan B.") It's worth pointing out that a lot of the income in this range comes from small businesses, many of which file are taxed under the personal rather than the corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. . Below is a table showing the percentage of income that is either business income, partnership income, or S-corp income, on tax returns in various income ranges, by state:
Combined Partnership/S-Corp/Business Income as Percent of AGI, Tax Year 2010 |
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| State | All returns | Rank | Returns with Income Over $200K | Rank | Returns with Income over $1M | Rank |
| Alabama | 7.53% | 30 | 26.52% | 10 | 34.16% | 13 |
| Alaska | 9.99% | 6 | 32.18% | 3 | 48.66% | 1 |
| Arizona | 6.15% | 47 | 20.10% | 34 | 25.50% | 35 |
| Arkansas | 6.95% | 40 | 19.99% | 35 | 17.58% | 45 |
| California | 9.60% | 9 | 19.50% | 42 | 24.33% | 39 |
| Colorado | 7.68% | 27 | 17.61% | 49 | 16.71% | 47 |
| Connecticut | 10.82% | 1 | 18.94% | 45 | 21.71% | 43 |
| Delaware | 6.04% | 48 | 19.40% | 44 | 29.18% | 22 |
| Florida | 8.41% | 17 | 22.36% | 23 | 26.45% | 32 |
| Georgia | 6.85% | 42 | 21.64% | 28 | 28.49% | 26 |
| Hawaii | 7.45% | 31 | 24.71% | 16 | 35.19% | 10 |
| Idaho | 8.73% | 11 | 32.17% | 4 | 42.84% | 3 |
| Illinois | 7.74% | 24 | 19.44% | 43 | 24.35% | 38 |
| Indiana | 7.53% | 29 | 28.55% | 7 | 39.16% | 6 |
| Iowa | 7.40% | 34 | 25.10% | 14 | 37.24% | 8 |
| Kansas | 8.41% | 16 | 24.35% | 18 | 29.48% | 21 |
| Kentucky | 7.42% | 33 | 26.09% | 11 | 31.00% | 18 |
| Louisiana | 10.67% | 3 | 33.22% | 1 | 40.63% | 4 |
| Maine | 8.00% | 21 | 23.38% | 21 | 32.64% | 15 |
| Maryland | 8.03% | 20 | 22.26% | 26 | 37.30% | 7 |
| Massachusetts | 9.97% | 7 | 19.74% | 38 | 26.55% | 31 |
| Michigan | 6.63% | 43 | 20.23% | 33 | 27.44% | 29 |
| Minnesota | 7.79% | 22 | 20.33% | 32 | 28.09% | 27 |
| Mississippi | 8.04% | 19 | 26.96% | 8 | 25.48% | 36 |
| Missouri | 7.77% | 23 | 24.56% | 17 | 32.31% | 16 |
| Montana | 10.34% | 5 | 32.70% | 2 | 44.65% | 2 |
| Nebraska | 8.70% | 12 | 25.18% | 13 | 29.74% | 20 |
| Nevada | 5.12% | 50 | 17.67% | 48 | 17.22% | 46 |
| New Hampshire | 6.37% | 45 | 11.62% | 50 | 9.67% | 50 |
| New Jersey | 8.70% | 13 | 18.33% | 47 | 26.33% | 33 |
| New Mexico | 6.54% | 44 | 22.28% | 25 | 28.69% | 25 |
| New York | 9.75% | 8 | 19.75% | 37 | 22.64% | 42 |
| North Carolina | 6.87% | 41 | 21.15% | 29 | 29.78% | 19 |
| North Dakota | 10.74% | 2 | 29.12% | 6 | 39.68% | 5 |
| Ohio | 7.26% | 35 | 23.31% | 22 | 32.10% | 17 |
| Oklahoma | 9.20% | 10 | 26.90% | 9 | 34.51% | 12 |
| Oregon | 7.69% | 26 | 22.35% | 24 | 28.80% | 24 |
| Pennsylvania | 7.42% | 32 | 19.62% | 39 | 24.36% | 37 |
| Rhode Island | 8.48% | 15 | 24.72% | 15 | 33.95% | 14 |
| South Carolina | 6.33% | 46 | 22.23% | 27 | 27.58% | 28 |
| South Dakota | 10.42% | 4 | 30.09% | 5 | 35.11% | 11 |
| Tennessee | 7.68% | 28 | 19.83% | 36 | 18.92% | 44 |
| Texas | 8.63% | 14 | 20.67% | 30 | 25.67% | 34 |
| Utah | 7.72% | 25 | 25.50% | 12 | 28.87% | 23 |
| Vermont | 8.16% | 18 | 20.38% | 31 | 24.29% | 40 |
| Virginia | 7.24% | 36 | 18.40% | 46 | 26.88% | 30 |
| Washington | 7.12% | 38 | 19.61% | 40 | 23.85% | 41 |
| West Virginia | 5.99% | 49 | 23.97% | 19 | 15.37% | 49 |
| Wisconsin | 7.05% | 39 | 23.95% | 20 | 35.66% | 9 |
| Wyoming | 7.17% | 37 | 19.60% | 41 | 16.14% | 48 |
| District of Columbia | 11.97% | 25.92% | 34.50% | |||
| United States | 8.28% | 20.79% | 25.77% | |||
| Source: IRS |