Sep 18, 2010

Tax Increase Would Hit Few Small BusinessesBy David KocieniewskiNYTimes.com

As Congress and President Obama wrestle over whether to let the Bush tax cuts expire for the wealthiest Americans, one of the most heated aspects of the debate, in Washington and in neighborhoods across the country, is how a tax increase would affect small businesses.

Mr. Obama wants to extend the cuts for most taxpayers. But he proposes eliminating them for the top 2 percent of wage earners, whose taxes would rise. Opponents of the plan warn that a tax increase would batter hundreds of thousands of small businesses — from Silicon Valley start-ups to mom-and-pop convenience stores — and prevent them from creating the jobs that might lift the sagging economy.

“It’s a body blow to the small-business community,” said Grover Norquist, president of the conservative advocacy group Americans for Tax Reform.

Despite that emotional appeal, Internal Revenue Service statistics indicate that only 3 percent of small businesses would be subject to the higher tax, and many studies of previous tax increases suggest that it would have minimal impact on hiring.

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