Obama’s plan to lower the corporate tax rate to 28% from 35% may help the overall economy, but it does not particularly help small businesses.
In his State of the Union speech to Congress, President Barack Obama called for a number of solutions to the United States’ tax problems. In particular, he attempted to appeal to small businesses with a plea for simplicity.
Small-business advocates have been some of the most vocal opponents of the President’s tax reform proposals, questioning their ability to help them jump start their businesses amid the most recent recession. Some of his non tax reforms have had a negative effect on the taxes of small-businesses with more than 50 employees.
It is Obama’s individual tax-rate reform policies that will hit small businesses hardest. Small businesses tend to be created as pass-through entities that pay the individual tax rate on their business income.
Obama’s proposal to raise the minimum-wage rate to $9 from $7.25 is another is another sticking point for small businesses. Small businesses could benefit from customers having “more money in their pockets”, but the higher wage requirement could also discourage companies from hiring more staff.
A number of projects aimed at helping small businesses from the standpoint of taxation have already been put in place by the President, such as the Startup America Initiative and the private-sector Startup America Partnership in 2011 and the Small Business Jobs Act in 2010.
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