Sunday, April 4, 2010

Small Businesses Being Crushed By New Taxes

Most new jobs are created by small businesses (pdf). Small businesses generated 64 percent of net new jobs over the past 15 years. That may no longer be true. New taxes by Federal, State and Local governments are crushing the ability of small businesses to grow and succeed. The effective tax rate on the nations 26 million small businesses may be as much as 50% now. This is a 10 percent recent increase.

A record 25 percent increase in the taxes against US small businesses -- from costs associated with new health care law...

By one estimate, the effective tax rate on the 26 million small businesses across the country -- ...

Here are a sampling of the new taxes imposed on the nation's small businesses.
The 26 million small businesses in the US — like Eneslow Shoes, headed by CEO Robert Schwartz— are getting buried under an avalanche of new taxes, which include:

* An increase of 4.6% in federal taxes from 35% to 39.6% (expiration of Bush tax cuts)

* An increase in capital gains taxes from 15% to 20% (expiration of Bush tax cuts)

* A new tax of 3.85% on investment income, dividends, rents, royalties mandated in the new health care bill

* An increase in the Medicare payroll tax to 2.35% as mandated in the new health care bill

* In states like New Jersey and others, state and municipal taxes have been raised by the average of almost 2%

Businesses with 50 or more employees will be required to provide health insurance to employees in 2014 or pay a penalty. If you were a small employer with 45 employees, would you hire another 5 and move into the mandatory health insurance range or try to get by with your current employees? Growth from small to medium size carries a heavy penalty.

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