By Terry Corbell
The Biz Coach
Nonpartisan Study: Obama’s Tax Plan Hits 53% of Business Earnings
Fifty-three percent of Americans with business income would be taxed at higher rates in President Barack Obama’s plan to hike taxes on the top 2 percent of households. That’s according to an analysis by the nonpartisan Joint Committee on Taxation.
The analysis was prepared at the behest of the Senate Finance Committee in 2012.
“With our economy as weak as it is, it makes absolutely no sense to hit more and more small businesses with a tax hike,” said Sen. Orrin Hatch (R-Utah) in a statement. He called it “irrefutable proof” that such an increase would be destructive.
Tax rates are slated to increase for capital gains, dividends, estates and income in 2013. The president wants the Bush tax cuts to expire this year, and increase taxes on couples earning $250,000 annually as well as on individuals making $200,000 or more.
Mr. Obama’s plan wants nearly one million households in the top 2 percent to pay tax rates of 39.6 percent. The study indicates it includes 3.5 percent of taxpayers with business income, 53 percent of those with net business income.
Hurts small business owners
Business owners would pay such taxes even if they have a closely held corporation, partnership, or sole proprietorship.
Proponents of the tax increases claim most aren’t small business owners. As business-performance consultant I disagree.
My sense is that spending must be curtailed to balance the budget. The U.S. doesn’t have a revenue problem – it’s a spending problem, which is hurting economic development and job creation.
Certainly, education can help a person get a job. But we’re not doing a good job of managing education in this country.
Another example: The Pell Grant Program spent $36.9 billion in 2009-2010 on students – many of whom aren’t even low-income and fail to graduate from college – according a 2012 study by the Pope Center for Higher Education.
Further, that’s 50 percent of the Department of Education’s budget. And yes, it’s the largest higher education expense of the U.S. government.
Sixty percent – 9.6 million college students –received Pell grants, but the rate of graduating students was lower than forecast.
The Senate is considering an increase for individual Pell grants – to $5,635 per year.
A 2011 study by the National Center for Education Statistics shows an alarming statistic: Pell Grant recipients graduate at much lower rate than other students.
Pell Grant solutions
The study suggests:
- Only “very low-income” students receive the entitlement
- Such students be required to earn a minimum SAT score
- They must qualify a good grade-point average
- The grants have a four-year time limit
- Publicizing the progress of Pell-grant student recipients
Amen. We need to get a much better ROI on education spending. A helping hand is one thing, but a handout is another.
In reality, without the five requirements, many students are welfare recipients at the expense of job-creators. Congress needs to act responsibly to protect our economic and political liberties.
From the Coach’s Corner, suggested reading:
“If we can prevent the government from wasting the labors of the people, under the pretense of taking care of them, they must become happy.”
Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.