Friday, October 08, 2004
Subchapter S Smokescreen (Molliwogg)
According to W the rollback of tax cuts for Americans making over $200,000 a year would have a negative impact on job creation because of the huge number of Subchapter S small business, 900,000 was the figure Bush gave. Hmmm.
"The main advantage associated with the "S" Corporation is that the income passes through to the shareholders, thus avoiding the double taxation of a "C" Corporation. Subchapter S corporations are most appropriate for small business owners and entrepreneurs who want to be taxed as if they were sole proprietors or partners – again, this is a pass through tax structure, meaning you file profits and losses on your personal tax returns." legal-database.com
If a sole proprietor, partner, or S Corporation shareholder is making that much cash off his business then I say let 'em be taxed more.
Don't forgot the part about losses passing through too. Small businesses get to write off expenses like investment in equipment, leasing space, and the costs of paying employees. It is even possible to realize a substantial write off against other sources of personal income if the S Corporation is losing money.
The way I see it, the only time rolling back the tax cuts would affect the small business negatively is if the profit for any one of a possible 75 shareholders were to exceed $200,000 or their distribution combined with other sources of income were to exceed $200,000. So if the business is re-investing in itself, and thereby creating jobs, rather than distributing the profits to shareholders it would not create an undue tax burden on small businesses. If I am a mere simpleton who is missing something big in this equation, can someone please explain it to me?
Bush, Cheney, and friends think we are all simpletons and are trying to scare us into protecting tax cuts for the rich with smoke and mirrors. The wealthy can afford accountants and tax attorneys the rest of us can't to play hide and go seek with their money and avoid paying their fair share of taxes to begin with. Why should we protect further tax cuts in their favor?
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