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Small businesses will shed jobs to pay for the higher small business tax rates. The Obama budget blueprint calls for the top tax rate to climb from 35% to 39.6%, and for the second-highest rate to climb from 33% to 36%. In addition, restoring the phaseout of itemized deductions and personal exemptions will bring the top rate mathematically closer to 41.6%. Social Security and Medicare taxes come on top of this.
These tax rate hikes would be devastating for small businesses, which pay taxes on their owners’ tax forms. $2 out of $3 in small business profits pay taxes at these tax rates. 47 million Americans—one out of three American workers—is employed by these profitable small businesses. In order to pay the higher taxes in the Obama tax blueprint, workers will be among the first to suffer.