Dow Jones Newswires, reported that small businesses are of opinion that, the increase in tax rates will effect business investment and hiring plans at large.
Tax cuts proposed by President George W. Bush are to expire at the end of this year. In this regard, Obama has proposed new tax policies such as, extending the tax cuts for married couples earning less than $250,000, or for single taxpayers earning less than $200,000. Further, the Government increased tax rates on incomes higher than those to 36% and 39.6% respectively, from present levels of 33% and 35%.
It has become a concern for many of the businesses and a September Senate debate will be held for deciding on whether to extend the tax cuts propsed by Bush Government or to let the tax rates increase for the wealthiest.
Congress’s Joint Committee on Taxation reported from an analysis made in July, that under Obama’s plan only 3% of taxpayers with the reported business income in 2011 would face increase in tax rates.
But Republicans and democrats have different opinions on the JCT report. Republicans say that only 50% of the $1 trillion income that is supposed to be earned by partnerships and S corporations, will face imposition of tax in 2011.
But democrats favour expiring of tax cuts for the wealthier, in order to reduce the federal budget deficit, which is expected to top $1trillion next year.
Whatever, might be the debate, the government should regulate the tax rates in order to facilitate small businesses development.