Progressive Tax Policies Won't Harm Small Businesses

The number of small-business owners who would be affected by this tax increase would actually be very small, according to the Center for Budget and Policy Priorities [2] and the Brookings Tax Policy Center.

First, less than 9 percent of people with any small business income have incomes of over $250,000. The remainder would actually get a tax cut under President Obama's tax plan. Second, only 1.9 percent of small-business owners pay taxes at above the 28 percent tax bracket. Third, many of the people who would be affected by the proposed tax increase are actually passive investors who have no direct role in managing the businesses, including multimillion-dollar hedge-fund managers. Plus, small businesses whose owners are paying taxes on their profits at the personal tax rate have other options for lowering their tax bill.

What small-business owners will get with this tax change, however, is policies that will lower their health care costs over time, help them shift to green-energy sources, strengthen schools so they can draw from a better-educated labor pool and a better transportation grid for their goods and their workers. And those changes will have a positive impact on their bottom line that will outweigh the small tax increase a few might pay.