[Vision2020] More Help for the Wealthy

[Paul Rumelhart]

On 04/15/2012 04:31 PM, Art Deco wrote:
> Despite the Mom-and-Pop label, it is designed so that nearly half of 
> the tax cut would go to people with annual income over $1 million, and 
> more than four-fifths would go to those making over $200,000, 
> according to the Tax Policy Center 
> <http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=3342&DocTypeID=1>. 


That's a little disingenuous.  The over $1M tax bracket goes all the way 
up, whereas the lower tax brackets have a ceiling.  That's like 
complaining that the highest paid employees get a better deal out of a 
straight percentage raise, on average.  Of course they do.  According to 
the link to govtrack.us that was in the original email 
(http://www.govtrack.us/congress/bills/112/hr9), here is what the bill 
actually does:

"Small Business Tax Cut Act - Amends the Internal Revenue Code to allow 
domestic businesses a tax deduction for 20% of the lesser of their 
qualified domestic business income (income effectively connected with a 
trade or business in the United States) or their taxable income for the 
taxable year. Limits the amount of such deduction to 50% of the the 
greater of the W-2 wages (payroll) paid to business non-owners or the 
sum of the W-2 wages paid to non-owner family members of direct owners 
(i.e., stockholders), plus any W-2 wages paid to direct owners who have 
a 10% or less interest in a business."

It's a straight percentage, with a maximum amount cut (also a 
percentage).  So of course it will benefit the largest cash earners the 
most, but it still benefits every small business.  With the economy the 
way it is, I can see why they want this.  Reduce the tax burden so that 
businesses of all sizes can increase profits.  This is a direct boost to 
the economy, at the expense of some tax revenue.  I don't know if the 
loss in revenue is worth the possible increase in businesses bottom 
lines, but that's a math question, really.

Also, limiting the maximum amount to a percentage of wages paid is one 
way to create an incentive for creating jobs.  The larger the payroll, 
the larger the possible tax break.  Kind of clever, actually.

Paul
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