by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor, John Locke Foundation
The Wall Street Journal breaks down the manifold negative tax shocks the “recovering” economy is about to weather, thanks to Obamacare and yesterday’s tax bill. One that I would like to highlight:
As for small business, the overall tax increase this year is substantial. The new listed top rate of 39.6% doesn’t include the phaseout of deductions that will take the actual rate to 41% or so for many taxpayers. Add the ObamaCare surtaxes on investment income (3.8%) and Medicare (0.9%), as well as the current Medicare tax of 1.45% (employee share), and the real top marginal tax rate on a dollar of investment income from a bank savings or money-market account will be about 46%. Throw in state taxes, and the marginal rates in many places will be in the mid-50%-or-higher-range.
Why does this matter? Because small businesses comprise 99.7 percent of employers in the United States.