How Our Tax Code Discourages Entrepreneurs

In March this year, about the same time, Americans everywhere were thinking about income taxes, POTUS (President of the United States) said: If anyone has any ideas on how to stimulate small business, listened.

OK Mr. President, here's an idea: Get rid of about 40% federal marginal tax rate paid by individual entrepreneurs. Confiscatory rate drains the lifeblood of small businesses and discourages growth and job creation.

What we say and what they are unrelated.

Members of Congress, both Democrats and Republicans, business owners always exalt often dubbing the "engine of American capitalism." But while the legislative branch of government does well, the implementation, the IRS, is stuck a hand into the pockets of our business and pulls about half of its profits.

Let me show you what I mean.

Each contributor has a number of tax obstacles to clear. Every obstacle is higher than the last. The higher your income, the greater the obstacle.

Here are the first three hurdles for a couple filing jointly.

• 10% in amounts up to $ 16,750

• 15% of the amount of $ 16,751 to $ 68,000

• 25% of the amount of $ 68,001 to $ 137,300

Note that each incremental or marginal amount is facing a higher rate. For example, dollars of taxable income of $ 68,001 to $ 137,300 is taxed at 25%. It is important to understand that you do not pay 25% of all taxable income, that only a fixed $ 68,001 $ 137,300. Thus, the term "marginal rate".

Picture if you will, a fictional couple, William and Mary. William received W-2 wages of $ 86,700. Mary had taxable business profit of $ 30,000. When the couple files their federal taxes, reduced earnings by $ 11,400 from William for $ 7,300 standard deduction and exemptions for their two mass leaving a taxable income of $ 68,000.

The sting

You can see then that the whole profitability of Mary taxable $ 30,000 is taxed at 25%. But that's not all. Mary also pays self-employment tax of 15.3% in the increase of $ 30,000. (The percentage of self-employment is reduced to 13.3% for 2011 only. I should also note that the normal rate of 15.3% is slightly reduced, since only 85% are taxes and half the provided a tax deduction.)

In reality, then, the couple will pay about 40% of all taxable business profits of Mary.

This question is important for our President and Members of Congress: Why did Mary want to risk capital and effort that nearly half of his bonus will be allocated to you to give General Electric, which incidentally , pay zero taxes on their $ 14 million of income?




http://typedia.com/member/25929/
http://tamsta.lt/forumas/member.php?action=profile&uid=8432
http://pcgamer.com/forum/member.php?u=51740
http://provideocoalition.com/index.php/forums/member/181139/
http://socionics.org/members/kalis34.aspx
http://depressioncanbefun.com/index.php/S=f9638d3af5ec0cf7a1159fa9ce0bbe0c2c162066/forums/member/222867/
http://burc.org/user.php?op=userinfo&uname=mikelus9in
http://ilrinc.com/member/19296/
http://followyourfashion.com/forums/member.php?action=profile&uid=2291
http://ciudadanosenred.org.mx/users/wilson780
http://moore-pr.com/member/25195/
http://asianwomenenterprise.com/community/profiles/100599/
http://hydroponicsonline.com/forums/members/brain343.html
http://eventful.com/users/kalis34
http://myeclipseide.org/user.php?op=userinfo&uname=mikelus9in
http://akiscode.com/anonskillers/member.php?action=profile&uid=3871
http://severedheads.org/mybb/member.php?action=profile&uid=1887
http://museumofhoaxes.com/hoax/member/111309/
http://forum.mangastream.com/member.php?u=27813
http://watch-clock-makers.org/msgbrd/index.php?a=profile&w=645
http://forums.airbender.net/index.php?action=profile;u=2680
http://beyonddc.com/smforum/index.php?action=profile;u=39292
http://sportzchat.com/member.php?action=profile&uid=354
http://hlurb.gov.ph/forum/member.php?action=profile&uid=16612
http://ofthefield.com/forum/member.php?action=profile&uid=3044
http://justcauseit.com/user/smith349
http://mydailyprogress.com/index.php/forums/charlottesville/member/160753/
http://infosalatiga.com/Forum/member.php?action=profile&uid=457
http://forum.virtuemart.net/index.php?action=profile;u=300134
http://magentocommerce.com/boards/member/25950244/
http://self-empowerment101.com/community/user/881
http://yourjobs.ro/forum/member.php?action=profile&uid=22065
http://akiscode.com/anonskillers/member.php?action=profile&uid=3853
http://classxradio.com/community/profile.php?id=244
http://asianwomenenterprise.com/community/profiles/100570/
http://followyourfashion.com/forums/member.php?action=profile&uid=2205
http://provideocoalition.com/index.php/forums/member/183290/
http://asianwomenenterprise.com/community/profiles/100587/
http://mbdefault.org/forum/member.php?action=profile&uid=15557
http://grindtv.com/profile/steeve22/blog/27988/nice+links/