The Republicans either have no idea how business and taxes work or they are intentionally lying. The idea that raising taxes on the 2% who report INCOME in excess of 250K will harm the economy is wrong, ignores tax law and accounting principles!
Let us take a simple example. I run a small business called the Widget Factory. I run it myself and I have 10 employees. We make and sell a product called widgets which people love.
Now lets look at how accounting and taxes work.
In its simplest form my INCOME is my gross revenues less my expenses. Under President Obama's plan to only raises taxes on those making more than 250K I will only have to pay anything extra (actually only about three cents on the dollar extra) for every dollar above 250K.
It is how we get to INCOME that is important.
My gross revenue is all the money I receive for selling widgets. That is pretty straight forward.
What makes up expenses is much more interesting always remembering that it is gross revenue less my expenses which makes my INCOME to pay taxes upon.
So what are some of my expenses? I pay rent on the building we manufacture and sell out of, I have utility bills, I pay my employees, I provide cell phones to myself and key staff, I have office supplies, I pay internet expenses, we have a company truck, I pay for advertising, I pay for postage and shipping, I pay my suppliers for the raw materials that we assemble to make widgets, etc...
Now it is only after I pay for ALL of those things that I begin to have INCOME. And since INCOME only comes AFTER I have paid for all my expenses that money is indeed all mine.
Finally ... after everyone else is paid some money is all mine.
Under President Obama's plan, all of that INCOME which is finally mine will not have any increased taxes upon it until I reach 250K - and then only a small amount more.
Of course, this simple example does not even include the sophisticated techniques and benefits of a small business like electing to be an S-Corporation (with its favorable tax status on dividends avoiding payroll taxes), providing myself a company car, the travel, which the company will pay for, when I visit the annual trade shows in Las Vegas and New Orleans, the fact that my company pays for a cell phone that can double as my personal cell phone, the country cabin the business has for "retreats" and entertaining clients, my season tickets to all major sport teams in my area that I "give" to clients, that my children can work for me during the summer when home from college, etc...
Oh also, the increased taxes on INCOME of more than 250K is only on the bottom line AFTER I take my personal exemption and standard deduction!
There is absolutely no harm to small business from Obama's tax proposal.
In fact, one can argue the higher the tax percentage above 250K the more incentive I have to hire more people and take on more expenses.
Here is an example:
Imagine that the tax rate above 250K is raised not to 39.6%, but to 90%. Now with such a high tax rate I have a lot of thinking to do. Lets say I am looking at an INCOME of 350K per year. That means of that 100K above 250K, under a 90% tax, I will only get 10K. This makes me think if instead of taking that 100K in INCOME if I should instead use it to hire two extra workers so I do not have to work as hard? Do I take that extra 100K and invest in a new phone system, computer system or more advertising? There is so much more I can do with that 100K to make life better without taking it as INCOME and only keeping 10K.
In fact, it is clear that the more tax you lose from your income over 250K the more incentive you have to spend the money as an expenses (benefiting the economy and everyone else) to avoid paying such a high tax.
No matter where you live and no matter what kind of small business you have if your INCOME after paying all expenses is more than 250K you can afford this slight tax increase.
Republicans have the tax and accounting all wrong. I hope this small example helped.