“The Republican claim that this is a tax increase on a large fraction of employers is just not true,” said Howard Gleckman, a resident fellow at the Urban Institute.
In sharp contrast to the rhetoric, current data suggests small businesses don’t create an outsized number of jobs, very few small business owners fall into the top two tax brackets, and tax cuts for small businesses are ineffective stimulus measures.
Relatively few small businesses would be affected: Extending the tax cuts for top earners for another decade would come at a significant cost — nearly $1 trillion in added debt over a decade.
But small businesses wouldn’t see much of that cash.
Only 2.5% to 3.5% of small businesses would be affected by an increase in those two rates, according to the nonpartisan Congressional Research Service.
Instead, almost all individuals who report business income fall into lower tax brackets, where both Democrats and Republicans want to retain current rates.
According to CRS, 80% of tax cuts in the top two brackets would go to non-businesses.
[A] new report from the Treasury Department found that only 20% of small businesses in 2007 even had employees.
Source: CNN Money