3 Charts that Explain Why Washington Has to Avoid Automatic Tax Increases

Sep 25, 2012

The Tax Foundation put together a set of charts illustrating the reality of the U.S. tax system. Here are three that should be burned onto your retinas when talking about the threat of automatic tax increases on businesses:

  1. Most businesses are “pass-through entities” like s-corporations, partnerships, and sole proprietorships that pay business income on the owner’s individual income tax return.
  1. The popularity of pass-through entities has resulted in there being more non-corporate net income than corporate net income.
  1. If taxes were raised on those earning more than $200,000 as proposed by the administration and some members of Congress, 72% of 2010 total pass-through business income would be taxed at the highest rates.

Letting the 2001/2003 tax rates expire at the end of 2012 would result in a massive tax increase that would hit job creators hard and possibly push the economy into a recession. For Washington to let that happen would be irresponsible.

Check out Jim Pethokoukis for more fun with these charts.

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