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Obama Calls for Higher Tax Rates on Small Employers Than on Giant, Multi-National Corporations


Posted by Ryan Ellis on Tuesday, July 30th, 2013, 2:04 PM PERMALINK


In a speech today, President Obama will call on Congress to cut the corporate tax rate to 28 percent, and pay for it by eliminating some tax preferences for companies.  While this may appear like a good thing, it's actually part of a larger pattern of this president siding with giant, well-funded companies with DC lobbyists instead of Main Street small employers.

Cutting the corporate rate to 28 percent will only help very large companies.  According to IRS data, 32 million businesses file tax returns every year.  Fewer than 2 million of them are corporations.  These businesses tend to be the largest companies in the world.

Even a 28 percent rate is too high.  According to the OECD, a 28 percent federal corporate rate (more like 32 percent after state corporate income taxes are factored in) would still be higher than every one of our major trading partners except Japan and France.  We would still have a higher corporate income tax rate than Canada, Mexico, the United Kingdom, or Germany.  The new rate would still be higher than the developed nation average of 25 percent.

Most American employers don't pay the corporate income tax.  Most companies in America file and pay taxes using the individual tax rates.  President Obama just raised their tax rate in two pieces.  The first is when he allowed the fiscal cliff to happen, which raised the top income tax rate from 35 to 39.6 percent.  The second is when he imposed a uniform small business tax for Medicare of 3.8 percent on successful companies.  Taken together, this means that most employers face a top rate of close to 44 percent, plus state taxes.

Why does President Obama want to cut tax rates for giant, multi-national corporations, but was content to raise them on Main Street small employers?  It's a good question, but this is now part of a pattern.  Earlier in July, President Obama announced that he was giving large employers a one-year reprieve from Obamacare's employer mandate.  However, small employers and families would still have to face the individual mandate on schedule in 2014.  Again and again, this president sides with big business against small employers.

The bottom line?  President Obama thinks it's a good idea for multi-national, giant corporations to pay a 28 percent tax rate while Main Street small employers pay a 44 percent rate.  That's not fair, and it's not tax reform.

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