The President is determined to raise taxes and demand the wealthy pay their fair share. Yet, a new report out by Ernst and Young indicates that allowing taxes to increase for every American earning over $250,000 ($200,000 for single taxpayers) would suck $200 billion out of the economy, cost 700,000 jobs (those most likely to need jobs) and also reduce wages by 1.8 percent.
This report also addresses, in part, the taxes already scheduled to take affect under Obama Care. One of the significant tax increases from this law is the increase of the Medicare Tax from 2.9% to 3.8% and will extend to the unearned income (e.g. interest, dividends and capital gains). To top it off the tax collected on unearned investment income doesn’t even go to cover Medicare!! A classic bait and switch, but legally sanctioned.
If tax rates are allowed to increase in 2013, coupled with the Obama Care taxes, small businesses will face a crippling situation. What the politicians inWashington, and some state governments for that matter, refuse to understand is that they are destroying the wealth of the small business owner. The equity of the small business is instantly devalued when taxes are raised and wealth vanishes. The small business owner doesn’t have the luxury of listing his or hers stock on some national exchange when they desire to sell their business. Instead they have to have their business valued and commonly this valuation is done at a multiple of their business revenue stream. So for example, if a small business earns $300,000 and the government confiscates an additional 10%, that’s a $30,000 redistribution of the small business owner’s wealth to the government. If the multiple for valuing his business is 5 times, that’s a $150,000 wealth grab by the government.
You need to become pro-active and beat the IRS, Legally. You need a tax strategy to ward off the government wealth grab. Contact my office at 818.369.7900