“The chief argument voiced by Republicans in favor of keeping the full Bush tax cuts, including those in upper tax brackets, was that raising taxes on the “rich” would actually raise taxes on small businesses. This was correct. Most small businesses are not incorporated and instead pay taxes through the owners’ 1099 personal tax forms. President Obama’s response was that his proposed tax increases would only affect 3% of small businesses, but this calculation was misleading. The small businesses that would be affected actually earned 91% of small business income and also employed 54% of the entire private US workforce.”

“Another argument the Republicans did not raise, but perhaps should have, is that higher income taxes generally hit hardest newer businesses owned by people on the rise, not established businesses owned by the old rich. This is because newer and faster-growing businesses rely most heavily on current income to finance the expansion of their businesses. They also tend to have less credit with banks and greater need for expansion capital. Businesses in this category, when taxed more, have no choice but to slow their growth, including the hiring of new employees. Economist Art Laffer has been a particularly vocal critic of higher taxes on small businesses: “Higher marginal tax rates prevent poor people from becoming rich. The only way they can get rich is by earning income, which is taxable. Once you become rich, you have ways around it.”

Excerpt From: Lewis, Hunter. “Crony Capitalism In America.” AC2 Books. iBooks.

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The wealthy have lobbyists who sometimes literally write favorable clauses into the tax legislation.  The super wealthy can raise money by floating stock, which does not have to be paid back and may require no interest payment.  In this economy access to capital is very difficult, especially when home values, a common collateral, is deemed risky.  By taxing income and this administration impedes economic growth in the small sector anc economic recovery. This may be a critical reason why we have a jobless recovery and a disconnect between  Wall Street and Main Street.