One of the McCain campaign’s talking points is that Obama would raise taxes on everybody making over $42,000/year, which is a false statement. Obama has proposed tax increases on those making over $250,000/year. The McCain response is that this would hurt small businesses which are the backbone of the American economy and employment.
This got me to wonder which kind of small businesses would be impacted by raising individual income taxes on those making over $250,000/year. Chances are the guy running the dry cleaning store at your local strip mall isn’t taking home over $250,000. If his business makes over $250,000 in profits after operating expenses, he’s incorporated, so those are business assets. If he wants to expand his business and hire more people, that’s where those assets go, not into his paycheck. Small businesses where the owner makes over $250,000/year are likely to be sole proprietorships where the owner is the only employee: consultants, e-Bay sellers, lobbyists, etc.
The income tax issue as applied to small business is a red herring, designed to distract from the issue of fair taxation of the middle class.