Q: What impact would the Buffett rule have on businesses?
A: The Buffett rule would apply to individual income tax rates. It would not apply to the taxes that corporations pay, although Obama has separately proposed to increase taxes on some corporations including some that do work abroad.
Yet the proposal would still affect thousands of companies, from the local bakery to hugely profitable law firms, whose owners pay individual income taxes on the earnings, not corporate taxes. Republicans say taxing these companies would snatch away money they could otherwise use to create jobs — a damaging move with the economy still laboring to recover from the recession.
Q: Are there many of these companies?
A: In a paper last August, Treasury researchers analyzing tax data found that around 35 million individual tax returns reported some business income but just 331,000 of them — about 1 percent — were for earners making $1 million and up.
Out of those 331,000 business taxpayers earning at least $1 million, just 200,000 were employers, the study found.
Those 200,000 high-income employers accounted for just 5 percent of all employers filing business earnings on their individual returns. But they reported $189 billion in business income — a disproportionately huge 50 percent of all business earnings reported by such employers.
Republicans say it would inhibit job creation to tax away those large firms' earnings. Democrats argue the figures show how few high-earning taxpayers actually hire people.
The Treasury figures were for the 2007 tax year, the most recent available.
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