Raising Top Tax Rates Negatively Impacts Fastest Growing Businesses

From The Tax Foundation Tax Policy Blog, "Reaction to Obama Speech -- Raising Top Tax Rates Will Hurt Private Businesses" by Scott A. Hodge:

The frequently cited statistic that raising the top tax rates would "only" impact 2 or 3 percent of tax returns is misleading. Those 2 or 3 percent represent the most profitable and growing "flow-through" businesses that are key to economic recovery.

More than 74 percent of tax filers in the highest tax bracket report business income, compared to 20 percent of those at the lowest bracket. More than 40 percent of private business income is earned by taxpayers paying the top marginal rate.

Of the roughly $864 billion in taxable business income reported on individual tax returns in 2008, nearly 68 percent was claimed on by taxpayers earning over $200,000 and 35 percent was claimed by those earning over $1 million.

Read the complete blog post here.