Terrific: Senate Dems offset cost of student loan bill with higher taxes on small business

posted at 12:41 pm on April 26, 2012 by Morgen Richmond

Let the games begin. With Romney expressing his support earlier this week for extending the freeze in student loan interest rates, defusing this as a wedge issue just as the President was embarking on his college tour, Democrats in the Senate have decided to counter with, what else, the class warfare card. Via Bloomberg (emphasis added):

Senate Democrats and the White House are seeking a one-year freeze in the interest rate. The $6 billion cost would be offset by limiting a tax provision that allows some owners of so-called S-corporations to avoid paying Medicare payroll taxes on their earnings, Senator Tom Harkin, an Iowa Democrat, told reporters yesterday.

Harkin said the legislation would require the Medicare payroll tax on income of more than $250,000 a year earned at S-corporations with fewer than three shareholders.

“This is a loophole that needs to be closed anyway,” he said. “So this is the right time to do it and for the right cause.”

Current law exempts the profits earned by S-corporations from Social Security and Medicare taxes, taxing only the salaries earned by shareholders who are employed by these firms. The IRS requires the allocation of reasonable compensation for work performed, so closely held S-corporations cannot (legally) classify all of their net income as profits, thus bypassing these payroll taxes. To call it a “loophole” is disingenuous. It’s no more a loophole than hundreds of other avenues through which businesses and individuals can cheat on their taxes, if they are willing to subject themselves to the consequences of breaking the law.

Millions of small, family owned businesses around the country are classified as S-corporations, and would be caught up in this tax net for no reason other than that they are small, and successful. And keep in mind that the profits which are credited to shareholders of S-corporations often remain in the business, funding the salaries of new employees and other investments.

The worst of it is that this a new, permanent tax on small businesses – $9 billion over 10 years according to the CBO -  to fund the cost of just one year of the interest rate freeze ($6 billion). If this is the “right cause” then the cause isn’t long-term financial relief for college students, it’s the re-election prospects of Democrats in November.

Backing this bill would be a dangerous precedent to set ahead of the real class warfare battle to come this summer, and thus Republicans in Congress, as well as the Romney campaign, should withhold their support unless another means is found to pay for it.


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Another attack on small business. Now the official enemy of the democratic Party.

pat on April 26, 2012 at 12:44 PM

Yeah. Why is it that S-corps are getting taken to the woodshed on this deal?

Not enough lobbyists, I guess.

TexasDan on April 26, 2012 at 12:45 PM

How about 150% tax on all Congressmen and Senators past their 3rd term? I am sure the effect will be sufficient to pay every American student through to his or her PhD.

Archivarix on April 26, 2012 at 12:46 PM

The National Socialist Democrat Party’s WAR ON SMALL BUSINESS.

jukin3 on April 26, 2012 at 12:46 PM

Great idea, Dims. Let’s make it harder for small businesses, which will further reduce hiring, which will make it harder for recent graduates to get jobs, which will make their burdensome student loan debts even more likely not to be paid.

Brilliant!

AZCoyote on April 26, 2012 at 12:46 PM

The next battle in the Democrats’ “War on America”.

crosspatch on April 26, 2012 at 12:46 PM

The Democrats really are an enemy of this country. We need to remove them from government at ALL levels; federal, state, and local.

crosspatch on April 26, 2012 at 12:47 PM

So Obama wants people to continue to borrow money they don’t have to get degrees so they CANNOT get jobs that don’t exist because of Obama’s moronic economic policy of shifting the burden to those people who would be most likely to hire them?

BRILLIANT!

Obama is the smartest man who ever lived. Yeah right.

wildcat72 on April 26, 2012 at 12:47 PM

Opportunity! Attack Democrats as trying to harm employment outlook for the recent college graduate by loading taxes on small businesses, the creators of the largest number of jobs. Hit it again and again, they will back off.

A.S.R. on April 26, 2012 at 12:48 PM

Good news for college students: You got a one year freeze on student loan interest hikes!
Bad news for college students: your part-time jobs and summer jobs just disappeared forever. Just borrow more!

Marcola on April 26, 2012 at 12:48 PM

The Democrats really are an enemy of this country. We need to remove them from government at ALL levels; federal, state, and local.

crosspatch on April 26, 2012 at 12:47 PM

Indeed.

Weight of Glory on April 26, 2012 at 12:49 PM

Uh…how do Medicare premiums get shuffled over to the general fund?

BobMbx on April 26, 2012 at 12:49 PM

Instead of attacking small business they should seize the endowments that the greedy unaccountable colleges have been stashing away as they raise their rates 9% per year.

The schools are the ones getting fat on these loans. Just take the money back for the greater good. They’re socialists. They will understand it needs to be done.

forest on April 26, 2012 at 12:51 PM

“This is a loophole that needs to be closed anyway,” he said. “So this is the right time to do it and for the right cause.”

That’s a great definition for term limits there Tom.

Bitter Clinger on April 26, 2012 at 12:51 PM

This is easy. Let’s have a conference committee and settle it out. The Senate, BTW, can’t raise taxes on their own.

US Constitution, Article 1, Section 7:

All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.”

Michael K. on April 26, 2012 at 12:51 PM

I’m surprised the d’s haven’t gone after taxing people’s 401K’s yet? Gads these d’s are horrible beyond belief!
L

letget on April 26, 2012 at 12:52 PM

Democrats-

“Reckon the economy’s jacked? Watch this!”

CorporatePiggy on April 26, 2012 at 12:52 PM

Sure, protect students from their student loan debt by taxing into oblivion the very businesses that would create the jobs that students could get hired for after graduation that would allow them to earn the money to pay back those loans–then again, what they really want is for the loans to just magically unappear.

stukinIL4now on April 26, 2012 at 12:52 PM

Because you’re right to get stuff for free trumps my right to earn a living.

morganfrost on April 26, 2012 at 12:53 PM

Uh…how do Medicare premiums get shuffled over to the general fund?

BobMbx on April 26, 2012 at 12:49 PM

The same way Social Security surpluses get spent in the general fund.

Bitter Clinger on April 26, 2012 at 12:53 PM

“your right.” Sorry.

morganfrost on April 26, 2012 at 12:53 PM

Listen to morgen gop

The lsm is going to crucify you anyway…take a stand

cmsinaz on April 26, 2012 at 12:54 PM

and because romney couldnt let 0bama outpander now the dems will beat the repubs to death w/ this issue. “they agree interest rates need to stay low but dont want to pay for them” perfect example of why romney’s natural leftwrd drift on issues will kill us in the election.

chasdal on April 26, 2012 at 12:54 PM

Good Lord…

How about taxing TV and movie and sports celebrities more [80-90%, maybe] so they can pay for the defaulting student loans?

These are the folks who support Obama anyway.

Make ‘em put their money where their mouth is?

This…this killing off small businesses and start-up entrepreneurs is going to expand the economy how?

coldwarrior on April 26, 2012 at 12:54 PM

If this is the “right cause” then the cause isn’t long-term financial relief for college students, it’s the re-election prospects of Democrats in November.

Re-election is always ‘the right cause’. Of course, when those businesses begin to flounder or lay off workers, you can be sure the Democrats will be right there to “focus laser-like” on job creation.

GarandFan on April 26, 2012 at 12:54 PM

So now small businesses will be in a worse financial position to hire the very college grads Obama and the dems are pandering to. Real smart Dems. Destroy the one thing that yields the most jobs for those grads looking for work.

Weight of Glory on April 26, 2012 at 12:54 PM

Small business, Family farms, traditional families, marriage, anything that smacks of conservatism, capitalism, patriotism, nationalism, western christian/judeo principles, are all anathema to the leftist agenda and must be destroyed. All must be assimilated into, be dependent upon, work for and worship all causes of the amoral left.

hawkeye54 on April 26, 2012 at 12:55 PM

Uh…how do Medicare premiums get shuffled over to the general fund?

Yeah that’s a good question. If these are Medicare taxes than one would think they would go towards the budgetary cost of Medicare, or into the Medicare trust fund. I’m guessing this is a “loophole” in the pay-go scheme adopted by Democrats in 2006. What it really is just a ruse to raise taxes and strike the first blow in their class warfare campaign.

Morgen Richmond on April 26, 2012 at 12:55 PM

O.K., Mitt. Step up to the plate. Think of it as an acid test.

a capella on April 26, 2012 at 12:55 PM

and because romney couldnt let 0bama outpander now the dems will beat the repubs to death w/ this issue. “they agree interest rates need to stay low but dont want to pay for them” perfect example of why romney’s natural leftwrd drift on issues will kill us in the election.

chasdal on April 26, 2012 at 12:54 PM

Romney should have kept his trap shut on this issue and let the Republicans in the House handle this.

Bitter Clinger on April 26, 2012 at 12:56 PM

Another attack on small business. Now the official enemy of the democratic Party.

pat on April 26, 2012 at 12:44 PM

It’s because they see small business owners as being mostly Republican, and have written off their votes anyway.

Ward Cleaver on April 26, 2012 at 12:56 PM

Since when do Democrats care about paying for anything?

Oh, right, only when they see an opportunity to put their enemies in a political jam.

forest on April 26, 2012 at 12:56 PM

Where are the Republican Senators on this?

lea on April 26, 2012 at 12:57 PM

forest on April 26, 2012 at 12:56 PM

awww, how cute, you actually think this is to pay for something!!

chasdal on April 26, 2012 at 12:58 PM

So now small businesses will be in a worse financial position to hire the very college grads Obama and the dems are pandering to. Real smart Dems. Destroy the one thing that yields the most jobs for those grads looking for work.

Weight of Glory on April 26, 2012 at 12:54 PM

I’m not sure a lot of recent college grads and college students of voting age are capable of connecting those dots.

a capella on April 26, 2012 at 12:58 PM

Never…never…ever…cut spending…somewhere else.
Let’s make sure not even half the kids coming out of college, can move out of mom’s basement!

KOOLAID2 on April 26, 2012 at 12:59 PM

Romney should have kept his trap shut on this issue and let the Republicans in the House handle this.

Bitter Clinger on April 26, 2012 at 12:56 PM

Yep. Big mistake. Now, he has to extract himself from a mess he needn’t be in.

a capella on April 26, 2012 at 1:00 PM

“This is a loophole that needs to be closed anyway standing law as written by Congress and passed by the President,” he said. “So this is the right time to do it and for the right cause.”

 
FIFY.

rogerb on April 26, 2012 at 1:01 PM

Where are the Republican Senators on this?

lea on April 26, 2012 at 12:57 PM

Probably cowering in the corner.

Bitter Clinger on April 26, 2012 at 1:01 PM

Could not all of this be deflected with a simple: “Where’s your budget? How does this proposal fit with your budget? Take another another 2 years, we’ll wait.”

de rigueur on April 26, 2012 at 1:01 PM

This is the most lame-brained idea yet. I can’t begin to explain how clueless the Dems are on S-Corps.

They don’t even know what loop-hole is. The fact that there is no payroll tax on the end of the year pass through is not a loop hole since it applies to everyone S-Corp in the universe.

If this is a loop-hole, then so is the fact that the government doesn’t tax everyone at 100% of their income. I suppose that’s the final loophole that needs to be closed.

Curtiss on April 26, 2012 at 1:01 PM

I’m not sure a lot of recent college grads and college students of voting age are capable of connecting those dots.
 
a capella on April 26, 2012 at 12:58 PM

 
Maybe Jimmy Kimmel can do a segment on it.

rogerb on April 26, 2012 at 1:02 PM

Great idea, Dims. Let’s make it harder for small businesses, which will further reduce hiring, which will make it harder for recent graduates to get jobs, which will make their burdensome student loan debts even more likely not to be paid.

Brilliant!

AZCoyote on April 26, 2012 at 12:46 PM

Why do U.S. Senators get paid the big bucks? Because they can come up with ideas like this!

Ugh…………….

jfox21 on April 26, 2012 at 1:02 PM

Let’s see– we can give you some relief on your student loan payment, but you’ll have trouble getting a job because the highly taxed small businesses can’t hire you. How’s that!

And that’s how economics works, folks!

LilyBart on April 26, 2012 at 1:02 PM

So now small businesses will be in a worse financial position to hire the very college grads Obama and the dems are pandering to. Real smart Dems. Destroy the one thing that yields the most jobs for those grads looking for work.

Weight of Glory on April 26, 2012 at 12:54 PM

It doesn’t matter when you only care about this coming Nov. It’s all about winning the presidency for 4 more years. Anything after that doesn’t matter at this point for the dems.

NapaConservative on April 26, 2012 at 1:03 PM

Youth and indies wake up. Whee will you work?

Schadenfreude on April 26, 2012 at 1:05 PM

If I wanted America to fail……

http://www.youtube.com/watch?v=CZ-4gnNz0vc

…..keep electing Progressives and Marxist Democrats and you’ll get to see first hand what it looks like.


These Senate lifers are just as guilty as the Administration is in pushing this economic growth choking legislation (mandates/regs).

PappyD61 on April 26, 2012 at 1:05 PM

Great idea, Dims. Let’s make it harder for small businesses, which will further reduce hiring, which will make it harder for recent graduates to get jobs, which will make their burdensome student loan debts even more likely not to be paid.

Brilliant!

AZCoyote on April 26, 2012 at 12:46 PM

Why do U.S. Senators get paid the big bucks? Because they can come up with ideas like this!

Ugh…………….

jfox21 on April 26, 2012 at 1:02 PM

This is what happens when raw political power is your only goal in life.

Bitter Clinger on April 26, 2012 at 1:05 PM

Small business’ that rely on free market capitalism, which are most of them, do themselves no favor if they side with a the Republican Party, which represents crony-capitalism. In fact crony-capitalism is the enemy of American capitalists. A lot of people like me support real capitalism, but crony-capitalism is un-American, if you ask me, and is destroying our society.

All the unpayable debt is a drain on Americas future, and is why young people have little to look forward, while inflation is a stealth tax that redistributed wealth from the poor and middle class to the wealthy/powerful and their special interests. A taxation brought about through monetary policy, which both Democrats and Republicans support.

In fact it’s the Democrat and Republican inflation that is chiefly responsible for the high gas prices. But since both parties are responsible, they attack each other on lesser matters instead.

Small business capitalists should not endorse and defend crony-capitalism. It should be defeated.

FloatingRock on April 26, 2012 at 1:05 PM

AZCoyote on April 26, 2012 at 12:46 PM

recent grads arent looking for work they are looking for the nearest Occupy camp so they can protest to get someone else to pay for their degrees. education is a right!!!

chasdal on April 26, 2012 at 1:06 PM

Great idea, Dims. Let’s make it harder for small businesses, which will further reduce hiring, which will make it harder for recent graduates to get jobs, which will make their burdensome student loan debts even more likely not to be paid.

Brilliant!

AZCoyote on April 26, 2012 at 12:46 PM

Oh, it is brilliant. Obama has already established that $250,000 a year is a millionaire and billionaire.

Logic will have nothing to do with the “debates” in this election and regrettably, the masses have lost basic horse sense. They don’t bother to connect the dots so the President can get away with completely divergent claims in one paragraph—never mind the same speech.

When are the Republicans going to target senior citizens with an understandable ad about Advantage going the way of the Do Do bird shortly after Obama is reelected? Didn’t I hear that the Republicans are going to propose using Obama’s health care slush fund for this lower interest rate? It’s about time Republicans start “channeling” Johnson and Rayburn because this is war and the democrats are burning the fields and salting the earth.

Portia46 on April 26, 2012 at 1:06 PM

When is the transportation/keystone bill going through the senate? If Obama vetoes it or Reid blocks it, package the keystone in with the student loan bill and make them block/veto it again.

The Count on April 26, 2012 at 1:07 PM

Wow. Next the Dems will completely take over education and teach this kind of math.
9 over ten years to cover 6 next year ?
My 3rd grader knows better.

Jabberwock on April 26, 2012 at 1:08 PM

I wish someone in the House would propose a bill saying “Resolved: we will not act on any bills passed in the Senate until they pass a budget.”

Mr. Bingley on April 26, 2012 at 1:10 PM

Let’s do this.

Every time the Dems increase or institute any kind of tax, to any rate of income or to any particular organization, they must apply that same tax rate in an accumulating fashion to their annual income.

They’ll be working for nothing in no time, just like the rest of us, thanks to them.

fogw on April 26, 2012 at 1:10 PM

I’m not sure a lot of recent college grads and college students of voting age are capable of connecting those dots.

a capella on April 26, 2012 at 12:58 PM

Sadly true.

Weight of Glory on April 26, 2012 at 1:11 PM

Since government is now in the student loan business, liberals will use the interest rate as a political football every election season – you can count on it. They will either propose to cut the rate or propose to extend the current “temporary” rate rather than let it go up, and dare Republicans to oppose it. If Republicans agree, Dems will demand a tax increase on some pro-Republican group as the way to “pay for it” – and the math will always be unbalanced.

The GOP this time should, 1, make sure that the extension ends in a non-election year and, 2) should demand that the interest rate on student loans be tied to something that is not subject to political control by Congress, such as overall interest rates or the Federal Funds Rate or something.

Otherwise, this is going to be like the “temporary” payroll tax cut – it will be permanent as long as Republicans can’t figure out a way out of the political box the Dems have put them in on that one.

billhobbs on April 26, 2012 at 1:11 PM

Why not tax the speculators in the education market (i.e., academia)? It is a bubble after all, isn’t it?

blammm on April 26, 2012 at 1:11 PM

Give me a break with the outrageous outrage. Using S-corp is a tax dodge and nothing more. Someone makes $300K as an indpedented consultant. He pays himself $100K salary, pays FICA on that $100K and the other $200K is exempt. And it’s legit, because $100K is a “reasonable” salary for a consultant.

The “millions of small businesses” are mainly 1 person businesses. As soon as a business gets big enough to be an actual business as opposed to a business in name only (BINO?) the business is changed to an LLc or a Corp.

angryed on April 26, 2012 at 1:13 PM

Every time the Dems increase or institute any kind of tax, to any rate of income or to any particular organization, they must apply that same tax rate in an accumulating fashion to their annual income.

They’ll be working for nothing in no time, just like the rest of us, thanks to them.

fogw on April 26, 2012 at 1:10 PM

That’s just a dog and pony show. While the Democrats and Republicans argue about “taxes” above the table, under the table they both support the monetary policy which is the worst kind of tax. They’ve raised the tax on the future, through debt, and the hereafter, through inflation, trillions and trillions of dollars, starting under Bush.

The reason gas prices are so high is because of taxation-through-inflation which both parties support.

They are magicians. You can’t fall for their distractions, he have to keep an eye on both of their hands at all times.

FloatingRock on April 26, 2012 at 1:16 PM

“If you make less than a quarter million dollars a year, then you will not see your income tax go up, your capital gains tax go up, your payroll tax. Not one dime.”
 
- President Barack H. Obama, 2008

rogerb on April 26, 2012 at 1:17 PM

Give me a break with the outrageous outrage.
angryed on April 26, 2012 at 1:13 PM

Yeah, businessman, hand over your money. I’ve got plans for it.

LilyBart on April 26, 2012 at 1:17 PM

question. Why would increased taxes for Medicare count for paying to freeze student loans? wouldn’t those funds be needed to sure up the increasing problem with, oh i don’t know, MEDICARE! I thought those funds where protected?

mbquinn on April 26, 2012 at 1:17 PM

I’m surprised the d’s haven’t gone after taxing people’s 401K’s yet? Gads these d’s are horrible beyond belief!
L

letget on April 26, 2012 at 12:52 PM

Oh, they’re working on it.

totherightofthem on April 26, 2012 at 1:18 PM

Give me a break with the outrageous outrage.
angryed on April 26, 2012 at 1:13 PM

Yeah, businessman, hand over your money. I’ve got plans for it.

LilyBart on April 26, 2012 at 1:17 PM

Whatever.

It’s a tax dodge. Someone doing the exact same job as a W2 employee or as a sole proprietor making $300K pays Medicare on all $300K. That same person doing the exact same thing but is paid via an S-corp pays Medicare on only $200K. That’s the only reason anyone would go the S-corp route. Might as well be called the “Evade Medicare Tax Corp”.

angryed on April 26, 2012 at 1:19 PM

Give me a break with the outrageous outrage. Using S-corp is a tax dodge and nothing more. Someone makes $300K as an indpedented consultant. He pays himself $100K salary, pays FICA on that $100K and the other $200K is exempt. And it’s legit, because $100K is a “reasonable” salary for a consultant.

The “millions of small businesses” are mainly 1 person businesses. As soon as a business gets big enough to be an actual business as opposed to a business in name only (BINO?) the business is changed to an LLc or a Corp.

angryed on April 26, 2012 at 1:13 PM

I’m not sure what point you’re trying to make. The FICA cap is only $110,100 this year anyway. They wouldn’t pay FICA on $300,000 regardless.

Sub-S are not a ‘tax dogde’ – its a legal way to set up a business – one of many legal ways. There are advantages and disadvantages.

I think you’re just greedy.

LilyBart on April 26, 2012 at 1:21 PM

So now small businesses will be in a worse financial position to hire the very college grads Obama and the dems are pandering to. Real smart Dems. Destroy the one thing that yields the most jobs for those grads looking for work.

Weight of Glory on April 26, 2012 at 12:54 PM

Murder your parents and then frame them for the crime, that’s REAL chutzpah.

ebrown2 on April 26, 2012 at 1:21 PM

The interest for ALL student loans should be the prime rate 3.25 percent, perhaps plus a service charge or part of a percentage point. The government has taken over the loans, and this does not seem correct to begin with, but to start factoring in the profits of loans from the very people in this country who cannot afford to pay for college outright,is a crime. And if you are middle class you know who you are, because you are not getting Obama’s discount loan, you are paying 6-9% TO THE GOVERNMENT.

Fleuries on April 26, 2012 at 1:21 PM

http://www.scorporationsexplained.com/scorporation-advantage-payroll-taxes.htm

From a CPA: S-corp = tax avoidance.

I’m going to be a bit general here, but payroll taxes basically include self-employment tax for sole proprietors and working partners in active trades or businesses and Social Security and Medicare taxes on shareholder-employees in corporations.

The payroll tax rate is, roughly speaking, 15% on the first $100,000 of sole proprietorship profit, partner’s profit share, or shareholder salary and 3% on anything above the first $100,000.

This means that a business owner who makes $100,000 a year as a sole proprietor, partner, or shareholder-employee pays (either directly or indirectly) about $15,000 in payroll taxes.

And this means that someone who makes $200,000 a year as a sole proprietor, partner, or shareholder-employee pays (again either directly or indirectly) about $18,000 in payroll taxes: $15,000 on the first $100,000 of income and $3,000 on the second $100,000 of income.

angryed on April 26, 2012 at 1:22 PM

The Democrats really are an enemy of this country. We need to remove them from government at ALL levels; federal, state, and local. crosspatch on April 26, 2012 at 12:47 PM

You ain’t the first to observe this.

Akzed on April 26, 2012 at 1:22 PM

But with an S-corp….

For an S corporation shareholder-employee, however, payroll taxes are only levied on the portion of the profit that the corporation labels “salary.” The corporation has to be reasonable in what it labels “salary,” but if $50,000 is a reasonable salary, then only the $50,000 is subject to payroll taxes. At a 15% tax rate, that means the S corporation shareholder pays roughly $7,500 in payroll taxes.

As compared to a sole proprietor, partner or C corporation employee making $100,000, therefore, the S corporation saves its owner $7,500 a year.

As compared to a sole proprietor, partner or C corporation employee making $200,000, therefore, the S corporation saves its owner $10,500 a year.

And, by the way, note that these amounts are savings per shareholder. If the example S corporation employs four shareholder-employees, the annual savings are roughly four times as much.

angryed on April 26, 2012 at 1:23 PM

Get in line, proles. The State and her national champions take precedence, don’t cha know.

All within the State, nothing outside of the State, and nothing against the State!

chimney sweep on April 26, 2012 at 1:23 PM

It is extraordinarily important for the Romney campaign to patiently but firmly push back and educate the population in simple mathematics. Our government education system has failed, so we conservatives must take up the slack. Here is a boggling tidbit: the approximate deficit of the unvoted/unapproved Obama budget for FYI 2012 is 1.4 trillion dollars. Let’s simplify that to say it is 1400 billion dollars overbudget (1 trillion=1000 billion). Even if you assume NO economic impact from raising taxes among the job creators, look at what Obama’s propsed policies would do. The Buffet Rule would bite out approximately 5-6 billion dollars out of that 1400 billion. Does that make sense? What about the approximately 70 billion from the Bush tax hikes? 75 billion from 1400 billion? Come on Romney and Republicans on TV…GET TO WORK

DrRich on April 26, 2012 at 1:24 PM

Angered –

I would point out that the ‘single person Sub S Corps’ are some of the best suited to ‘Go Galt’. You think you’re going to net a certain $$ by increasing taxes on this group, you’d be wrong.

LilyBart on April 26, 2012 at 1:24 PM

I’m not sure what point you’re trying to make. The FICA cap is only $110,100 this year anyway. They wouldn’t pay FICA on $300,000 regardless.

Sub-S are not a ‘tax dogde’ – its a legal way to set up a business – one of many legal ways. There are advantages and disadvantages.

I think you’re just greedy.

LilyBart on April 26, 2012 at 1:21 PM

FICA is not only $110K. That’s only SS. Medicare is unlimited. Try again.

angryed on April 26, 2012 at 1:25 PM

Let the games begin.

With Obama, it’s more like the Hunger Games.

faraway on April 26, 2012 at 1:25 PM

I would point out that the ‘single person Sub S Corps’ are some of the best suited to ‘Go Galt’. You think you’re going to net a certain $$ by increasing taxes on this group, you’d be wrong.

LilyBart on April 26, 2012 at 1:24 PM

So you admit that s-corps are tax dodges. Good.

angryed on April 26, 2012 at 1:26 PM

So the best solution to to take away money from the companies that actually might hire the graduating student? So they don’t get a job and can’t pay their loan back. Great idea!

StB on April 26, 2012 at 1:26 PM

I wouldn’t get so hot and bothered. This is not designed to become law, the President would never sign it. It is simply designed to get Republicans to filibuster in the Senate or to “block/obstruct” it in the House.

I say that the Senate Republican’s allow it to go to a vote, while offering up a few amendments (like closing the loophole that allows Entertainers to avoid these same taxes altogether as I recall) and let the Dems vote for it. Allow the House to vote on a version with the Entertainer loophole and then send it to conference, where it will surely die.

The problem is you can’t let the Dems win the war on optics with the young voters. You have to keep them independent or, frankly, disinterested come November.

Also, since when do you have to use PayGo rules to pay the cost of not enacting a tax increase, which is all this is. Sorry was the government already BUDGETING for these funds? (snicker)

oconp88 on April 26, 2012 at 1:27 PM

angryed on April 26, 2012 at 1:22 PM

if congress would be more responsible w/ the taxes they already collect people wouldnt look for “dodges”. you need to stop blaming the victim.

chasdal on April 26, 2012 at 1:28 PM

So the best solution to to take away money from the companies that actually might hire the graduating student? So they don’t get a job and can’t pay their loan back. Great idea!

StB on April 26, 2012 at 1:26 PM

S-corps don’t hire students. S-corps are almost universally 1 or 2 people, husband and wife type setups. By the time a company gets to the point of hiring new grads, they’re an LLc or a Corp.

angryed on April 26, 2012 at 1:28 PM

if congress would be more responsible w/ the taxes they already collect people wouldnt look for “dodges”. you need to stop blaming the victim.

chasdal on April 26, 2012 at 1:28 PM

I’m not blaming anyone. I’m stating a fact. Do you think it’s fair that someone making $150K a W2 employee pays Medicare Tax on $150K but someone else doing the exact same job but doing it as an S-corp pays Medicare on only $100K?

angryed on April 26, 2012 at 1:29 PM

So you admit that s-corps are tax dodges. Good.

angryed on April 26, 2012 at 1:26 PM

So S corps take advantage of legal loopholes….What’s your point?

Ditkaca on April 26, 2012 at 1:30 PM

I’m not blaming anyone. I’m stating a fact.
angryed

Don’t bother, comrade. They will only understand when they become Party members. And if not, we’ll make sure they are punished.

chimney sweep on April 26, 2012 at 1:32 PM

So you admit that s-corps are tax dodges. Good.

angryed on April 26, 2012 at 1:26 PM

I would actually say that they are one of the most appropriate methods of taxation. A portion of the owner’s income is treated as though he were pulling a market salary and all profits above that amount are treated as dividends of the company that he owns.

oconp88 on April 26, 2012 at 1:32 PM

So, the plan is to pay for the student loan interest rate discount by forcing small businesses to pay for it, and in turn prevent small businesses from using that money to hire new graduates.

End result: 3.4% intrest rate and no job instead of a slightly higher 6.8% interest rate but a job. Yup, makes sense.

milcus on April 26, 2012 at 1:33 PM

The Democrats really are an enemy of this country. We need to remove them from government at ALL levels; federal, state, and local.

crosspatch on April 26, 2012 at 12:47 PM

That applies to both parties. America is in trouble and the problems that afflict our nation are on core matters that both parties have the same positions on. Where the parties differ are on some fringe issues that they use to lure in special interest groups, but overall they really are the same. We need to fix the problems right now, at the core, which means we need new parties that have solutions to those core problems.

FloatingRock on April 26, 2012 at 1:33 PM

I’m surprised the d’s haven’t gone after taxing people’s 401K’s yet? Gads these d’s are horrible beyond belief!
L
letget on April 26, 2012 at 12:52 PM

Oh they will. There is talk already by top dems to actually seize people’s private 401k’s and replace with yet another promise like Social Security. Mark Levin interviewed the dingbat professor who is lobbying congress to do it.

jawkneemusic on April 26, 2012 at 1:33 PM

Common sense, and past history, shows that increasing tax rates can cause people to not invest and even Obama, in August 2009, said it was bad economics to raise taxes in a recession.

Read more: http://www.americanthinker.com/2011/07/raising_taxes_not_revenue.html#ixzz1tAWbN2K1

OK. I won’t raise taxes. I’ll raise revenues. And BTW, that statement expired in September, 2009. Do over.
- pbHo

VietVet_Dave on April 26, 2012 at 1:34 PM

Who’s gonna hire me now? These dems pull ‘loopholes’ outta their sleeves like a gambler pulls aces out. Is Harkin answering his phone from family farmers?

Kissmygrits on April 26, 2012 at 1:35 PM

angryed on April 26, 2012 at 1:29 PM

oh its about being fair??? i get it, cause its so fair that the top 1% pays over 40% of the taxes??? well by all means lets make things fair!!

chasdal on April 26, 2012 at 1:35 PM

I’m not blaming anyone. I’m stating a fact. Do you think it’s fair that someone making $150K a W2 employee pays Medicare Tax on $150K but someone else doing the exact same job but doing it as an S-corp pays Medicare on only $100K?

angryed on April 26, 2012 at 1:29 PM

Exact same job? Are you saying there are two employees of a company who both make $150k…but one of them decides he is going to run his salary through a S-Corp? I admit I don’t know much about how that works but wouldn’t there be some tax liability to the employer if he allowed that to happen?

Ditkaca on April 26, 2012 at 1:39 PM

angryed: from the same website you pulled your quote:

But you also know or sense that an S corporation burdens you and your accountant with extra work and expense.

As compared to a sole proprietor, S corporation tax returns also cost more to prepare. Partly, the extra cost stems from the increased complexity of a corporate return. And partly, the extra cost stems from the fact that a corporate return is typically many more pages than a simple sole proprietorship tax return.

An S corporation, for example, would often be required to prepare and submit balance sheets as part of its tax return.Unfortunately, a corporation may have extra banking and legal costs as compared to a sole proprietor.Banks, for example, may charge more for checking accounts, loans and other services.

Finally, state governments, their agencies, and even other outside parties may require a business that’s setup as a corporation to jump through additional legal or accounting hoops or to pay more in fees and taxes simply and only because of the corporate form.S Corporation Disadvantage #4: Costs to Start and Stop

Typically, sole proprietorships and partnerships are easier and less expensive to start than corporations. For example, a sole proprietorship or partnership can be started without anything more formal than a decision or a handshake.

…..in order for a new or existing business to incorporate and then elect S status, the business needs to file articles of incorporation, articles of organization, or articles of formation with the state in order to start “existing.”

A subchapter S election must be filed with the Internal Revenue Service and, in some cases, with the state’s tax agency.

Furthermore, the requirements of Section 351 of the Internal Revenue Code need to be met so that the incorporation isn’t viewed by the tax laws as the sole proprietor or partners exchanging the assets of the business for stock in a new corporation.

A related disadvantage of an S corporation is that an S corporation often can’t be liquidated without paying some federal and state income taxes.

This problem of “taxes due at corporate termination” is a bigger worry with a regular, non-S corporation (called a C corporation, by the way.) But you can still find yourself paying taxes at the liquidation of an S corporation. And here’s why: When a corporation liquidates, the corporation distributes property to its shareholders. If a particular item of property has a fair market value in excess of its depreciated cost, the difference between the fair market value and the depreciated cost gets recognized as either a gain or loss.

In comparison, with property in a sole proprietorship or partnership, merely winding up the proprietorship’s or partnership’s operation doesn’t necessarily create gains or losses, even if the sole proprietorship or partnership distributes appreciated property to the owner or owners.

All this for an extra $7500. Wow, they’re getting away with murder.

LilyBart on April 26, 2012 at 1:40 PM

Romney: “This is not the hill to die on. Raising taxes is….uh….severely conservative?”

Buckshot Bill on April 26, 2012 at 1:40 PM

Backing this bill would be a dangerous precedent to set ahead of the real class warfare battle to come this summer, and thus Republicans in Congress, as well as the Romney campaign, should withhold their support unless another means is found to pay for it.

Backing this bill is in poor judgment. How about we teach people to PAY THEIR OWN DAMN BILLS? What a concept.

dogsoldier on April 26, 2012 at 1:41 PM

The democrat war on Capitalism and the middle class.

Hard Right on April 26, 2012 at 1:42 PM

The problem is you can’t let the Dems win the war on optics with the young voters. You have to keep them independent or, frankly, disinterested come November.

oconp88 on April 26, 2012 at 1:27 PM

So young voters are selfish and care more about Jersey Shore than national issues?

Happy Nomad on April 26, 2012 at 1:43 PM

Oh and before I forget, small businesses are not hiring NOW. Tax them more dimwitcrats. Dems – the bottomless pit of stupidity.

dogsoldier on April 26, 2012 at 1:44 PM

Romney: “This is not the hill to die on. Raising taxes is….uh….severely conservative?”

Buckshot Bill on April 26, 2012 at 1:40 PM

I much prefer the House idea of taking the money out of the Obamacare slush fund.

Happy Nomad on April 26, 2012 at 1:44 PM

oh its about being fair??? i get it, cause its so fair that the top 1% pays over 40% of the taxes??? well by all means lets make things fair!!

chasdal on April 26, 2012 at 1:35 PM

Many of them are the same people getting the most benefit from all of the generational theft caused by debt and inflation.

FloatingRock on April 26, 2012 at 1:44 PM

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