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Would small businesses be hurt by extending tax cuts?

A small business

TEXT OF STORY

STEVE CHIOTAKIS: After Thanksgiving, Congress decides what to do with the Bush-era tax cuts. President Obama wants them permanent for families earning less than $250,000 a year. But he wants them to rise for people making more. Republicans and some Democrats say the president's plan would hurt small business owners and damage job creation. Would it?

Marketplace's David Gura has that.


David Gura: A small business brings to mind a local company, with a few workers. But plenty of them employ just one person.

Howard Gleckman: It is just not right to say that what we're talking about here are small businesses.

Howard Gleckman is a fellow at the Tax Policy Center.

Gleckman: What we are talking about are people who report business income on their individual tax returns.

Gleckman says that way an individual is taxed less. A car wash owner can do this, and so can a hedge fun manager.

Gleckman: It's hard to know who owns a mom-and-pop business versus who is a partner in a law firm.

Howard Gleckman says most small business-owners wouldn't have to pay the government more money if the cuts expire. But a small percent, including some moms-and-pops making an average of $700,000 a year, would pay higher taxes.

Gleckman: They may employ a lot of people. And it is possible that they may employ some fewer people if they have to pay a higher tax.

But no one knows for sure.

In Washington, I'm David Gura for Marketplace.

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