When I got up this morning, I was all set to blog more about the disaster that is (and let me type it out one more time) the American Jobs and Closing Tax Loopholes Act of 2010.
Specifically, I was going to focus on the S corporation provisions, which seem to be taking a beating in this bill. But then I read this piece by Joe Kristan. It’s a brilliant summary of much of exactly what’s wrong with the apparently poorly thought out efforts on Congress’ part to reform/fix/muddle up even more the Tax Code.
In the piece, Joe points out the most obvious concern about the new provision:
It would penalize the smallest personal service providers to the benefit of their larger competitors. A sole proprietorship would pay taxes at a rate at least 2.9% higher than a competitor whose “principal asset” is the reputation of more than three employees.
That’s right. Congress is penalizing small businesses. That’s exactly what we need in a recession. If you read through the bill, you’ll see that we’re giving tax incentives to NASCAR, to Hollywood, to mining companies… And at the end, we’re thumbing our nose at what keeps this company going: small service-based businesses.
And we wonder why we’re in this pickle to begin with.