More than 50 percent of taxes collected in 2004 will be paid by business owners, according to a new study from the Tax Foundation.
“Individually owned business pay the lion’s share of all individual income tax collections,” the report said. “We estimate that in 2004, business owners will pay 54.3 percent of all individual income taxes.”
In addition, the report estimated that 37.4 percent of all income tax collections will come from business owners earning over $200,000, “roughly the wealthiest 2 percent of taxpayers,” the report said.
The Tax Foundation report is aimed at critics who question the effect of top marginal income tax rate cuts on business owners.
The debate is an important one because the number of small businesses, and sole proprietorship’s, partnerships and farms has “exploded” over the past two decades.
The report found that an “extraordinarily” high proportion of high-income taxpayers have some form of business income. About 74 percent of the wealthiest one percent of Americans reports some business activity, the report noted.
“The data clearly shows that a large proportion of high-income taxpayers are engaged in some form of business activity,” the report concluded.
The report’s findings are similar to those published in a March, 2003 report by The Business Council’s research affiliate, The Public Policy Institute.
That report, A Fair Share- At Least!, found that businesses pay more than a third of all tax revenues collected by the state and local governments in New York.
To read the Tax Foundation’s report, visit www.taxfoundation.org/sr131.pdf.
The Public Policy Institute’s report is available in PDF format at www.ppinys.org/reports/2003/fairshare03.pdf.