The threat of increased income taxes almost came to fruition at the end of 2010. With the expiration of the Bush tax cuts, income tax rates were set to rise unless Congress stepped in. They did, but they only enacted a two-year extension of the Bush rates. Higher individual income tax rates impact family businesses that operate as a business that "flows through” business income to the individual tax return of the owners. It is common for those businesses to reimburse their owners for the resulting tax liability. Personal income tax increases which are perceived to be geared toward "wealthy individuals” negatively impact small to medium sized businesses that operate their businesses as a "pass-through.”
Much has been said about the Bush tax cuts, and plenty of finger pointing has occurred at the so-called "wealthy individuals.” Even though the message has been shared that many small business owners fall into the higher income tax category due to their business structure, the impact of the increase has not been well-articulated. FEUSA plans to paint a clearer picture of how raising individual income taxes impacts family-owned businesses.