Small business

I volunteer to do taxes for AARP each year and know how much lower income families benefit from various government programs.



This compares two families, each with a stay at home mom and three minor children. The first man works at Walmart and made $18,000 last year and has a family health plan, paid vacation, paid holidays and sick leave, disability insurance, life insurance the estimated value of these benefits is $6,000. He pays no federal or state income tax but does pay $1,377 in payroll tax(social security and Medicare).

His net pay is $18,000 less $1,377 payroll tax or $16,623. In addition he receives tax free from the federal government $5,657 in earned income credits, $2,250 in child tax credits and $800 in make work credits. He also received $1,260 from the state for family work credit. Total net income

$16,623

$5,657

$2,250

$800

$1,260

Total $26,590 plus the $6,000 in benefits for a grand total of $32,590



Second family is self employed and owns a small business. The gross income after business expenses is $250,000. From this taxes and cost of benefits must be deducted.

Federal income tax $47,247

Alternative min tax $2,898

Self employment tax $19,938

State income tax $22,867

Total $92,950



Net pay before purchase of benefits $157,000 Self employed must buy their benefits unlike someone who works for a company.

Family health insurance $15,000

Disability and life insurance $8,000

Pension $15,000



Disposable income $119,000



The second family has disposable income of 3.6 times as much as the first family but their gross income is 13.9 times as much.



Realize that the second family had to take the risk of starting up their own business and understand that 4 out of 5 small businesses fail. Is it worth the risk to start a business and with the proposed changes from the government will people be discouraged from starting a business, remembering that this is the primary source of jobs in America.