What Happened to No Tax Increases for Those Making Under $250K?

Remember when Obama assured the American public that there would be no tax increases for those making under $250K?  Well, not only did the new healthcare law prove that to be a lie, but the American Jobs and Closing Tax Loopholes Bill of 2010 contains a provision that increases taxes for self-employed business owners who make under $250K per year.

This bill's purpose is not to "close tax loopholes" like Obama, Pelosi, and Reid want you to think; this bill is necessary to help offset the $1.1 trillion deficit created by the healthcare law.  It is necessary to help offset the trillion dollar deficit created by the spendulus package.  This is a permanent tax increase as a "solution" to a deficit "problem" that was intentionally created by Congress and the President.

If you read Title IV Subtitle B Section 413 of HR 4213, you will find new disqualifications for tax breaks afforded to pass-through entities.  What will really piss off most self-employed small business owners is Section 413.  That section disqualifies S Corporations and LLC's with fewer than three employees that provide professional services from receiving the tax breaks that organizing as those pass-through entities allows.

This means that your local plumber, electrician, body repairman, wrecker, and other service providers who organize this way to protect themselves and their families from personal liability just got a 15.3% tax increase.  Did you catch that?

So if you are a self-employed small business owner who provides professional services and does the smart thing to protect against personal liability (like I am about to be), you are about to have your taxes go up by 15.3%.  If you are a consumer who uses any of these services, your rates about to go up 25-30% to make up the difference.  This is a GREAT idea in a recession!