the 112th Congress hobbles towards recess in anticipation of the November
general election, there seems to be little political will to steer the nation
away from the "fiscal cliff" by extending tax cuts first passed
during the Bush administration. Both the Republican-controlled House and
Democrat-led Senate have passed their own tax bills.
While much has been made of the political implications of the Congressional
game of chicken being played with the extension of the tax cuts, the actual
impact on the United States economy is now more clear, thanks to a study commissioned by ICBA, NFIB, the S
Corporation Association and the U.S. Chamber of Commerce.
short, a tax increase on individuals making more than $250,000 will likely
translate into a loss of approximately 700,000 American jobs, including 56,000
in Texas. The impact on Texas is second only to California, which is
expected to lose more than 76,000.
is particularly concerned for the 273 Texas financial institutions organized as
S-corporations, who would see a tremendous increase in their effective tax
rates. Not only are individual bank shareholders likely to have their tax
rate increased to 36% or 39%, but dividends issued by the banks to cover the
shareholders' tax liability will be taxed at approximately 44% as part of the
"pay for" included in the Obama healthcare initiative.