Its not the business it is the investor and most small business do not pay captial gains taxes that is income.
Most small businesses do not sell off assets .
I guess if you sold an old building you could get a capital gain on it.
I think Obama meant to say investors or owners will not pay capital gains taxes not the small business.
I thought the capital gains tax cut would be to an individual investor not the business .
Capital gains are earned on investments that you have held for at least one year, right ?
Not quite sir. Capital gains can be paid on all sorts of investments. There are short term capital gains (i.e., less than one year) and long term capital gains (i.e., one year or more).
In addition, I believe most small business are owned in the form of pass-through entities. That means that the business itself doesn't pay taxes, just the individuals who own it.
Its not the business it is the investor and most small business do not pay captial gains taxes that is income.
Most small businesses do not sell off assets .
I guess if you sold an old building you could get a capital gain on it.
I think Obama meant to say investors or owners will not pay capital gains taxes not the small business.
COMPANY TAXATION GENERALLY:
There are basically 2 types of companies from a tax perspective.
1. Companies that pay their own taxes and then when shareholders get a dividend (or otherwise take money out), they pay an additional tax. 2 LEVELS OF TAXES
2. Companies that pay NO taxes, but their shareholders pay taxes when the company earns money (no additional tax when money is taken out by the shareholder). 1 LEVEL OF TAX
Most small business are type 2 companies. These include all partnerships, LLCs, PCs, and S Corps.
Accordingly, when talk about small business, there is no real distinction between the tax on the business and the tax on its owner.
Most small business don't pay capital gains taxes for a multitude of reasons including that they have no capital assets which would be subject to tax upon sale. Are small business subject to long-term capital gains tax? Absolutely.
But you cannot admit Obama was wrong he said small businesses pay captital gains and they do not the owner or investor does . Obama misspoke.
-- Modified on 10/13/2008 4:32:55 PM
Were I in his situation, I would have said it the same way because the public does not understand taxation on business. When speaking about complicated issues in a campaign, it is critical to remember who the audience is.