Name: How Do Small Businesses Pay Taxes?
Uploaded: 2017-12-28T07:40:38.000Z
Duration: 2 min 19 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

No matter where you come from, what your job is,

Modal verbs - A2

or where you stand politically, you have to pay taxes.

To-infinitive

Uncle Sam needs taxpayer dollars to pay for things like schools,

income taxes, payroll taxes and sales taxes just to name a few.

But individuals aren't the only ones who pay taxes—

Businesses that are set up as corporations pay taxes on their income

at the US corporate tax rate of about 35 percent—

one of the highest in the developed world.

Countries like Ireland and Switzerland have

which can give companies based there a competitive advantage.

But there's another taxed group that we're forgetting…small businesses.

and they employ nearly 56 million people.

That's a total of 85 million people dependent on the success of small businesses!

Small businesses are most often set up as sole proprietorships,

partnerships or another designation called an S-corp.

But the money they make isn't taxed at the corporate rate.

The profits earned by these small businesses are "passed through"

to the owner and counted as individual income on their personal tax return.

That's why you might hear small businesses referred to as "Pass-throughs".

These entrepreneurs can pay tax rates as high as 40 percent

not including additional state and local taxes,

that means many American small businesses are being taxed

at a higher rate than businesses anywhere in the world.

Because high taxes hurt small businesses ability to grow and expand,

causing them to raise prices or even trim jobs

Lowering taxes for small businesses, or "pass-throughs", results in the growth of small businesses—

allowing them to provide more jobs and boost the economy for everyone.

After all two thirds of all new jobs come from small businesses,

and lowering taxes can have a big effect on the entire economy for all Americans.

So the next time you hear someone supporting an increase in tax rates on businesses,

remember that very important group of small business owners

and the 85 million people dependent on their success.

For more information about taxes, visit InformationStation.org.