Small businesses get a few breaks
U.S. tax form Credit: istock
Michael Dawidziak is either not being 100 percent honest, or he is ignorant of the facts ["250k is 'rich'? LI business owners beg to differ," Opinion, Dec. 8]. The overwhelming majority of small businesses are in the under-$250,000 class.
Those that are over the $250,000 income threshold would still have a tax benefit on the amount up to $250,000, and only pay additional tax on the amount over $250,000 should the tax breaks end.
Bill Parks
I agree with Michael Dawidziak that $250,000 is far from rich, especially on Long Island, and I agree with the basic premise of his column. But I need to correct something he and other conservatives often contend.
He said in his example, "They turn around and invest most of that money (the $150,000 after-tax profit) right back into their companies to pay for salaries and operating expenses."
Dawidziak doesn't seem to be very knowledgeable about tax accounting. I guess he hasn't heard of Schedule C on the federal tax Form 1040. It's called "Profit or Loss From Business." He seems to be confusing gross profit with net profit.
That $250,000 "profit" he mentions is indeed taxable, but it is net profit and already has "salaries and operating expenses" subtracted out.
Edward Schwartz
Your columnist is way off base with his small-business profit evaluation. He takes a $250,000 profit and whittles it down to $150,000 after deducting payments to Social Security, federal and state taxes, and the Metropolitan Transportation Authority payroll tax.
He is wrong in his "double bang" of paying Social Security taxes. The owner deducts the half paid on his employees, including himself. He only pays his personal half, like every other employee.
Mark Herzog
Editor's note: The writer is a small-business owner.
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