A decline in the number of small businesses means an increase in unemployment and an uncertain economic outlook for the next generation. Everyone loses when small business fails. When a business is sold, the former owner pays Uncle Sam a capital gains tax based on the profit gained in the sale. Unless Congress acts to extend the current Bush-era tax rate, the capital gains rate of 15% will increase to 20% at the beginning of next year. As of this date, it seems we will have to play the wait-and-see game hoping that someone in Washington will tackle this onerous tax increase on small business owners. Another tax of which many may not be aware is the additional Medicare Tax on investment income that comes into play as a result of the 2010 health care reform act. The Medicare Tax adds an additional 3.8% tax for most types of investment income, including capital gains. It applies to single taxpayers earning more than $200,000 and married taxpayers with combined income of more than $250,000. Theref ...

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