Which Candidate's Tax Plan Helps Small Business

Most small businesses file individual tax returns. (The others file as corporations.) The Internal Revenue Service does not have detailed income information about which taxpayers are small-businessowners and which ones are employees. But the overall numbers show just how few Americans earn more than the Obama tax-hike threshold.

Most Small Businesses Earn Less

In tax year 2006, 138.4 million tax returns were filed by Americans. Only 2.9 percent -- a little more than 4 million tax filers -- reported earning more than $200,000. (The IRS does not have data for the $250,000 mark.)

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Small-businessowners do tend to earn more than the general population but a majority of them still do not earn above $200,000 or $250,000.

The National Federation of Independent Business found that 14 percent of those surveyed earn $200,000 or more. Those who did tended to own larger businesses. For instance, of those with 20 to 249 employees, 32 percent earned $250,000.

Some small businesses do file corporation taxes. McCain has proposed cutting the top income tax rate for corporations from 35 percent to 25 percent.

Williams said that cut wouldn't help most small businesses.

"Only the biggest corporations would benefit from McCain's cut," he said.

The Health-Care Divide

Both candidates also have health-care plans that could impact small-businessowners and their bottom line.

McCain wants to replace income tax exclusions for employer-sponsored insurance with a refundable tax credit of up to $5,000 for individuals.

Obama wants to force employers to offer health insurance and require those who don't to pay a fee to the government to cover those employees. But he says he would exempt small businesses from the so-called "pay or play" requirement.

The question is who qualifies for the small-business exemption.

"That's the problem," economist Williams said. "We don't know. There is nothing in the plan that says what is a small firm. Is it 10 workers? Is it 25 workers? Is it 100 workers? There's absolutely nothing there."