Tax Burden Weighs Heavily in Small Business Bankruptcies

A newly released study from the Office of Advocacy of the SBA authored by Rafael Efrat documents the pervasiveness and the magnitude of the tax burden among small business owners in bankruptcy. The data suggest that the tax burden is more pervasive among small business owners in bankruptcy than among consumer petitioners. While less than one-quarter of all consumers in the bankruptcy sample reported tax debts, more than half of individual small business owners reported owing some tax debts.

This is more evidence that we need to tear up the current income tax code and replace it with a simple and less burdensome approach.