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Fiscal Cliff Splits Big, Small Businesses On Taxes

By JIM KUHNHENN

WASHINGTON (AP) â¿¿ The "fiscal cliff" debate is splitting the business community over taxes, driving a wedge between two natural Republican allies: the nation's corporate leaders who are helping strengthen President Barack Obama's bargaining position and the small business advocates bristling over the prospect of higher taxes.

Obama has been courting top CEOs, inviting them to the White House for "fiscal cliff" consultations and they have responded by being open to Obama's demand that tax rates go up on household income above $250,000. In turn, Obama has promised to consider changes in the tax code that would lower corporate tax rates.

Most small businesses, however, pay at individual income tax rates and the biggest earners among them would have to pay higher taxes if Obama succeeds in winning an increase in the top two marginal tax rates. They could face even higher tax payments if an overhaul of the tax code does away with business deductions or credits they now claim.

"This sort of laser like focus on corporate-only tax reform that we keep seeing coupled with revenues on the individual side is definitely a concern for us," said Chris Whitcomb, the top tax lawyer at the National Federation of Independent Business.

Leading Republicans have been quick to portray the rift in populist terms, casting Obama as a big business ally and the GOP as champions of small businesses.

For Obama, it is an unlikely role that underscores his own complicated relationship with the business community. Republicans in the past have criticized him for not consulting enough with the private sector.

Early in his term, Obama characterized Wall Street executives and bankers as "fat cats" and he has singled out oil and gas companies for their tax subsidies. But he also has won appreciation for expanding the government rescue of the auto industry and has promoted some tax breaks for small business.

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