Obama’s War on Small Business.
That headline is not hyperbole, folks. Barack Obama’s new taxation scheme, which he inaccurately promises will “only” hit Americans making a joint tax filing of $250,000, is in the words of House Minority Leader John Boehner (R-Ohio) , “A job killer, plain and simple.”
And we’re not just talking about a $338 billion Income Tax hike, either. There’s plans to raise $179 billion by eliminating itemized deductions and another $118 billion by increasing the capital gains tax. More than $600 billion dollars. Talk about killing jobs! Raising taxes during a recession? Herbert Hoover, anyone?
That’s not including all of the senseless taxes to come on energy consumption (post to come), or on any forced single-payer healthcare proposals.
Small and medium sized business must be quaking right now. They they plan on doing any hiring anytime soon? Think again.
[Wall Street Journal] But let’s not stop at a 42% top rate; as a thought experiment, let’s go all the way. A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue. That’s less than half the 2006 federal budget of $2.7 trillion and looks tiny compared to the more than $4 trillion Congress will spend in fiscal 2010. Even taking every taxable “dime” of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion.
Fast forward to this year (and 2010) when the Wall Street meltdown and recession are going to mean far few taxpayers earning more than $500,000. Profits are plunging, businesses are cutting or eliminating dividends, hedge funds are rolling up, and, most of all, capital nationwide is on strike. Raising taxes now will thus yield far less revenue than it would have in 2006.
Mr. Obama is of course counting on an economic recovery. And he’s also assuming along with the new liberal economic consensus that taxes don’t matter to growth or job creation. The truth, though, is that they do. Small- and medium-sized businesses are the nation’s primary employers, and lower individual tax rates have induced thousands of them to shift from filing under the corporate tax system to the individual system, often as limited liability companies or Subchapter S corporations. The Tax Foundation calculates that merely restoring the higher, Clinton-era tax rates on the top two brackets would hit 45% to 55% of small-business income, depending on how inclusively “small business” is defined. These owners will find a way to declare less taxable income.
The bottom line is that Mr. Obama is selling the country on a 2% illusion [that only the top 2% of wage earners will see increased taxes]. Unwinding the U.S. commitment in Iraq and allowing the Bush tax cuts to expire can’t possibly pay for his agenda. Taxes on the not-so-rich will need to rise as well.