President Obama is at it again – calling for tax hikes on the wealthy and trying to divert the nation from the sputtering economy. In renewing his well-worn pitch, he claimed that “what’s holding us back is not a lack of plans, not a lack of ideas” but rather the stalemate in DC. Does anyone actually believe that our recovery has run out of steam because Congress hasn’t raised taxes on rich people?
Isn’t it more likely that the White House’s ongoing assault on employers – and especially on small businesses – has stymied job growth? The National Federation of Independent Businesses (NFIB) just reported that its index of small-business optimism declined in June, taking us back to October 2011 levels. (And this reading was taken before the Supreme Court ruled on Obamacare, which almost surely will cause further slippage in the next poll.) Compared to the prior month, businesses reported significantly lower plans to hire and to invest in capital projects. That can’t be good.
Obama claims that 97 percent of small businesses would not see a tax hike. He’s counting the millions who sell baseball cards on EBay or who teach piano but who don’t employ people.
Why the gloom? As NFIB chief economist William Dunkelberg explained in the press release, “Taxes remain a top concern for the small-business community.” He notes especially the 20 new taxes included in Obamacare – “a price tag of $800 billion” -- and a slew of new related regulations that make the cost of hiring unclear.
Will the president’s move to preserve the Bush tax cuts only for those earning less than $200,000 ($250,000 for families) offset those anxieties? Not likely. The NFIB reports that 75 percent of small businesses surveyed are organized as pass-throughs, paying taxes at individual rates and that “54 percent of the private sector is employed by pass-through entities. Therefore, any increase in the individual rate at the end of the year will hit America’s number one job creators the hardest.”
President Obama claims that very few small businesses would be impacted by his proposed tax hike on high earners; Republicans dispute that claim. The Treasury Department appears to side with the latter. They report that of the 4.3 million small businesses organized as “pass-throughs” (that pay taxes at personal rates) some 1.2 million or 28 percent make more than $200,000, and that they account for almost 91 percent of the income earned by such entities.