Few would suggest that Barack Obama would intentionally kill American jobs and persecute the small businesses that create them.
Unfortunately, that’s precisely the effect of his new budget and tax scheme.
By raising taxes on small business and reneging on his campaign promise to provide them capital gains tax relief, he will punish the very entrepreneurs that create most American jobs and market innovations.
Obama, of course, would righteously protest that he seeks to help small businesses, and will only raise taxes on the “wealthy” earning over $250,000. The simple truth, however, is that most taxpayers filing above the $250,000 benchmark are not individual fat cats or trust-fund babies.
Rather, over 65% of them are actually small businesses, which file as individuals rather than corporations because they have fewer than 100 shareholders and do not pay dividends. Small businesses constitute 99% of employers, and employ over half of all private-sector employees in America, and many of them file above the $250,000 threshold.
Ignoring these facts, Obama persists in telling the American public that his plan will only raise taxes on “the wealthiest 2% of Americans.” In his speech before Congress this week, at which time he discussed his budget blueprint, he again repeated this falsehood:
“In order to save our children from a future of debt, we will also end the tax breaks for the wealthiest two percent of Americans. (Applause.) Now, let me be clear – let me be absolutely clear – because I know you'll end up hearing some of the same claims that rolling back these tax breaks means a massive tax increase on the American people. If your family earns less than $250,000 a year – a quarter million dollars a year – you will not see your taxes increased a single dime. I repeat: not one single dime. (Applause.) Not a dime. In fact, the recovery plan provides a tax cut – that’s right, a tax cut – for 95 percent of working families. And by the way, these checks are on the way. (Applause.)”
Thus, Obama again assures us that his tax increases will only target “the rich,” which he defines as those earning over $250,000. But as referenced above, official Internal Revenue Service (IRS) Statistics of Income data reveal that over 65% of filers exceeding $250,000 are small businesses.
According to the National Federation of Independent Businesses (NFIB), which defines “small businesses” as those employing between 3 and 199 people, these entrepreneurs employ over 50% of the nation’s private-sector employees and account for over half of American non-farm private gross domestic product (GDP). In addition, given the dynamic nature of our economy, these small businesses create approximately two-thirds of net new jobs and provide the first job for most new entrants into the workforce, according to the NFIB, the Bureau of Labor Statistics and the United States Census Bureau.
In fact, America’s small businesses would comprise the world’s third-largest economy (after the United States and Japan) if standing alone, and represent an astounding 99.7% of all employers in America.
Unfortunately, Obama and Congress are implementing an agenda that may suffocate this sector of our economy.
In addition to tax increases, their $787 billion “stimulus” bill largely ignores small business innovators, and instead focuses on failing, sclerotic big businesses like General Motors and Chrysler, whose own poor decisions put them in the perilous position in which they find themselves. So instead of rewarding the small businesses that provide most new growth, jobs and innovation in America, they reward failure among gluttonous giants that are “too big to fail.”
If Obama really wanted to stimulate the American economy and create jobs, he would stop punishing small businesses with tax increases that falsely target “the rich.”
Instead of repeatedly shoveling billions of dollars to well-connected big businesses that employ armies of lobbyists but refuse to correct their defective business models, he might provide relief to small entrepreneurs like those who created Wal-Mart, Apple or Microsoft. Instead of raising taxes on small businesses, he would honor his campaign promise to cut them. Instead of futilely attempting to preserve jobs at failing giants, he would provide the incentives for the smaller businesses that create jobs.
Along the way, he might consider reducing payroll taxes or providing tax hiatuses for new small businesses until they successfully transcend their fledgling early stages.
President Obama and Congress, your massive spending bills are only worsening the market and harming the economy. If you really want to restore American innovation and begin creating jobs again, stop targeting supposedly “rich” small businesses and raising their taxes.
You’ll be amazed at the economic growth that follows.February 27, 2009