Higher Taxes on Small Business — Yeah, Well, So What?

By February 27, 2009Taxation

The White House communications shop is making progress is the timely posting of materials, having yesterday afternoon’s press briefing by Robert Gibbs up by this morning. So that’s good.

We note an exchange over the President’s tax plans and its impact on small businesses, as Gibbs responds to a guestion from Chip, whom we will assume is Chip Reid of CBS:

MR. GIBBS:  Well, that’s true.  But it’s on their income.  I mean, I think it’s interesting, as people listen to those complaining about some aspects of the budget, I think it’s just interesting to note — I think the President was pretty clear on Tuesday — we’re talking about people that earn in excess of a quarter of a million dollars a year.

Q    And a huge percentage of those people are small business owners.

MR. GIBBS:  Some of them are, sure.  Some of them are big business owners.  Some of them are home-run hitters in major league baseball.  Some of them run kickoffs back for a living.  Some of them are the President of the United States. 

Q    But a lot of them create jobs.

MR. GIBBS:  Some of them — certainly, some of them, that’s what their job is.  But I would reject this overall premise that when we’re asking for tax fairness from the American people, that we’re — that this is going to kill jobs.  I guess if I follow the logic of the Republicans on Capitol Hill, how do you explain last month’s unemployment figures?  Current tax rates, 550,000 jobs — what happened?

That seems awfully dismissive: Small business, big business, baseball millionaires, yadda, yadda.

The comments also slide right over the reality about small businesses filing as individual taxpayers. Last October, the Heritage Foundation published a paper on the Obama versus McCain tax plans. Relevant passage:

While Obama claims only to raise taxes on the “rich,” the group he is targeting includes many entrepreneurs. The biggest tax hike is placed on those with annual income above $250,000—this group consists of at least 65 percent small-busi­ness tax filers. In other words, most of those fil­ers being targeted with the higher rate are small businesses. These small businesses have an aver­age income of about $645,000. These businesses also hire workers, and steeper tax rates could mean lower wages for those workers, no new job openings, and layoffs.

That’s the issue the reporter was getting at, an important issue worth more than just a gibe in response.

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