Sen. Charles Grassley’s floor speech Monday on S. 3816, the Raise Taxes on Successful U.S. Businesses with Overseas Operations Act, provided a thorough, historical discussion of the U.S. tax system’s treatment of foreign income, as noted before.
Grassley, the ranking Republican on the Senate Finance Committee, also offered his views on the payroll tax holiday, a two-year tax break for some small businesses financed by a permanent tax increase on others. And he asks the key question: Why is the Senate debating this when taxes on small business are going to rocket higher when the 2001 and 2003 tax rates expire at the end of the year.
This provision only scores, according to the JCT, as costing $1 billion. So, let’s make sure we are clear on this point – the other side is seriously considering raising taxes on small businesses – the lead creator of jobs – by tens of billions of dollars by letting top individual rates go back up in 2011, but, in an effort to support job creation, they offer up this $1 billion payroll tax holiday?
According to the Joint Committee on Taxation, 50% of small business flow-through income will be hit by a marginal tax hike of 17 to 24%. That tax increase is scheduled to hit these job-creating small businesses in a little over three months. Finance Committee Republican tax staff calculate the effect of that tax hike to be 50 times the benefit provided by this bill. On our side, we don’t see the logic of raising $50 in taxes and providing a complicated tax benefit of $1.
Why aren’t we dealing with the real problem, for the folks responsible for creating 70% of America’s jobs. I’m talking about a time-out on the tax hit that’s coming to those small businesses. That’s what we ought to be debating here on the Senate Floor.
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