The nonpartisan Tax Policy Center issued a report today that has some interesting and harmful findings. According to their study, if the U.S. goes over the much discussed “fiscal cliff,” almost 90 percent of Americans would be subject to a tax hike. Now, this is bad news for all Americans but it will have a resoundingly negative effect on the backbone of our job creation engine – the small to medium sized manufacturer.
Two-thirds of all manufacturers pay taxes at the individual rate, so a significant tax increase will have a devastating impact on their ability to invest in their own companies, purchase necessary equipment and hire and train workers. Increasing their taxes puts a massive roadblock in manufacturer’s ability to lead our economy back to on the right path.
Economists have consistently sounded the alarm bells that if we do indeed go over the fiscal cliff, we will almost assuredly enter another recession. The gains the U.S. economy have made over the past two years have been modest at best and it is beyond foolish to risk a backslide because policymakers in Washington can’t come to an agreement to stave off the largest tax hike in American history. Working families and their employers stand poised to bear the brunt of this game of political and economic chicken – it’s time for Washington to do the smart thing and extend the current rates as a bridge toward badly needed tax reform.