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From: Scotty Starnes's Blog <[email protected]>
Date: Fri, Sep 3, 2010 at 3:38 PM
Subject: [New post] Obamanomics: The Small Business Tax Hike and the 97%
Fallacy
To: [email protected]
<http://scottystarnes.wordpress.com/author/scottystarnes/> Obamanomics:
The Small Business Tax Hike and the 97% Fallacy
<http://scottystarnes.wordpress.com/2010/09/03/obamanomics-the-small-business-tax-hike-and-the-97-fallacy/>
*Scotty Starnes
<http://scottystarnes.wordpress.com/author/scottystarnes/>*| September
3, 2010 at 3:38 PM | Tags: Barack
Obama <http://scottystarnes.wordpress.com/tag/barack-obama/>, Bush tax
cuts<http://scottystarnes.wordpress.com/tag/bush-tax-cuts/>,
economy <http://scottystarnes.wordpress.com/tag/economy/>, Harry
Reid<http://scottystarnes.wordpress.com/tag/harry-reid/>,
IRS <http://scottystarnes.wordpress.com/tag/irs/>,
jobs<http://scottystarnes.wordpress.com/tag/jobs/>,
Joe Biden <http://scottystarnes.wordpress.com/tag/joe-biden/>, Nancy
Pelosi<http://scottystarnes.wordpress.com/tag/nancy-pelosi/>,
Obama <http://scottystarnes.wordpress.com/tag/obama/>,
Obamanomics<http://scottystarnes.wordpress.com/tag/obamanomics/>,
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Obama <http://scottystarnes.wordpress.com/tag/president-obama/>, S
corporation <http://scottystarnes.wordpress.com/tag/s-corporation/>, small
business <http://scottystarnes.wordpress.com/tag/small-business/>, small
business tax
hike<http://scottystarnes.wordpress.com/tag/small-business-tax-hike/>,
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URL: http://wp.me/pvnFC-2wC
Obamanomics, or as I call it the "spread the wealth economy" has been a
total failure. Obama's Robin Hood economy just isn't working and America is
feeling it's effects. Obama continues to punish the successful while
rewarding the unproductive.
One of the reasons to why the economy is stagnant is due to the way
progressive politicians like Obama, Pelosi and Harry Reid think. Small
businesses are the backbone of our country and the economy. Instead of
rewarding this productive industry, the Obama administration has done
nothing but hamper it.
The Wall Street
Journal<http://online.wsj.com/article/SB10001424052748703959704575454061524326290.html>reports:
When Congress returns from its summer recess, members will face a pivotal
decision about the expiring Bush tax cuts. President Barack Obama has called
for their permanent extension for singles with incomes below $200,000 and
married couples with incomes below $250,000, but has proposed that most of
the tax cuts for households with higher incomes be allowed to expire.
*To buttress this position, the president and his supporters have repeatedly
asserted that the expiration of these cuts will have little impact, because
they affect only a tiny fraction of the wealthiest Americans, people who
"can afford it."*
Recently, for example, Vice President Joe Biden harshly rejected House
Minority Leader John Boehner's assertion that the hikes would harm small
businesses, saying that "he has created this myth that a tax cut for
millionaires is actually a tax cut for small business. There aren't 3% of
small businesses in America that would qualify for that tax cut." House
Speaker Nancy Pelosi flipped the number around, saying that the planned tax
increases would exempt "98% of American families and about 97% of small
businesses."
*The impact is far more severe than Mrs. Pelosi and Mr. Biden suggest. In
fact, the sound bite about 3% of small businesses, which has been picked up
by numerous pundits, is one of the more misleading statements in the long
history of economic propaganda.*
The 3% figure, which is computed from IRS data, is based on simply counting
the number of returns with any pass-through business income. So, if somebody
makes a little money selling products on eBay and reports that income on
Schedule C of their tax return, they are counted as a small business. The
fact that there are millions of people in the lower tax brackets with small
amounts of business income may be interesting for some purposes, but it is
irrelevant for the assessment of the economic impact of the tax hikes.
*The numbers are clear. According to IRS data, fully 48% of the net income
of sole proprietorships, partnerships, and S corporations reported on tax
returns went to households with incomes above $200,000 in 2007. That's the
number to look at, not the 3%. Would Mrs. Pelosi and Mr. Biden deny that the
more successful firms owned by individuals in the top income-tax bracket are
disproportionately responsible for investment and job creation?*
It's clear that business income for large and small firms will be hit by the
higher tax rates. And in point of fact, firms of all sizes contribute to the
nation's prosperity. So it's a mistake to focus only on the impact of
increased tax rates on small business. But will the higher rates actually
cause a significant reduction in business activity?
Economic research supports a large impact. A pair of papers by economists
Robert Carroll, Douglas Holtz-Eakin, Harvey Rosen and Mark Rider that were
published in 1998 and 2000 by the National Bureau of Economic Research
analyzed tax return data and uncovered high responsiveness of sole
proprietors' business activity to tax rates. *Their estimates imply that
increasing the top rate to 40.8% from 35% (an official rate of 39.6% plus
another 1.2 percentage points from the restoration of a stealth provision
that phases out deductions), as in Mr. Obama's plan, would reduce gross
receipts by more than 7% for sole proprietors subject to the higher rate.*
Continue
reading...<http://online.wsj.com/article/SB10001424052748703959704575454061524326290.html>
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