In his recent press conference, President Barack Obama again claimed his plan to reduce the deficit and avoid the fiscal cliff would mean that "97 percent of small businesses are not going to see their taxes go up." But this is, to put it politely, deceptive.
According to a recent Treasury Department study, America has some 34.8 million small businesses. That sounds like a lot but 30 million of them employ no one other than the owner. Of the remaining 4.8 million that do employ workers, 1.2 million have incomes above $200,000 — where President Obama's tax hikes kick in.
Here's the hitch. As the Heritage Foundation points out, those 1.2 million small businesses that will be hit by Mr. Obama's small-business tax are the nation's most prolific job creators, accounting for 54 percent of all private-sector positions — or 77.6 million in all. And while they make up just 3 percent of all small businesses, they earn 91 percent — or $341 billion — of all profits reported by the small businesses with workers.
They are the most successful and therefore the biggest job creators. They also pay 44 percent of all federal business taxes. Yet, the president's talking point about his tax increases affecting only "the rich" so they pay their "fair share" is repeated by the mainstream media as if it were true! By slamming small businesses, Mr. Obama's "tax on the rich" turns out to be a tax on jobs, pure and simple.
A study released in July by the consulting giant Ernst & Young found that Mr. Obama's planned tax hikes on individuals earning more than $200,000 and families earning more than $250,000 will amount to a devastating tax hike on the small-business sector. Among other things, the study concluded that Mr. Obama's tax hikes will slice 1.3 percent or $200 billion from the nation's gross domestic product, kill 710,000 jobs immediately, with a projected 0.5 percent cut in long-run employment and shrink capital stock by 1.4 percent and capital investment by 2.4 percent over the long run.
And Mr. Obama's latest proposal for $1.6 trillion in new taxes would only increase the burden.
The media are too busy talking about military sexual escapades to tell Americans the truth — that the coming tax hikes won't just hit the rich, but rather will decimate the job-creating small-business sector. That's the one part of the economy we can least afford to sacrifice in Mr. Obama's war on success.
If you let successful people keep more of their money, they tend to put that money to more productive use than the government. And that translates into more jobs and more people working and paying taxes. Which means more money for the Treasury!
Benedict Frederick Jr., PasadenaCopyright © 2015, The Baltimore Sun