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  • Obama Tax Hike on Small Business Would Chill Hiring

    “Would raising taxes on the wealthiest Americans have a chilling effect on hiring in this country?” When asked this question by Today’s Matt Lauer, Warren Buffett confidently answered, “No.” How could this be, when the tax hikes desired by President Obama would fall directly on some of America’s most successful job creators?

    As Kris Roglieri wrote in The Washington Post:

    What policymakers fail to realize is that most small business owners, who also employ most of the country’s workforce, declare their business profits on the owner’s personal income tax return and are taxed at the personal income tax rate. Given that the net income number for many will be over $250,000, the proposed tax hikes could have a dramatic effect on small businesses and the growth and hiring decisions they will make. Another point policymakers overlook is that business owners will ultimately pass this cost on to the middle class by raising prices on goods and services, possibly triggering layoffs and stalling hiring.

    Professor George Haynes of Montana State University analyzed small business employment based on the Federal Reserve Survey of Consumer Finances and found that those small businesses run by families earning more than $250,000 per year employ 93 percent of the people working in small businesses. Raising these businesses’ taxes means that they have fewer resources available to invest and create jobs.

    Based on data from the President’s own Treasury Department, tax hikes on upper-income earners would directly fall on 91 percent of income earned by job-creating businesses that pay their taxes through the individual income tax, which are known as flow-through businesses. (continues below chart)

    Successful small businesses face a double whammy from the Obama tax hikes. In addition to allowing the Bush tax cuts to expire for wealthy Americans, President Obama’s signature health care law will raise their taxes yet further. As Heritage’s Curtis Dubay explains:

    The higher tax rate on wages and salaries will cause workers to cut back on their hours, which will slow economic growth. It will also deter job creation at small businesses. The income of certain small businesses (sole proprietorships) is wage and salary income to the owner. As both employee and employer, the owner therefore pays the entire newly increased 3.8 percent [hospital insurance] tax rate. With more of the owner’s—and therefore the business’s—income taken by higher taxes, the owner will have fewer resources to invest back into the business to create jobs.

    The answer to whether raising taxes on upper-income Americans would chill hiring is an emphatic yes—especially because those taxes fall on some of the nation’s biggest job creators. Lawmakers should avoid tax hikes on all Americans—no matter what Warren Buffett and other supporters of higher taxes would have you believe.

    Posted in Featured [slideshow_deploy]

    5 Responses to Obama Tax Hike on Small Business Would Chill Hiring

    1. Bobbie says:

      This has to stop. There are other ways that avoid the foreseeable crisis Obama leads America's businesses and the economy to. Interference by government, hinders the economy into crisis! Self governing businesses promotes a healthy economy.

      Government Obama who speaks words, leaves out the sincerity of government Obama's power and control that's become corrupt by abuse of his power and control, omitting any concern or thought of collapse that's certain. It isn't the role of government and especially not the President. Get the government and their expense and corruption out of America's business and start eliminating government waste! People have to learn the American peoples' constitution protects the peoples' freedom and independence. Protection from government authority taking over personal livelihoods!!!! Once a president misinterprets the constitution to conduct his governance by his misinterpretation taking advantage of what Americans haven't been respected to teach the correct interpretation, doesn't make him righteous. It makes him weak to be unwilling to respect the truth of the people's American constitution and ALL it stands for. No one knew the public education system controlled by government authority in position we're left to assume their duty to protect the rules of law and America's founding principles, was teaching students distortions and lies WITH OUR MONEY!!

      Had America's truth of her founding principles and all that proves to build from that with accountability on any hint of indoctrination of lies since the communist 60's, this country of immigrants would have the strongest character of people from the world time would ever have known and no one would have the audacity to nationally address the low self esteem of all people from one religion. Not that I want to make it my business or it's business forced on America, the one thing in common is "the religion" and if that religion teaches faith in low self esteem, IT BEST STAY AWAY FROM THOSE UNINTERESTED!!!!!

    2. Kahr50 says:

      Don't you get it?

      Noone cares except those 1.2 million families.

      In the US today it is all about ME and I do not care if they fail becasue I am too stupid to see cause and effect.

      Obama was re-elected becasue he tolld everyone that he had their backs – and voters vote for their own best interests.

      The days of voting, or for that matter acting, for the good of the whole are over.

      The big picture has become the mirror on the wall.

    3. Bobbie says:

      Obama's only answer is with all undo, obsessive disorder. Policy makers aren't listening to the experienced obviously or solutions would implement yesterday! The ongoing dereliction of the democratic party who are only show pieces has got to be publically addressed. No budget under Obama. No rules followed under Obama. No tolerance under Obama. No respect for the peoples' constitution under obama. No responsibilities held under Obama.

      it's wrong for America to drop down to the level of a man's phoniness that fraud gained him the position of presidency and since conducting America without any positive qualities of a man! Two being integrity and dignity!

    4. Joe says:

      Really love reading the insane ranting in these comments. Keep it up guys, you're contributing greatly to the nuances of the discussion with sweeping generalizations!

    5. malcolm vernon says:

      Even Milton Friedman showed that small business creating jobs is unprovable because of survival bias (J Eco Lit, Vol. 30, No. 4, pp. 2129-2132). Small business is all about sociopath atomists who want to break the law by being on their own so no one sees them, but they want their wives to work for the government just to get the benefits, like healthcare.

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