October 1, 2012
- The president and Democrats in Washington are fighting to ensure that taxes go up on small businesses just three months from today, on January 1, 2013.
- Independent analysis shows that the president’s small business tax increase would destroy 710,000 jobs at a time when the country is suffering through the worst jobs crisis in 70 years.
- Only House Republicans have voted to protect American jobs and ensure that American families and small businesses are not hit by the president’s tax increase.
- In addition, House Republicans passed the first-ever legislative vehicle to expedite comprehensive tax reform that will make the tax code fairer, flatter and simpler and help create jobs.
The President’s Looming Tax Increase Will Destroy Jobs and Will Not Reduce Our Debt
The president has falsely claimed that letting small business owners and families keep more of the money they earn is what caused the unemployment crisis we face today. He says that we will create jobs if Washington continues to wastefully spend money we don’t have. But the president’s argument to justify a job-destroying tax increase at the worst possible moment in American history is plainly undone by the facts. The president’s plan to raise taxes on small businesses will destroy jobs, cause another recession and do nothing to reduce our nation’s debt burden.
- The President’s Small Business Tax Increase Will Destroy 700,000 Jobs: A report released by the accounting firm Ernst & Young finds the president’s proposed tax increases will hurt the economy and cost more than 710,000 American jobs. In addition, the report found that wages would fall by 1.8 percent, reflecting a decline in workers’ living standards relative to what would have occurred otherwise. According to the study, if the President’s tax increase occurs:
- Employment in the long-run would fall by 0.5 percent, meaning roughly 710,000 fewer jobs in today’s economy.
- Real after-tax wages would fall by 1.8 percent, reflecting a decline in workers’ living standards relative to what would have occurred otherwise.
- Output in the long-run would fall by 1.3 percent, or $200 billion in today’s economy.
- Capital stock and investment in the long-run would fall by 1.4 percent and 2.4 percent, respectively.
- CBO Says that Looming Tax Increases Will Hasten Another Recession: According to the Congressional Budget Office (CBO), if pending tax increases are not stopped, and arbitrary sequestration cuts are not replaced, the U.S. economy will be plunged into another recession in 2013. The full impact of looming tax increases and automatic cuts under sequestration (the so-called “fiscal cliff”) would cause unemployment to increase to 9 percent in the second half of 2013.
- Small Businesses Say Taxes are the Biggest Problem They Face: In September, as the looming tax increase inched closer, small businesses cited taxes above poor sales as the single most important problem they are facing today. Not surprisingly, 78 percent of small businesses owners report that they did not hire any new employees in the month of September, according to a National Federation of Independent Business (NFIB) survey.
- Small Business Owners Cannot Hire Because of President Obama’s Failed Policies: A survey from the National Association of Manufacturers (NAM) and the National Federation of Independent Business (NFIB) released last week revealed that 69 percent of small business owners and manufacturers say President Obama’s Executive Branch and regulatory policies have hurt American small businesses and manufacturers. In addition, 67 percent say there is too much uncertainty in the market today to expand, grow or hire new workers. Perhaps most shockingly, 55 percent of small business owners say they would not start a business today given what they know now and in the current environment.
- Small Businesses—Those Hardest Hit by the President’s Tax Increase—Are Our Nation’s Job Creators: According to the Small Business Administration, small businesses have created 65 percent of net new jobs over the past 17 years.
- The President’s Plan Increases Taxes on Nearly One Million Small Businesses, Does Almost Nothing to Reduce the Deficit or Pay for the President’s Record Spending: Even with the president’s proposed tax hike, deficits would still total $6.5 trillion over the next ten years according the president’s own budget projections. The president estimates that his small business tax increase would bring in an additional $952 billion in revenue from hard working small business owners over the next ten years. While that tax increase would hamstring small businesses and destroy 710,000 jobs, it would only pay for 2 percent of the $46 trillion the president wants spend in the next ten years. These tax hikes will not reduce the president’s spending and, therefore, will not reduce our debt.
- President’s Own Advisors Say Tax Increase Will Hurt the Economy: Former chairman of President Obama’s Council of Economic Advisers, Austan Goolsbee, said of the pending tax increases, “It’s two to three times bigger in negative terms than even the biggest year of the stimulus was in positive terms.”
- Entrepreneurship Reached a 17-Year Low: According to Bureau of Labor Statistic’s latest data, the number of new business start-ups in 2010 fell to the lowest level since the data was first recorded in 1994. Since 2007, there has been a 23 percent drop in new business creation.
- Ease of Starting a Business in the U.S. Fell from 4th to 13th: According to the World Bank’s Doing Business 2012 report, the U.S. now ranks 13th in the world in the ease of starting a new business and has been steadily declining since President Obama took office. In 2011, the U.S. was 8th. In 2009, the U.S. was ranked 6th. It was 4th in 2008 and 3rd in 2007. The U.S. now trails such job creators as Macedonia, Georgia, Rwanda, Belarus, Saudi Arabia, Armenia and Puerto Rico in the category.
House Republicans Have a Plan for Economic Growth and American Jobs
- House Republicans have a Plan for America’s Job Creators and it’s time for the president and Senate Democrats to stop blocking our bipartisan jobs bills, such as the dozens of bills passed in the House that would provide relief from record amounts of red tape.
- Unfortunately, President Obama and Senate Democrats have not brought forth a credible plan to avoid the next recession. House Republicans have urged the president and Democrats in the Senate to join us in preventing another recession by stopping the tax hike and replacing the arbitrary sequester. Without action from the president and the Senate, CBO confirms that we are heading for another recession and higher unemployment.
For additional information, contact:
The House Republican Conference Policy Office