Republicans Falsely Argue That Surtax Would Disproportionally Affect Small Businesses
Republicans Falsely Argue That Surtax Would Disproportionally Affect Small Businesses
Responding to reports that the House Ways and Means Committee has decided to raise $550 billion to pay for health care reform by applying a surtax to the richest Americans, Republican lawmakers took to the airwaves yesterday to argue that the tax would disproportionately burden small businesses:
Sen. Jon Kyl (R-AZ): At least 55 percent of the income that would be generated by this surtax directly hits the entrepreneurs that run these small businesses. It would be a job killer.
Rep. Eric Cantor (R-VA): Half of those people [who would have to pay the tax] derive their income from small businesses, half of those people are making the decision about whether to hire Americans or not.
Watch it:
Indeed, “beginning in 2011, the plan would target all income over $350,000 a year for families and $280,000 a year for individuals.” The surtax would start at 1 percent, “rise to around 1.5 percent for families earning more than $500,000, then step up again, to around 3 percent, for families earning more than $1 million.” The proposed surtax would target adjusted gross incomes (AGI) — or all earnings before subtracting for itemized deductions and exemptions.
Since the overwhelming majority of small business owners earn far less than $280,000, few “entrepreneurs that run these small businesses” will be affected by the tax. As the Center on Budget and Policy Priorities pointed out, “only 1.9 percent of filers with any small-business income are projected to face either of the top two income tax rates in 2009.” In fact, of people who file most of their income from their own business, “more than half have income below $30,000 and 80 percent make less than $100,000.” The few business owners who do qualify for the new tax should be able to afford it. Pat Garofalo explains that “no one likes paying higher taxes” but a household earning more than $350,000 “is not a household that is barely scraping by.”
Still, if only a small percentage of small businesses will face a tax increase, all small businesses are currently grappling with skyrocketing health care costs, the difficulties of a small risk pool, higher administrative costs and unpredictable premium spikes. In fact, rising prices have led many businesses to drop coverage entirely, increase cost sharing or switch to coverage with higher out of pocket costs and skimpier benefits.
Fifty eight percent of all small-business owners say they’re having a hard time keeping up with the cost of health care and the percentage of businesses with fewer than 200 employees that offer insurance fell to 59 percent last year, “down from 66 percent as recently as 2002, according to the Henry J. Kaiser Family Foundation.”
The reality is small businesses will benefit from comprehensive health care reform, not inflated earnings projections. The health reform legislation before Congress exempts small businesses from the requirement to provide coverage and offers a new Small Business Health Tax Credit to businesses that still provide insurance. Small business owners and their workers would also be able to purchase coverage through a new Health Insurance Exchange, where employees who currently lack coverage would have a choice of private or public coverage.
7 Responses to “Republicans Falsely Argue That Surtax Would Disproportionally Affect Small Businesses”
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At first I was angry that voters would again believe lies repeated by Republicans, than I realized that even if the republicans were telling the truth their logic makes no sense. A tax increase on incomes making over 350,000 a year isn’t is an increase on those incomes not on buisness. The Business wouldn’t lose a dime because the businesses taxes aren’t getting changed, the only thing getting changed is the income taxes of the super rich.
July 13th, 2009 at 12:40 pmRepublicans really have become the party for the Rich, and no one else.
The Party of Lies routinely trots out another related whopper. They like to say that the USA has one of the highest corporate tax rates in the industrialized world… and this is true. However, the USA also has one of the lowest effective corporate tax rates in that same population. The reason for this dissonance is the loophole larded corporate tax code here in America.
July 13th, 2009 at 1:36 pmSee Augustine’s insightful writings on the nature of lies of omission if doubt remains.
Instead of always “pulling down” those who have worked so hard for many years to get ahead why don’t you motivate those who aren’t working so hard? Higher earning +65 are already getting “hosed” on Medicare. In addition to the standard $96.40 per month they have to pay up to an additional $211 a month (x2 for married couples). People won’t be motivated to work so hard if you take away the incentive.
July 13th, 2009 at 2:20 pmDid I just see somebody over 65 complain about their socialized Medicare costing them $518.40 a month because they have too much money? WOW. I’m 30 and pay over $800/month for my employer (small business!) provided healthcare for the 3 of us. That’s before deductibles…
Stop complaining, you’ve got it great with your socialized medical care. I’m watching people in my age group be destroyed by medical bills in the prime of their life for relatively minor problems. Those people are allowed to complain too, but not you.
July 13th, 2009 at 5:22 pmDid I just see somebody over 65 complain about their socialized Medicare costing them $518.40 a month because they have too much money? WOW. I’m 30 and pay over $800/month for my employer (small business!) provided healthcare for the 3 of us. That’s before deductibles…
Stop complaining, you’ve got it great with your socialized medical care. I’m watching people in my age group be destroyed by medical bills in the prime of their life for relatively minor problems. Those people are allowed to complain too, but not you.
July 14th, 2009 at 10:05 amBTW I love your blog!
The reason this is a tax on small businesses is because they report their small business profits on their tax sheets as personal taxes. Learn how the tax system works before you comment.
Secondly, subsidized health-care hurts small businesses while helping large businesses. The burden falls on the small businesses because their owners pay the costs for not only their employees, but also those of larger businesses.
Not very smart if you ask me.
July 14th, 2009 at 5:26 pm>>Hitandrun said: A tax increase on incomes making over 350,000 a year is an increase on those incomes not on buisness
My income IS the business’ income. Being a small business I report it as personal income, not as business income. This “sock it to the wealth” is going to cause one of my employees to lose their job.
July 15th, 2009 at 12:40 am