Obama Tax Hikes on Rich Will Kill Jobs

 

IBDEditorials.com

Jobs: While vowing to "compromise" to avoid driving off the fiscal cliff, President Obama again repeated his demand that any solution must include a tax hike on high incomes. Ready for four more years of job stagnation?

You have to hand it to President Obama and the Democrats: No matter how many times they are proved wrong by facts, they stick to their message.

On Friday, Obama vowed to "compromise" when he meets with Republican leaders this week to avoid the fiscal cliff — which, the Congressional Budget Office says, would push the economy into recession and send unemployment soaring above 9% if it's not avoided.

But Obama's "compromise" is nothing of the sort. He merely repeated his demand for a "balanced" approach that relies on raising taxes on families that earn over $250,000 to reduce the deficit.

This is a sham. Raising taxes on all those above $250,000 as Obama proposes would raise just $34 billion. That's a whopping 3% of our $1.1 trillion deficit. Even if you seized all their income, it would only run the government for three months.

So the idea that taxing the wealthy will reduce the deficit is false. This is just class warfare, pure and simple.

Even so, Obama compounds the fib by going on to say his tax hike will have virtually no impact on small businesses. He notes, for example, that 97% of all small businesses would be untouched by his tax hike.

True, but irrelevant, as Treasury Department data show. For while there are 34.8 million small businesses in America, 30 million of those employ no workers.

Just 4.8 million, or 12%, employ workers. But an even smaller number — just 1.2 million — earn 91% of all the small business income. These are Obama's "rich."

But while they make up just 3% of all small businesses, they employ a stunning 54% of the total private U.S. workforce.

They are, in short, the nation's job creators. And their owners, who report their small-business income on their personal income tax return, will be taxed at a higher rate by Obama.

So don't be fooled. It's not really the "wealthy," as Obama says, who'll get taxed. It's small businesses. And it will have a devastating impact on jobs.

How devastating? A recent study by Ernst & Young noted that Obama's tax hike, far from being "balanced," would cost 700,000 people their jobs.

And it will no doubt kill hundreds of thousands if not millions more jobs in the future as would-be entrepreneurs decide not to start businesses in such a hostile tax and regulatory environment.

We're happy to hear that House Speaker John Boehner and Senate Minority Leader Mitch McConnell have both said that tax-rate increases aren't acceptable.

They think America needs entitlement and tax reform — making our code lower, broader, flatter, with fewer distortions — along with spending cuts. We agree.

A poll released last week shows that 80% of Republicans reject tax hikes to solve our budget ills. Following the party's lackluster election showing, GOP leaders would be wise to keep this in mind as they negotiate.

Caving in on taxes is political and economic suicide.