Washington (CNSNews.com) – House Majority Leader Steny Hoyer (D-Md.) said that job growth and economic recovery would not be harmed by a Democratic plan to increase income taxes by $540 billion to pay for their health-care reform proposal because the tax hikes would not affect small businesses.
Hoyer also said he could not think of any small business owners who make enough money to qualify for the higher taxes.
Speaking at his weekly press briefing on Tuesday, Hoyer said that the proposed tax was merely a surcharge on wealthy individuals, explaining that the tax increases were graduated.
“This is a surcharge,” Hoyer said, “on people making over $280,000 as an individual, $350,000 [per year] as a couple and it’s graduated, it goes up as you reach $1 million in income.”
Asked by CNSNews.com whether such a tax increase would affect small businesses and job creation during a recession, Hoyer said: “I don’t know many small business men or women who are making, themselves $280,000 [per year], so I’m not sure that very many small businesses are going to be affected by this.”
Hoyer also made clear that Democrats were committed to the tax increases, saying his party was determined to pay for its massive health care overhaul--making it “deficit-neutral,” as insisted upon by President Barack Obama.
“We are committed to paying for health care reform,” Hoyer said. “The Senate is committed to paying for health care reform and the president is committed to paying for health care reform. So, we will pay for it.”
Republicans disagreed, saying that no one could rationally believe that a tax increase on job-creators would not effect job creation.
Rep. John Shaddegg (R-Ariz) said that the proposed $540-billion tax hike would hurt job creation and that there is no way such a tax increase would not hurt job creation.
“Absolutely, unquestionably, and nobody could rationally believe otherwise,” said Shaddegg, speaking at a press conference on Tuesday to unveil a Republican alternative health care plan that did not include tax increases.
Rep. Phil Gingrey (R-Ga.)--a doctor by trade--said that in a recession any type of tax increase was “unconscionable,” especially given that the Bush-era tax cuts are set to expire next year.
“Many of these small businesses file [taxes] as subchapter-S or ‘sole proprietors’,” said Gingrey. “They’re paying at the same individual tax rate which, once President Obama lets the Bush tax cuts expire in 2011 and they add on this surcharge, you’re talking about a marginal rate of up to 42 percent or higher.”
“That’s going to hit right on the backs of many of the small businessmen and women in this country who create most of the jobs,” said Gingrey. “To put this [tax increase] on the back of that is absolutely unconscionable.”
Rep. Trent Franks (R-Ariz.) said the Democrats’ proposed tax hikes would be the final straw of economic misfortune for an already weakened economy.
“To suggest that this won’t have a profound impact on jobs is ridiculous,” said Franks. “This will be the coup de gras when you add all the things this administration has done.”
Gingrey also noted that job creation was already weaker than expected despite massive government stimulus spending, and asked why anyone would want to risk making things even worse.
“Obviously, they [small business owners] aren’t creating too many [jobs] under the economic stimulus bill, in fact I think we lost 500,000 last month,” said Gingrey.
In fact, 467,000 jobs were lost in June, according to the Bureau of Labor Statistics. According to the Internal Revenue Service data from 2006 – the most recent year available – nearly 68 percent of small business profits ($470 billion) were reported by people making over $200,000 a year, meaning that the majority of small business profits would be subject to the Democrats’ tax increases.