End tax cuts for the wealthiest

The following opinion editorial by Frank Knapp ran in The Hill's Congress Blog today.
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The Board of Directors of The South Carolina Small Business Chamber of Commerce voted this week to support the effort in Congress to end tax cuts for the very rich. Here’s why.

First, letting the tax cuts for the top two income brackets expire will impact very few real small business owners. The reality is that almost all small business owners are middle-class Americans with middle-class incomes. Of those who aren’t, more small business owners are lower income than upper income. Only two to three percent of tax filers who claim income from a business make over $250,000 a year. Many of these people are wealthy passive investors or part of large corporate law and accounting firms who invest in financial and real estate partnerships — not hands-on small business owners.

While big business CEOs, Congressional lobbyists, Wall Street bankers, some attorneys and other professionals will lose their tax cuts on the portion of their incomes that is over $250,000 (they keep the tax cuts on the portion under $250,000) — the vast majority of small business owners will not be impacted at all.

Second, if our government is going to borrow $700 billion from China and other nations, using it to cut taxes on the very rich is an extremely counterproductive way to put American’s back to work and grow our economy.

The Congressional Budget Office this year looked at 11 policy options in terms of boosting small business and creating local jobs. It found that keeping the tax cuts for the top two income brackets was the least effective because higher-income households simply don’t spend as much of their income as middle and lower-income households. Remember — spending money in your local economy helps small businesses, not sending checks to hedge funds or putting money into “too big to fail” banks that favor quick buck speculation at the expense of Main Street investment.

Instead of handing more money to those who won’t create main street jobs, the money would be better used to help the real engine of our economy — the small businesses that create most of our new jobs. We should be stimulating more customers for our small businesses through infrastructure projects and keeping teachers and law enforcement officers working. We could also be giving incentives to small businesses to start hiring again by reducing their payroll taxes or other measures. And we can do all of this for a lot less money and reduce our nation’s deficit at the same time.

Allowing the tax cuts on the top two income tax brackets to expire and putting the money into more productive “job creating” or deficit reduction uses is the right business decision for our country’s small businesses and our nation’s economy.

UPDATE

Since going public with the above message, I have received a couple e-mails disagreeing with our Board’s decision. However, I have received many more agreeing with our position.

One message congratulated us on being “courageous”. But our position on the tax cuts isn’t courageous; it was a good business decision.

Does a decision on the tax cuts have to be made? Yes, by law all the tax rates revert back to the 2000 levels if Congress takes no action.

Do the tax cuts for the majority of American’s help the economy? Yes

Do the tax cuts for the wealthiest American’s in the top two brackets do a good job of creating jobs? No, these specific tax cuts are a terrible way to create jobs.

Can we afford the tax cuts for the wealthiest if they don’t do a good job stimulating our economy? No, not if we’re concerned about the national debt.

Can we spend some or all of the same money for these tax cuts better to create jobs? Yes

So there’s nothing courageous about our position. It was just a good business decision. And I thought everybody wanted government to run more like a business.