Even During a Recession, Democrats Continue Push for Tax Hikes on Small Businesses
With Families and Small Businesses Already Squeezed by the Economic Downturn, Dems Plan to Resurrect Death Tax
Washington,
Jan 13 -
A troubling trend has developed as Democratic leaders in Congress and President-elect Obama’s economic team continue to craft legislation that could be soon considered in the House. In recent days, an increasing number of Capitol Hill Democrats have spoken out in favor of tax hikes and against tax cuts, and they have successfully blocked some tax relief for families and small businesses from the proposal. Now comes word congressional Democrats have taken their opposition to tax relief a step further: they’ve convinced the President-elect’s economic team to join them in bringing the Death Tax back to life. That’s right; they’re working to raise taxes during a recession. The Wall Street Journal has the details:
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“President-elect Barack Obama and congressional leaders plan to move soon to block the estate tax from disappearing in 2010, suggesting the levy might outlive the ‘Death Tax Repeal’ movement that has tried mightily to kill it…”
“Advocates of killing off the tax say the emerging Obama policy is the wrong medicine for the recession, arguing the levy is economically burdensome like the income tax. Bill Rys, tax counsel for the National Federation of Independent Business, said small businesses struggling with falling sales and layoffs shouldn’t have to devote resources to estate planning.”
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The Journal’s editorial page notes that the Democrats’ move is nothing less than a tax hike on small businesses – at the same time that they are struggling during the ongoing economic recession:
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“Mark it down as the first tax increase of the new Democratic era. The Journal reported yesterday that President-elect Obama and Congressional leaders intend to maintain the estate tax rather than let it expire on schedule in 2010.”
“They will do so even though their economic stimulus plan is supposed to be about creating millions of new jobs in a hurry. The death tax strikes most heavily at small- and medium-sized family-owned businesses that generate the majority of new American jobs. So hitting these family businesses with a multimillion dollar tax bill when the owner dies won't help job creation.”
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The decision by Democrats in Washington to raise taxes in the middle of a recession stands in stark contrast to the advice of dozens of economists who have suggested tax relief – not tax hikes – as the best and fastest way to get the economy moving again. Here are just a handful of comments from a list of economists released by House Republican Leader John Boehner (R-OH) last week:
“Want to grow the economy without inflation? Cut marginal tax rates, slash the corporate rate, expense investment in the first year (instead of depreciation), keep tax rates low on dividends and capital gains, and repeal the death tax. “
Stephen Entin
President & Executive Director, Institute for Research on the Economics of Taxation
“Marginal rate tax cuts would be a much more effective way [than spending on new programs] to stimulate demand along with cuts in the capital gains and corporate tax rates. Evidence shows that marginal tax cut multipliers are much higher than spending multipliers. In addition the Fed is still not out of ammunition.”
Joseph Zoric
Associate Professor of Economics, Franciscan University of Steubenville
“Tax cuts are preferable to spending, especially the many programs that will doubtless result from this process. Even the designated chair of Obama’s CEA finds that increased taxes reduce growth.”
James Butkiewicz
Professor of Economics, University of Delaware
On CBS’ Face the Nation last Sunday, Boehner said that instead of raising taxes and spending more, leaders in Washington should find ways to tax less and spend less so the plan does not burden future generations with mountains of debt. On behalf of small businesses across the country trying to keep their heads above water during these difficult days, isn’t it time for Democrats in Washington to reconsider their plans to raise taxes in a recession?
