Jim Gilmore

An old joke says the IRS will tax even your patience.  Don’t say it out loud in Washington this summer. It might give new ideas to Treasury Secretary Timothy Geithner.

He told the House Small Business Committee this week that the Obama administration believes taxes on small business must increase so the administration does not have to “shrink the overall size of government programs.” As part of the administration’s plan to raise taxes on all Americans who make more than $250,000 per year, taxes will rise even more on small businesses, which file taxes the same way individuals and families do.

This jaw-dropping commentary by our nation’s treasury secretary comes even as he acknowledged the powerful role of small business as the nation’s best hope for new jobs.  By some counts, more than 60 percent of new jobs are created by small businesses.  This is a core reality that can’t be denied or ignored during a painful, anemic growth period when our nation desperately needs every single new job it can create.

Consider that our struggling national economy grew at an annual rate of just 0.1 percent during 2009 and 2010, compared to 3.2 percent over a period of nearly the last six decades. We lost jobs at a rate of 2.2 percent a year over the same two-year period, some 265,000 per month, compared to a historic growth rate of 1.6 percent since the early 1950’s.

The jury on 2011 is out.  Distressingly, the latest testimony on administration solutions is now in.

Geithner argued that the government would be financing a “tax benefit” by sparing taxation on the hard-working, small business households toiling, some seven days a week, to put together $250,000 or more in combined annual income.  It would be “good” for growth, Geithner said.

The comments reveal a stubborn worldview still held by Geithner, the president and other key financial officials.  They see the swollen current size of government as something that must be maintained, and fed. 

Geithner – capable, bright, energetic technician that he is – not surprisingly views the size of government through a technician’s lens. He is intent on finding ways to finance the funding challenge before him. He sees only two ways to grow revenue.  First, increase borrowing.  Next, raise taxes. In this particular world, there is no room for the third solution—creating more wealth.  Nor is there apparently room for any notion that government must change the way it does business.

Jim Gilmore

James S. Gilmore III, is President and CEO of the Free Congress Foundation (www.freecongress.org).