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.
Most working and job-seeking Americans know better. They do not inhabit that particular world. They live in the world as it actually exists today.
In a country suffering from a nagging, norm-busting unemployment rate above nine percent, those of us in the working world need the tools and freedom to invest in own productive activities that stimulate new growth, new jobs and, yes, new tax revenues. We need a tax and regulatory environment that cuts bureaucratic red tape and encourages businesses of all sizes to create jobs and opportunity.
Small business is the engine of future growth. We must support the small businesses and entrepreneurs who are now sitting it out due to taxation, fear of taxation, restricted capital, burdensome regulations and continuing economic uncertainty. We can still take major steps to fix the problem. We can unleash the last weapon in our national economic arsenal—small business people and entrepreneurs—by empowering them today with the certainty. Empower them with the confidence that the risks they take today to pursue rewards tomorrow will not be taxed at new and unexpected rates tomorrow.
Sensible policies to promote economic growth lie at the core of the Free Congress Foundation’s program to freeze spending, promote growth and reform the entitlement programs.
Genuine growth begins at the shops, storefronts, home offices, and shared workspaces of our nation’s small businesses. Let’s keep their taxes at levels that make it worth it. While time is short, it’s not too late. So let’s muster a little more patience in hopes the administration moves its worldview more in line with the place where the rest of us live.