Increased Taxes on America’s Small Businesses?

Washington, D.C. – U.S. Senator Rob Portman (R-Ohio) recently released a statement responding to President Barack Obama’s call for increased taxes on America’s small businesses.

Senator Portman introduced his statement with these observations:

While President Obama calls for higher taxes on jobs (sic) creators, two new government reports undercut his class warfare argument and the basis for calls for higher taxes…. As the nation careens toward a fiscal cliff, real leadership not more rhetoric and finger pointing, is necessary to reform our tax code and address Washington’s out of control spending.

Analysis of the Congressional Budget Office’s (CBO) final report on what caused the January 2001 projection of a $5.6 trillion 10-year surplus to turn into an actual $6.1 trillion deficit over that 10-year period (ed. note: a $11.75 trillion dollar swing) shows that:

• Tax policies enacted a decade ago are responsible for just 16% of the swing from surplus to deficit, or $1.9 trillion;
• Given that only about one-fourth of the tax cuts went to upper-income earners (indicative of the reality that there are very few of these), just 4% of the decline from surpluses to deficits resulted from upper-income tax cuts, or $490 billion
• Since CBO ignores any of the positive impact of tax cuts on the economy  (this is known as “static analysis,” as opposed to “dynamic analysis,” which estimates growth attributable to tax cuts), savings and economic growth, the percentage was actually even smaller than the 4% estimate (above).

Additional analysis of the factors behind this massive $11.75 trillion swing reveals that new spending, (much of which was due to debt incurred because of the new spending and interest) were responsible for almost half (48%) of the increase in spending.

To sum it up, the $11.75 trillion swing from surplus to deficit was comprised of  a $6.1 trillion decrease in revenue (52% of the total swing) caused by tax policies, new spending and interest and a $5.6 trillion increase in spending (48% of the total swing).

Of the total spending and revenue lost over the 10 year period, an astounding 34% ($4 trillion) was due to Obama/Pelosi legislation over the last three years!

Senator Portman concluded:

In a second report, the CBO said that in both 2008 and 2009, the highest-earning 20% of taxpayers paid 94% of the total income tax burden – up from 86 %in 2007, and 81% before the 2001 tax cuts.  In other words, higher-income Americans have been paying a bigger and bigger part of the total tax burden under the so-called “Bush tax cuts.”

Editors’ note: Due to rounding, the percentages above may not agree with the dollar amounts. For clarity’s sake the editors decided to round dollar amounts to two decimal points and percentages to just one.

The author is a concerned Lane County resident and business owner.

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