Think that the proposed "millionaire surtax" to help pay for health care reforms won't impact job growth? Think again.
Last week, the House Ways & Means Committee approved health care surtaxes which, when combined with the expiration of the Bush tax cuts and reversion of the top federal tax rate on wages to 39.6% at the end of 2010, would mean a "significant tax hike" on business income in 2011. The Tax Foundation recently issued a report that found that one-third of the $49 billion that would be raised by the surtax in 2011 is from business income. The report also estimated that the total tax increase on business income would be $51.3 billion, a 24.5% increase, assuming business income is the last dollar of income earned. Tax Foundation president Scott Hodge said, "The U.S. business sector includes millions of 'non-corporate' businesses that pay their taxes on the individual income tax returns of their owners. That means new tax hikes on personal income, which may soon bring total rates over 50% in most states, will be hurting small businesses. Some pundits like to cite the statistic that only 4% of the 36 million tax returns with 'business' income are subject to the surtax, but that 4% of tax returns earns 60% of the $882 billion in total ''business' income."
The Tax Foundation's findings are alarming – if the proposed surtax and expiring tax cuts hit business income simultaneously, it isn't hard to imagine where businesses will make up the difference. That means no more job growth.
The U.S. Chamber of Commerce produced a short video illustrating the impact these surtaxes would have on income that is worth watching. The Chamber also has sounded the call for America's small businesses to urge Congress to vote no on these surtaxes and policies that impede economic and job growth. This ad says it all: