For years, the federal government has spent too much. Now, when we most need small businesses to be hiring, the grand plan from the White House is to tax these job creators even more and just keep spending. The United States government should not ask small-business owners to bear the burden of Washington's fiscal irresponsibility.
Last week, more than 300 small-business owners responded to the House Small Business Committee's "Small Biz Open Mic" to express overwhelming opposition to the president's plan to raise taxes on income above $250,000 on couples and $200,000 on individuals, which hits almost a million "pass through" small businesses.
Though they file as individuals, their tax returns reflect business income, not personal take-home pay. These small businesses don't have money sitting around to bail out Washington's big spenders. Instead, they reinvest their profits into their businesses -- exactly what the government should be encouraging.
Thriving small businesses are in the federal government's best interest. These enterprises can generate real economic growth with resulting federal revenue, and employ more taxpaying Americans. Instead, their hiring plans are bleak, according to the latest Gallup survey. The National Federation of Independent Business just last week released a survey showing a huge drop in small-business confidence.
Testimonials at the Committee's "Small Biz Open Mic" illustrate the disconnect between reality and the president's claims that taxing the rich solves the problem.
"Higher taxes mean less cash to reinvest -- simple as that," said David Curliss of Performance Polymer Solutions Inc. in Dayton, Ohio. "We won't be hiring more people and we won't be purchasing equipment to expand the company. This is not complicated."
"The new taxes will keep me from hiring this year, even though I could use another employee," said Kim Irwin of Integrity Wire Inc. in Huntingdon, W.Va. "I pay more in taxes already than I take home. I, like many other small-business owners, reinvest in the company and employees rather than taking the money for personal use. The new taxes are going to be very hard on my company."
The nation cannot tax its way out of trillion-dollar yearly deficits, and it certainly can't expect small businesses to pick up the tab. The math falls drastically short. While all the chatter from the White House is on a tax hike, officials forget to mention that the new revenue would be simply swallowed up by the size of the deficit. By some estimates, the new revenue may come to as little as 8 percent of the deficit. And it comes at the expense of the very new jobs and growth we need to begin to solve the spending problem.
While the administration eyes small businesses as a piggy bank for its endless spending, small businesses are also dealing with the taxes, regulatory mandates and red tape of the President's health care law. Doubling up their burden is economically punitive.
Small businesses shouldn't be penalized for success. They want to do their share, but they believe that means hiring and investing again. That would actually make a dent in the nation's fiscal problems. The best source of national revenue is a growing economy with thriving small businesses.
The responsible choice is serious reform on the spending side. Our nation's federal credit card has hit its limit. If $16 trillion in debt doesn't convince President Obama and Senate Majority Leader Harry Reid, D-Nev., to put the fiscal future of this country ahead of politics, what will?
Sam Graves is a Republican congressman from Missouri and chairman of the House Small Business Committee.