As Congress continues to debate the fiscal cliff and methods to rein in our national debt, we cannot neglect to consider how tax hikes would burden the economic backbone of our country, our small businesses. Last week, I wrote that Congress must address the drivers of our debt, entitlement spending, if we are to avoid a serious crisis. We can’t tax, spend and borrow our way out of this debt.
For that reason, I oppose raising tax rates, which threaten our economy and stunt job creation. Below are a few examples of what small business owners and associations representing these businesses have to say about how tax hikes would hurt their ability to be successful and hire more employees.
David Curliss, Performance Polymer Solutions Inc., Dayton, OH: “I am president and co-owner of an S-Corp providing advanced lightweight polymer and composite materials used in a variety of industries from aerospace to automotive. The President's plan for tax increases will significantly impact our company's growth and financial health. Since founding our company 10 years ago we have grown from 2 to over 20 employees through reinvestment of any profits into manufacturing equipment, quality people, and employee benefits. Higher taxes mean less cash to reinvest - simple as that. We won't be hiring more people and we won't be purchasing equipment to expand the company. This is not complicated, higher taxes retard economic growth.”
Christopher Heitman, Pegasus Auto Racing Supplies based in New Berlin, WI: “My wife and I operate a subchapter S corporation and therefore pay personal income tax rates on the net profits of the business. Unlike most large corporations, we don’t get any special tax breaks. Our passed-thru business income puts us in the top 1%. However, in order to grow our business and increase the number of employees from 14 to 17, we reinvested more than $400,000 during the past year. The largest portion of this investment was for additional inventory needed to expand into new product lines. This type of investment is paid for out of AFTER-TAX income.”
Clifford Laverty , Total Radio, Inc. Tulsa, OK: “The Fiscal Cliff, i.e. higher taxes, along with ACA is the only reason we decided to back off constructing a new building and expanding our business. The President thinks that those making over $250,000 can do more than we already do. First, how about the fact that I provide good jobs for over thirty people with benefits. Second, I don't believe that there are only 2% of small businesses that fall into this category. I would say most small businesses are S Corporations which means that company profits flow into their personal incomes. In my opinion, the President's plan is a perfect disincentive for companies to be more profitable and successful.”
National Federation of Independent Business “In the current economic environment, the last thing small businesses should face is a tax increase. Furthermore, NFIB remains adamantly opposed to any fiscal cliff resolution that cuts taxes for large corporations at the expense of small businesses organized as pass-through entities. The expiration of current individual tax rates is particularly important to small businesses because 75 percent of them are organized as pass-through entities that pay taxes at the individual rate. …Raising taxes on small businesses, especially in the current economic environment, stifles their ability to grow and create jobs. Congress must act to avoid this economic hit to over half of the business community that creates two-thirds of net new jobs and employs over half the private sector workforce.”
International Franchise Association “Franchise business owners are local small businesses, and as pass-through entities, their business profits are taxed at the individual tax rate. Many of these franchisees own the rights to develop multiple locations and have the strong desire to expand their businesses, creating more jobs and the economic output our country urgently needs. Yet in the current economic environment, with so much uncertainty about what tax rates will be next year, many franchisees have begun pulling back on developing additional locations, which means jobs are not created and economic growth is not realized.”