At a time when most people agree the engine for creating new jobs in a depressed
economy is small business, IRS attorneys following the government’s new strategy for
increasing revenue point with concern to some recent comments by Treasury Secretary
Timothy Geithner. During testimony before the House Small Business Committee last
week, IRS tax lawyers say Mr. Geithner told Congress the federal government “must”
raise taxes on small businesses so the government doesn’t “shrink.”
According to these same IRS tax attorneys, the Obama administration’s plan to raise
taxes on small businesses is part of its overall strategy to increase revenues by raising
taxes on all Americans who make more than $250,000 per year, including small
businesses which file taxes the same way as individuals. The revelation came during
an exchange between U.S. Representative Renee Elimers, a Republican from North
Carolina, while Geithner was explaining how the Obama administration intends to raise
Ms. Elimers responded, and many IRS attorneys representing small businesses agree,
that “[o]verwhelmingly, the businesses [in North Carolina and throughout the country]
continue to tell us that regulation, lack of access to capital, taxation, fear of taxation,
and just the overwhelming uncertainties that our businesses face is keeping them
from hiring.” Geithner responded by claiming the Obama tax increases would only
affect “three percent” of small businesses, while shrugging off the point that 64% of all
U.S. jobs created are through small businesses.
Geithner contents the Obama administration is “…not doing it because we want to…”
but rather out of alleged concerns that “…if we were to cut spending by [1 trillion dollars]
that magnitude to do it, you’d be putting a huge additional burden on the economy,
probably greater negative economic impact than that modest change in revenue”.
While Geithner doesn’t disagree the country needs more jobs, he maintains the
intended tax strategy is the governments only alternative.
In an incredible statement which caused several IRS tax attorneys to scratch their
heads, Geithner concluded his remarks by suggesting that further taxation of small
businesses would be “good for growth.” The comment led some IRS attorneys to
suggest he must have been referring to the growth of the federal government, as raising
taxes on small business is more likely to cause further unemployment in the private
sector and ultimately shrink the governments already struggling tax base.
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