Geithner: Taxes on ‘Small Business’ Must Rise So Government Doesn’t ‘Shrink’
Thursday, June 23, 2011
By Terence P. Jeffrey


(Congressional photo)
Treasury Secretary Tim Geithner testifies in the House Small Business Committee on Wednesday, June 22, 2011.

(CNSNews.com) - Treasury Secretary Timothy Geithner told the House Small Business Committee on Wednesday that the Obama administration believes taxes on small business must increase so the administration does not have to “shrink the overall size of government programs.”

The administration’s plan to raise the tax rate on small businesses is part of its plan to raise taxes on all Americans who make more than $250,000 per year—including businesses that file taxes the same way individuals and families do.





Geithner’s explanation of the administration's small-business tax plan came in an exchange with first-term Rep. Renee Ellmers (R.-N.C.). Ellmers, a nurse, decided to run for the U.S. House of Representatives in 2010 after she became active in the grass-roots opposition to President Barack Obama’s proposed health-care reform plan in 2009.

“Overwhelmingly, the businesses back home and across 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,” Ellmers told Geithner. “They just simply cannot.”

She then challenged Geithner on the administration’s tax plan.

“Looking into the future, you are supporting the idea of taxation, increasing taxes on those who make $250,000 or more. Those are our business owners,” said Ellmers.

Geithner initially responded by saying that the administration’s planned tax increase would hit “three percent of your small businesses.”

Ellmers then said: “Sixty-four percent of jobs that are created in this country are for small business.”

Geithner conceded the point, but then suggested the administration’s planned tax increase on small businesses would be “good for growth.”

“No, that's right. I agree with that,” said Geithner. “But just to put it in perspective, it's important to recognize why are we doing this. You know, our deficits are 10 percent of GDP, higher than they've been since any time in the postwar period really. We have a big hole to dig out of, and we have to figure out how to do that in a way that's balanced, good for growth, fair to people as a whole.”

Geithner, continuing, argued that if the administration did not extract a trillion dollars in new revenue from its plan to increase taxes on people earning more than $250,000, including small businesses, the government would in effect “finance” what he called a “tax benefit” for those people.

“We're not doing it because we want to do it, we're doing it because if we don't do it, then, again, I have to go out and borrow a trillion dollars over the next 10 years to finance those tax benefits for the top 2 percent, and I don't think I can justify doing that,” said Geithner.

Not only that, he argued, but cutting spending by as much as the “modest change in revenue” (i.e. $1 trillion) the administration expects from raising taxes on small business would likely have more of a “negative economic impact” than the tax increases themselves would.

“And if we were to cut spending by 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,” said Geithner.

When Ellmers finally told Geithner that “the point is we need jobs,” he responded that the administration felt it had “no alternative” but to raise taxes on small businesses because otherwise “you have to shrink the overall size of government programs”—including federal education spending.

“We're not doing it because we want to do it, we're doing it because we see no alternative to a balanced approach to reduce our fiscal deficits,” said Geithner.

“If you don't touch revenues and you leave in place the tax cuts for the top 2 percent that were put in place by President Bush, if you leave those in place and you're trying to bring our deficits down over time, then you have to do exceptionally deep cuts in benefits for middle-class Americans and you have to shrink the overall size of government programs, things like education, to levels that we could not accept as a country,” said Geithner.

“So to do a balanced approach to reduce our deficits you have to make modest changes in revenues,” he said. “There's no realistic opportunity to do alternatives to doing that.”

According to historical budget tables http://www.whitehouse.gov/sites/default/...s/hist.pdf published by the White House Office of Management and Budget, federal spending has climbed from $2.89 trillion in 2008—the year President Obama took office—to $3.82 trillion this year, an increase of approximately $930 billion.

Meanwhile, according to the National Center for Educational Statistics, although federal education spending http://nces.ed.gov/programs/digest/d10/t...errer=list in inflation-adjusted dollars has jumped from $71.64 billion in 1995—when Bill Clinton was president--to $163.07 billion in 2009—when Barack Obama was president—federal spending still accounted for only 8.2 percent http://nces.ed.gov/programs/digest/d10/t...10_180.asp of spending for public primary and secondary education in America in the 2007-2008 school year. Historically and presently in the United States, local and state governments have funded the cost of public education.

http://www.cnsnews.com/news/article/geit...-must-rise

If I remember correctly, wasn't Timmy the guy who didn't pay his taxes?

His statements are so beyond idiodic, that I truly don't know what to say since GTS' dirty word filter would cancel out most of anything I would type.

So who does he think will pay the increased taxes on small businesses?

The consumers!

And lost jobs would also be a part of this.

So who does he think will pay the increased taxes on small businesses?

The consumers!

And lost jobs would also be a part of this.

(06-24-2011 03:42 PM)BearcatOtto Wrote:  So who does he think will pay the increased taxes on small businesses?

The consumers!

And lost jobs would also be a part of this.

This is a common argument but not always true. It does not factor in the elasticity of demand. If the demand of a small business product is elastic and their prices go up because of taxes, the small business will be the one feeling the tax increase, not the consumer (as much).

Either way, this doesn't make sense to me. But before a legitimate talk about taxes can take place, taxes need to be drastically simplified. My opinion at least.

I'm speechless. This is idiotic beyond words.

I would like to see smaller government, please.

Oh, and signs of intelligent life in D.C. It's an extreme rarity there.

A few months ago, she was asking permission to give a patient a tylenol. Now, through the power of democratic election, she has become a leading expert on economic policy. All you naysayers are about to be proved wrong, she has renewed my confidence in the ol' US of A.

For what it is worth, here's a link to a video that demonstrates the proper way to not sound like a moron while slaughtering your political opposition, enjoy.


http://www.youtube.com/watch?v=FAn1FWInB...r_embedded

Attack the messenger, not the message.