Business groups blast proposed surtax

A coalition including top business groups is urging lawmakers to oppose the millionaire’s surtax that Senate Democrats are proposing to pay for President Obama’s jobs package.

The Tax Relief Coalition – which includes, among others, the U.S. Chamber of Commerce and the National Federation of Independent Business – said the proposed surtax, combined with other possible tax changes, would give millionaires a punitive tax bill.

“In sum, the Senate legislation would pay for the president’s jobs bill by raising tax rates on hundreds of thousands of business owners, a job killing tax hike to pay for a bill purported to strive for job creation,” the coalition wrote in a Friday letter to senators.

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The Democrats’ proposed 5.6 percent surtax would go into effect in 2013, with the Bush-era tax rates also set to expire at the end of next year. Those rates were all extended last year in the tax-cut compromise, but Obama has vowed not to extend them again for the highest earners.

The coalition letter also declares that the health care overhaul will bring new taxes in 2013, meaning millionaires would face almost an 50 percent rate if the surtax was implemented and the Bush tax cuts went away. 

Senate Democrats proposed the surtax this week, in lieu of the president’s pay-fors which were more focused on families earning north of $250,000 a year. 

The president has said he is comfortable with the Senate proposal, and Democrats in the chamber have said that millionaires could afford to pay a little more to help spark the economy.

But the Tax Relief Coalition notes in its letter that roughly 80 percent of 2007 taxpayers who made more than $1 million were business owners. The group also complained that the proposed surtax would also impact investment income. 

Officials from the National Association of Wholesaler-Distributors and the National Association of Manufacturers also signed the coalition letter. The group says it represents 1.8 million businesses across the country.