By Mike Lillis - 07/10/12 04:51 PM EDT
GOP leaders are misleading the public with claims that a tax hike on incomes above $250,000 will hurt small businesses, Rep. Steny Hoyer (D-Md.) charged Tuesday.
Hoyer, the Democratic whip, noted that only about 3 percent of small business owners would be affected if the Bush-era tax rates are allowed to expire on the wealthiest Americans.
“Very frankly, history shows that to be a fallacious argument,” Hoyer said. “That was the argument they made in 1993, that we were going to destroy the economy, that deficits were going to explode, that unemployment would skyrocket and that the stock market would tank.
“They were dead, flat wrong. Exactly the opposite happened. The stock market went up 226 percent, [and] we balanced the budget for four years in a row,” he added. “They continue, however, unabashedly and undeterred in making an argument which has been proven to be dead, flat wrong.”
At issue is how to approach the Bush-era tax rates, which are scheduled to go up for all incomes in January. In a direct challenge to Republicans, who want to extend the lower rates for everyone, President Obama on Monday doubled down on his plan to allow taxes to go up on families with annual taxable income above $250,000 and on individuals with taxable income above $200,000.
Behind House Speaker John Boehner (R-Ohio), Republicans have warned that a tax hike on the wealthiest people would cripple small businesses at a time when the economy needs them hiring new workers. GOP leaders wasted no time this week bashing the president for his proposal.
“Here we have a situation where the economy is stalled and there is a lessening of confidence each and every day. What does the president do? He doubles down on his own failed policies,” House Majority Leader Eric Cantor (R-Va.) said Tuesday during a press conference in the Capitol. “How does it make sense for anybody to call for taxing small-business owners when we are looking to create jobs?”
The Joint Committee on Taxation (JCT) has estimated the number of high-income earners – those earning more than $250,000 – who file as a small business is roughly 3 percent.
Democrats want to stage two separate votes: one to extend the Bush-era tax rates on lower incomes and another to extend the rate on higher incomes. Republicans have rejected that plan, believing it would make it difficult to extend current tax rates for wealthier households.
Consequentially, Democrats have charged Republicans with holding the lower-income tax breaks “hostage” to an extended cut for the wealthiest Americans, an accusation Hoyer amplified Tuesday.
“The Republicans agree that the people [earning] under [$]250,000 shouldn't get a tax increase. Democrats agree. The president agrees,” Hoyer said. “We ought to take 'yes' for an answer on that issue.”
Republicans argue Obama is proposing a tax increase on higher-income households.