The economy is struggling, jobs are disappearing rapidly. The deficit is already more than double last years total only nine months into the fiscal year. There is little hope in the numbers behind the already grim reported statistics. But Nancy Pelosi has called in her knight in leaden armor to put everything right. Yes, it’s the hero of a job-killing, economy-destroying, Democrat-controlled House of Representatives:
Every detail isn’t known, but late last week Ways and Means Chairman Charlie Rangel disclosed that his draft bill would impose a “surtax” on individuals with adjusted gross income of more than $280,000 a year. This would hit job creators especially hard because more than six of every 10 who earn that much are small business owners, operators or investors, according to a 2007 Treasury study. That study also found that almost half of the income taxed at this highest rate is small business income from the more than 500,000 sole proprietorships and subchapter S corporations whose owners pay the individual rate.
In addition, many more smaller business owners with lower profits would be hit by the Rangel plan’s payroll tax surcharge. That surcharge would apply to all firms with 25 or more workers that don’t offer health insurance to their employees, and it would amount to an astonishing eight percentage point fee above the current 15% payroll levy.
Here’s the ugly income-tax math. First, Mr. Obama has promised to let the lower Bush tax rates expire after 2010. This would raise the top personal income tax rate to 39.6% from 35%, and the next rate to 36% from 33%. The Bush expiration would also phase out various tax deductions and exemptions, bringing the top marginal rate to as high as 41%.
Then add the Rangel Surtax of one percentage point, starting at $280,000 ($350,000 for couples), plus another percentage point at $400,000 ($500,000 for couples), rising to three points on more than $800,000 ($1 million) in 2011. But wait, there’s more. The surcharge could rise by two more percentage points in 2013 if health-care costs are larger than advertised — which is a near-certainty. Add all of this up and the top marginal tax rate would climb to 46%, which hasn’t been seen in the U.S. since the Reagan tax reform of 1986 cut the top rate to 28% from 50%.
The one hope for this economy is that small business steps up and creates jobs. However, Pelosi and her minions have promised to wrap those small business owners in the weighty. leaden embrace of Surtax – then want the business owners to swim the river, so to speak.
Needless to say, most small business owners are reluctant to join Pelosi’s swim club. Hence, the jobs will not be forthcoming. Therefore, the consumer spending required to kickstart the economy will also not be forthcoming. (People tend to spend a lot less when they have no job.) Small businessmen now have a very, very, very strong disincentive to grow their businesses by hiring more people, lest Surtax be their swim partner.
The Democrats are intent on killing the economy, jobs and prosperity. Surtax will ensure that outcome.
A knight in leaden armor strides forth from Pelosi’s lair.
How’s that hope coming?