Last week Ernst and Young, a non-partisan organization, released a study finding that the tax hikes the Democrats and President Obama want to unleash on the economy will cost at least 700,000 jobs. Heritage summed up the dismal predictions:
The concern over higher individual tax rates has also been a focus because of the prominent role played by flow-through businesses—S corporations, partnerships, limited liability companies, and sole proprietorships—in the US economy and that a large fraction of flow-through income is subject to the top two individual income tax rates. These businesses employ 54% of the private sector work force and pay 44% of federal business income taxes. The number of workers employed by large flow-through businesses is also significant: more than 20 million workers are employed by flow-through businesses with more than 100 employees. (Emphasis added.)
President Obama is fond of saying his tax increase wouldn’t impact 97 percent of small businesses. But those 97 percent of small businesses aren’t job creators. They range from people in their basements selling items on e-Bay to lawyers who practice out of their homes.
The businesses that would pay this tax increase are the businesses that hire millions of workers. Higher taxes on these vital job creators could force them to cut back on their existing workforce and would certainly cause them to slow hiring of new workers. (Read More)
How will all of those job losses help the middle class? Obama and his friends make it sound like this is some sort of issue about fairness, but it’s not. All they care about is punishing success and expanding the size and scope of government.
Even if they were only to raise dividend taxes on those who earn over $250,000 per year, they will will hurt the middle class, as explained at AdvisorOne:
The study finds that filed 68% of all tax returns with dividend income in 2009 (the latest year for which data is available) were filed by consumers earning less than $100,000 per year.
According to the report, the Senate Democrats’ plan to shift the tax burden onto upper-income wage earners will likely cause them to shift their investments—here and abroad—to those that are taxed at lower rates. This in turn will likely cause dividend-paying companies to reduce the size of their quarterly dividend checks.
In addition, the report claims that with investors selling dividend-paying stocks, the values of those stocks will likely fall. And because the market is forward-looking, the stock prices will likely drop sooner rather than later. This will be another hit for the typical investor who holds dividend-paying stocks, either directly or indirectly through retirement plans or other mutual funds.
“One other thing it will do is reduce the value of all [dividend-paying] stocks by the amount of the tax increase, which would be a couple of trillion dollars,” says Charles Biderman, founder and CEO of the research firm TrimTabs. “This will affect anyone who has a pension, 401(k) or other retirement plan invested in stocks. Income is still off by about 10% across the board since 2007. How you boost after-tax income by boosting taxes is beyond me.” (Read More)
As if the pension crisis isn’t bad enough already, and the last thing anyone needs in this economy is a big hit to their 401K plans.
But then we’ve got dopes like Norah O’Donnell on CBS News claiming that Republicans are trying to cut taxes. All they’re doing is trying to keep taxes from increasing massively. On July 27 they will have a “Stop the Tax Hike Day” in an effort to spread the word about the looming tax increases the Democrats want. I guess we’ll have to wait and see if the media even bothers reporting the news, or if they continue to claim Republican are cutting taxes for the wealthy.