New Report Makes a Business Case for Letting High-End Tax Cuts Expire

A report released Tuesday finds that it makes good business sense to let the high-end Bush tax cuts expire on December 31. The report by Business for Shared Prosperity, says families should keep tax cuts on their income below $250,000, but well-off taxpayers should not get extra tax cuts that won’t create jobs and will cost $700 billion over the next decade.

The report, which is titled The Business Case for Letting High-End Tax Cuts Expire, contends that rather than extending the high-end tax cuts, Congress should build on constructive action like the Small Business Jobs Act and infrastructure investment needed to create jobs and be competitive in the global economy.

Rick Poore, Owner of Design Wear Inc. in Lincoln, Nebraska, made the case for stimulating demand rather than stimulating more production: “As a fellow businessman once told me, ‘Give me more customers and I’ll be forced to buy equipment and hire people to meet demand. Give me a tax break without more customers and I’ll just go to Aruba.’ ”

The following is a synopsis of the report’s findings:

• Small business hiring is driven by customer demand, not tax rates.
• Job growth was much better before the tax cuts. – The Bush administration created just 1.1 million jobs net, while the Clinton administration created 22.7 million.
• High-income households will get substantially more than middle-income households from the “middle-class tax cuts.”
• Few actual small business owners are in top tax brackets – Less than 3% of tax filers with any business income make over $200,000 (individuals) or $250,000 (couples) a year, and that’s counting hedge fund investors, big business lobbyists, and other non-small business owners.
• Continuing the longer eligibility period for unemployment insurance benefits is better for the economy that lowering the top tax rates.
• If Wall Street tax cuts trickled down, Main Street wouldn’t be in an economic drought.

South Carolina Small Business Chamber of Commerce CEO Frank Knapp said, "Extending the high-end Bush tax cuts serves Wall Street and K Street lobbyists, not Main Street shop owners. Politicians should not use us to justify a very bad business decision."

The report and a related petition are available here.  According to their press release, “Business for Shared Prosperity is an independent network of forward-thinking business owners, executives and investors.”

Jon Peacock