President Obama the class warrior is dashing the hopes of the unemployed on his quest for re-election. In the wake of Friday’s disappointing Labor Department announcement that a measly 80,000 jobs were created last month, Mr. Obama said he wants to punish a million job creators with higher taxes. Such a counterproductive policy will only make the unemployment lines longer.
On Monday, the president took to the East Room pulpit to ask Congress to extend the current tax rates for one year - but only for those who make less than $200,000. “In many ways, the fate of the tax cuts for the wealthiest Americans will be decided by the outcome of the next election,” he said, standing in front of a backdrop of supposedly regular middle-class people. “My opponent will fight to keep them in place. I will fight to end them.”
Republican presidential candidate Mitt Romney wants to reform the tax code and then lower everyone’s rates. “The president’s latest bad idea is to raise taxes on families, job creators and small businesses,” responded Romney campaign spokesman Andrea Saul. “Unlike President Obama, Gov. Romney understands that the last thing we need to do in this economy is raise taxes on anyone.”
Mr. Obama is vulnerable on this point because his version of “wealthy” includes 940,000 businesses responsible for over half of the $1.3 trillion in business income filed as pass-through entities, according to the nonpartisan Joint Committee on Taxation. Mr. Obama attempted to pre-empt Republican critics by claiming most companies wouldn’t be subject to this new tax rate of almost 40 percent. The 3 percent who are hit, however, are the more productive in the economy.
According to the National Federation of Independent Business, the Obama administration’s proposal would target businesses employing between 20 and 250 employees, which account for more than one-quarter of the total work force. Small businesses created two-thirds of the net jobs over the last decade, so this policy would do more to help the Obama campaign appeal to its left-wing base than actually assist those without jobs.
Mr. Obama will have to work with Congress to prevent “Taxmaggedon,” when $4.5 trillion in new taxes hit on Jan. 1, but Capitol Hill won’t go along. House Speaker John A. Boehner said in a statement Monday that, “the president is doubling down on his quixotic call for the same small-businesses tax hikes that have been routinely rejected by the House and Senate.”
Mr. Obama is even to the left of his own party on this issue. At least seven Senate Democrats want to keep all tax rates the same next year. Even House Minority Leader Nancy Pelosi, San Francisco Democrat, and New York Sen. Charles Schumer, a member of the Democratic leadership, have said they only want to increase taxes on those who earn over $1 million a year. The House will vote later this month to extend all current rates for one year in the hopes of starting a serious overhaul of the tax system under a new administration.
Making it harder for businesses large and small to survive, let alone expand and hire new employees, ensures continued economic stagnation. The country needs someone at 1600 Pennsylvania Ave. who realizes growth and prosperity depend on entrepreneurs, not bureaucrats.
Emily Miller is a senior editor for the Opinion pages at The Washington Times.