House passes extension of current tax rates
While President Barack Obama and Senate Democrats continue to play with fire on the economy, the House of Representatives yesterday passed a one-year renewal of existing tax rates for all income earners:
The House approved GOP legislation late Wednesday that would extend all current tax rates for another year, and also turned away a Democratic bill that would have allowed rates to rise for higher income earners.
The Job Protection and Recession Prevention Act was approved in a 256-171 vote that saw 19 Democrats vote with Republicans, highlighting division in the Democratic party over taxes. Only one Republican, Rep. Tim Johnson (Ill.), voted no.
Democrats voting in favor of the bill were Reps. John Barrow (Ga.), Sanford Bishop (Ga.), Dan Boren (Okla.), Leonard Boswell (Iowa), Ben Chandler (Ky.), Gerry Connolly (Va.), Jim Costa (Calif.), Mark Critz (Pa.), Henry Cuellar (Texas), Joe Donnelly (Ind.), Larry Kissell (N.C.), Dave Loebsack (Iowa), Jim Matheson (Utah), Mike McIntyre (N.C.), Jerry McNerney (Calif.), Bill Owens (N.Y.), Collin Peterson (Minn.), Mike Ross (Ark.), and Tim Walz (Minn.).
House Republicans allowed Democrats a vote on a proposal similar to the one the Senate approved, and predictably, it failed in a 170-257 vote, with 19 Democrats voting against their party. During debate, Republicans said the Democratic alternative would raise taxes on about one million small business owners with incomes at or above those levels.
They also noted that less than two years ago, many Democrats agreed to extend all the Bush-era tax levels, citing the harm any tax hike might do to the struggling economy.
We’re at a stalemate right now. Unfortunately, President Obama, in the words of Treasury Secretary Tim Geithner, is “absolutely committed” to raise taxes on higher-income earners, which would hit many small business owners and no doubt have a trickle down effect on the economy. Ernst and Young recently released a study noting that the tax hikes would lead to a 1.3% contraction in the economy and cost some 700,000 jobs.
Many business owners will be out money needed to expand or invest and likely will be forced to layoff workers. For example, Michael Passalacqua, owner of Angelo’s in Washington, Pennsylvania, explains the burden that small businesses are already bearing thanks to the insatiable for more tax revenue from politicians in the nation’s capitol:
And while President Obama says the increased tax revenue is needed to build roads and bridges, which represents a fraction of the federal budget, the people are the nation’s economic backbone aren’t buying it. A recent Gallup poll showed that President Obama’s approval rating with business owners is the lowest of occupational groups, a telling sign in this struggling economy.
Unfortunately, what Obama is pushing now runs counter to what he said just two years ago. During his weekly address on December 11, 2010, President Obama, who was pushing a two-year extension of existing tax rates, explained, “By putting more money in people’s pockets, and helping companies grow, we’re going to see people being able to spend a little more, we’re going to spur hiring - we’re going to strengthen our entire economy.”
Little has changed since then. We’re facing our worst recovery since World War II, but Obama is pursuing the wrong tax and regulatory policies, such as ObamaCare, and only prolonging our economic troubles.