White House Defends Tax Policies

by Mike Godfrey, Tax-News.com, Washington

27 August 2010

A speech in Cleveland by the Republican minority leader in the United States House of Representatives, John Boehner, attacking the Obama administration’s tax policies, provoked an immediate response from the White House and Vice-President Joe Biden.

Boehner started by pointing to American businesses that “are afraid to invest in an economy stalled by ‘stimulus’ spending and hamstrung by uncertainty. The prospect of higher taxes, stricter rules, and more regulations has employers sitting on their hands.”

He proposed two actions on taxation that the President could take to remove “the ongoing economic uncertainty”, the first of which would be to “announce he will not carry out his plan to impose job-killing tax hikes on families and small businesses,” a reference to the expiry on January 1 next year of the tax cuts introduced by President Bush in 2001 and 2003.

“President Obama has stated he wants to stop some tax hikes, and not others,” he continued, “once again putting the government in the position of picking winners and losers and pitting taxpayer against taxpayer. According to an analysis by the Joint Tax Committee, half of small business income in America would face higher taxes under the president’s plan.”

On the Bush tax cuts, Boehner concluded that “we will not solve our fiscal challenges until we cut spending and have real economic growth, and we won’t have real economic growth if we keep raising taxes on small businesses.”

Secondly he asked President Obama to “announce that he will veto any job-killing bills sent to his desk by Congress” including the ‘cap-and-trade’ national energy tax passed by the House last year, but not yet approved by the Senate.

A subsequent White House fact sheet protested that Boehner had “launched a series of false attacks on the measures that the President is pushing to create jobs, invest in our small businesses and cut taxes for businesses and middle class families.”

It said that “Boehner opposes job-creating tax cuts for small businesses while continuing to support a tax break for wealthiest 2% of Americans. The expiration of the Bush high income tax cuts would have no effect on more than 97% of small businesses. Instead, extending these tax cuts would provide an average tax cut of USD100,000 for households making more than USD1m.”

“At the same time,” it added, “Boehner opposes the small business tax cuts currently before Congress that would actually help small businesses grow and create jobs – including eliminating capital gains on key investments in small businesses.”

Biden replicated those remarks by stressing that, in his opinion, the debate is about “the big tax cuts of the last decade (that) are scheduled to expire. This President says the middle class can't afford higher taxes in the midst of this recession. They've borne the brunt of it. So the President proposes we extend the tax cuts for 98% of Americans.”

“What Boehner wants to do is extend the tax cut to the other 2%. That means we’re going to have to borrow USD700bn we don’t have to give a USD100,000 a year tax cut to millionaires. This is a tax cut they don’t need, and they won’t use to create jobs or economic growth.”

“So to justify that,” he pointed out, “he has created this myth that a tax cut for millionaires is actually a tax cut for small business. There aren't 3% of small businesses in America that would qualify for that tax cut. It's a Wall Street tax cut, not a Main Street tax cut.”

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