Summary of Pearlstein’s arguments for taxing the rich to pay for healthcare “reform” ( NOTE THE QUOTES ) :
1) Small businesses don’t create all the new jobs. Job creation goes on at firms of all sizes, with much of it coming from relatively few companies that start small and get big rather fast. The percentage of Americans employed by small business has increased only modestly over time. Most of the surtax would not come from small business and most small businesses would not be subject to the surtax.
2) According to data compiled by the Tax Policy Center at the Urban Institute and Brookings Institution, “only” ( note my quotes) 23% percent of taxpayers who would be subject to the surcharge derive most of their income from business profits.
The bulk of the proposed surtax would be paid by doctors, lawyers, investment bankers, corporate executives and people with lots of investment income. So taxing them would be OK because they can afford it anyway, and additional taxes paid by them will not make a major dent on their lifestyle. Forcing them to make a small sacrifice for the common good is — well, good for everyone.
3) Of the roughly 13 million taxpayers who derive most of their income from business profits, fewer than 500,000 would be subject to any surtax at all — and of those, fewer than 100,000 subject to the full 5.4 percent surtax. That 5.4 percent rate kicks in only after a taxpayer’s income (salary and profits) rises above $1 million, which would typically be a business with more than $10 million in revenue and more than 100 employees. That’s hardly the small, cash-strapped start-up company we all whine about.
4) It is a myth to think that small-business owners take every dime they earn in profit and plow it back into the business by investing in new plant and equipment and hiring new workers. In the real world, however, it doesn’t quite work that way. The reason an entrepreneur buys machinery or hires new workers is not because he has an uncontrollable urge to create jobs and grow the economy — it’s because he expects to generate enough additional sales to cover those additional expenditures and generate a reasonable profit as a result. For small businesses, those expenditures are paid with pre-tax money, not after-tax profits. The only reason an entrepreneur might not want to reinvest his pre-tax profits back into the business is that he knows of an investment that offers a better pre-tax return or he wants or needs the money to spend for himself. Spending money for yourself ? Yes, go ahead, but don’t spend TOO MUCH on yourself, share the rest with the poor and destitute.
5) The biggest winners from health-care reform are likely to be the 505 of small businesses that still provide health insurance to their workers and pay, on average, about 20 percent more for their policies than do big businesses. Democrats are also proposing to give tax credits to small businesses with low-wage workers that provide insurance. For many small firms, the benefits of those tax credits and lower premiums will more than make up for the real or imagined burden of higher marginal tax rates ( or so he argues ).
6) Final argument -— The money generated by a health surtax isn’t going to disappear into a mattress — it will be used to provide health care to tens of millions of Americans who now have no insurance, or too little.
Since doing so will require more nurses, more doctors, more lab technicians and, yes, more government bureaucrats — that is CREATION OF JOBS.
Ergo, The tax increase that creates these jobs more than offsets the loss that would result because of taxes on the wealthy.
That’s the way liberals see it. Rebuttals welcome of course.
The law I read said an 8% surtax on all payrolls above $400,000.00. That's about 6-10 people, depending on their jobs. That is a small company.