How to pay for President Obama's Health Care Reform is the burning question. We've heard for months that he intends to pay for it by raising taxes on people earning more than $250k as if that's no big deal for the average American. Opponents claim that tax increase is a huge financial hit on small businesses and will put lots of people out of work. Obama responds with "relatively few businesses will be affected by this tax increase." Sounds contradictory. So what's the truth? Wouldn't you like to be able to make your own judgement how bad this is for the economy based on ACTUAL impacts?
Turns out they're both correct but Obama's claim is deliberately(!) misleading to give the impression that it's not so bad. It's true that "relatively few small businesses will be affected" (ie, about 1/3 of them) as he says but those 'few' businesses employ 2/3(!) of the total small business employees. In fact, according to IRS(!) data, those 'few' small businesses most likely to be hit by this tax increase employ about 25% of the entire (emphasize ENTIRE) US workforce!!! IN ADDITION, 68% OF ALL MANUFACTURERS file as individuals and their average taxable income is well above $250k.
So, the FACT is that some 1/3 of all US workers will see their employers' taxes increase. What does an employer do when his taxes increase which drives his profit down? He fires people. He also spends less on capital expenditures ... so other companies make less off him and those other companies also have to fire people.
Taxing 'only' people making more than $250k sounds 'safe' for most of us but it affects the employers of about 1/3 of the US workforce. Is that as trivial as the President makes it sound? Do you feel misled, if not lied to? I do!
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