Straight Talk: Stop the Tax Hike on Small Firms

President Obama said it well in 2009: You don’t raise taxes in a recession. He was right; at least, back then. In 2012, President Obama and the Democrat leadership are openly advocating a tax hike on nearly a million small business owners, despite the economy. Today’s announcement that July unemployment increased to 8.3 percent underscores the importance of stopping this misguided tax hike on our job creators. Now at 42 straight months of at least 8 percent unemployment, we must remember nearly 13 million people are in need of paychecks. For every job available, 3.5 people are competing for it.

The House of Representatives voted on Wednesday to stop the tax hike. Our nation is experiencing a recession-like economy right now, and the basic economic principle that you don’t raise taxes in a recession definitely applies. Just one week ago, the Commerce Department announced the economy (the nation’s GDP) grew by a sluggish 1.5 percent in the second quarter. In 2010, President Obama joined Republicans to stop tax hikes when that same statistic was a much better 3.5 percent. We have heard no reasonable explanation from the President for abandoning the wise economic principle that you don’t raise taxes in an economy like this.

The House vote to stop the tax hike is an important step, but the Senate must join us in taking action. The nation has an unemployment crisis. Raising taxes on 940,000 small businesses – proven job creators – is bound to make it worse. 

Latest Committee Action

Know Before You Regulate: The Impact of CFPB Regulations on Small Business. Director Richard Cordray of the Consumer Financial Protection Bureau (CFPB) testified about the new Bureau’s proposed rule – 1,099 pages long – on mortgage disclosures and its effect on consumers and small businesses, such as community banks, credit unions, mortgage brokers, mortgage companies and settlement agents. This rule is expected to impact 26,000 small business lenders, mortgage brokers and settlement agents.

The Committee emphasized the need for compliance with the Regulatory Flexibility Act (RFA), which protects small firms by requiring federal agencies to evaluate the impacts of regulations on small business. If a new regulation causes significant impact on a substantial number of small businesses, the federal agency must consider less burdensome alternatives. The CFPB is required to convene small business panels for input on its rulemaking. This new Bureau, created by the Dodd-Frank Wall Street Reform and Consumer Protection Act to regulate consumer protection, began operation on July 21, 2011.

The Committee pointed out to Director Cordray that while the Bureau took steps to comply with the RFA, there are holes in its analysis of the burdens and alternatives.  The RFA can protect small firms only if sound analysis and a commitment to finding common sense, less costly alternatives is a priority for agencies.