The Intellengencer - McKinley Cautions Obama on Taxes

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By Joselyn King

Rep. David B. McKinley believes it is unfair to tax small businesses at the rate of major corporations, and he is urging President Barack Obama to consider the negative effect his most recent "fiscal cliff" proposal will have on the nation's small businesses.

McKinley, R-W.Va., spoke this week on the House floor about Obama's plan to address the fiscal cliff, and he sent a letter to Obama asking him to "please prioritize the fiscal negotiations by putting spending reductions before addressing revenues."

Obama has been holding firm to his plan to raise tax rates for the wealthy in exchange for making cuts to federal entitlement programs.

But McKinley criticized Obama's proposal for not differentiating between small businesses and large corporations, and for treating small businesses "the same as the wealthiest Americans." McKinley also believes Obama is ignoring "the central driver of our deficit - government spending."

"On the first matter, why would we lump the owner of a hardware store together with a Wall Street executive and tax them at the same rate?" McKinley asked in the letter. "When you talk about the rich paying their fair share, you fail to mention your plan also raises the same rate of taxes on small businesses.

"Earlier this week you told factory workers that your plan is to 'ask the wealthiest Americans to pay a slightly higher tax rate.' Previously, you've stated that 'millionaires and billionaires can afford to pay a little bit more.' Not once have you publicly acknowledged your plan will raise taxes on owners of small family businesses."

McKinley cited figures from the Joint Committee on Taxation noting that 940,000 small firms will face higher taxes under the plan, and an Ernst and Young report noting that 710,000 jobs would be lost "if small businesses are taxed at the same rate as wealthy executives."

"These are not the 'wealthiest Americans,' but are the proprietors of small, family owned businesses in every town in America ... " McKinley said. "Generally, I am opposed to raising taxes. However, if in the spirit of compromise Congress must adopt new revenue in order to achieve reductions, then Congress must insist that personal wages be separated from small business income and tax them differently."

This could be done using the information already filed on the 1040 tax form, just like taxpayers report capital gains, dividends and interest payments.

"On the second matter - the spending side of the equation - surely you understand that raising taxes on small businesses and Wall Street executives won't cover the deficit," McKinley added. "Despite this reality, you consistently confuse the public by ignoring the role cutting spending will play in deficit reduction."

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