BREAK IN TRANSCRIPT
Mr. McKINLEY. Thank you, Congresswoman.
I rise today in a belief that America can handle the truth. Abraham Lincoln said, ``I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts.'' To that end, Speaker Boehner has been candid about the fiscal challenges facing our Nation and has put forth a balanced plan. However, as the President continues to promote his own plan, he seems to be deliberately not sharing key details with the public.
First, the plan will hurt nearly a million small businesses by treating them the same as the wealthy Americans. Secondly, the plan ignores the central driver of our deficit--government spending. It ignores that.
On the first matter, why should we lump the owner of a hardware store together with Wall Street executives and tax them at the same rate? When the President talks about the rich paying their fair share, he fails to mention that he also raises the same rate of taxes on small businesses. Earlier this week, the President told factory workers that his plan is to ``ask the wealthiest Americans to pay a slightly higher tax rate.'' Previously, he said, ``Millionaires and billionaires can afford to pay a little bit more.'' But not once did the President publicly acknowledge his plan will raise taxes on owners of small family businesses.
I'd like to give you an example of a small business owner who would fill out the tax form here, a 1040. This form is for a single woman, Mary Workman, who is in software development. She makes $50,000 in wages, and the company makes $150,000. She picks up some dividends and capital gains, so she has a total family income of $210,000. Under the President's proposal, Mary would be hit with the same tax rate equal to those of millionaires--at $50,000 in wages.
Where is the fairness in that, Mr. President?
It's one thing to ask Bill Gates, Warren Buffett, or Donald Trump to pay more in taxes, but it's something else to penalize the small businesses of Main Street, like the software developer, for example.
This is not an isolated case. According to the Joint Committee on Taxation, 940,000 small businesses will face higher taxes under this President's plan. These are not the wealthiest Americans, but they're proprietors of small, family-owned businesses that are located in every town across America. According to the report by Ernst & Young this summer, 710,000 jobs will be lost by these companies if they're taxed at the same rate as corporate America.
The President's proposal, curiously, would raise taxes on small businesses to as high as 39 percent, but for larger, mature corporations, the President is seeking to lower their tax rate to 25 percent. Although reforming and lowering the corporate tax rate is a worthy goal, neither Congress nor the President should give tax advantages to large corporations at the expense of the owners of small, family businesses.
Generally, Mr. Speaker, I am opposed to raising taxes. However, if in the spirit of compromise Congress is forced to adopt new revenue in order to achieve reductions, then Congress should insist that personal wages be separated from small business income and taxed differently. This could be done by using the information already filed on the 1040, which is just like they do on capital gains, dividends, and interest payments.
Now on to the second matter, the spending side of the equation. Surely, the President understands that raising taxes on small businesses and Wall Street executives won't sufficiently cover the deficit. Despite this reality, he consistently confuses the public by ignoring the role that reducing government spending would and should play in deficit reduction.
According to the Office of Management and Budget, this administration's plan to raise the top rates generates an average of $43 billion a year, yet we are faced with a deficit of $1.1 trillion. This new revenue, as you pointed out, Madam Congresswoman, is only enough to fund the government for 8 days. During the campaign, the President proposed that there should be $2.50 in new spending reductions for every dollar in new revenue, but now that the campaign is over, his latest plan calls for just the opposite--an unacceptable ratio of $4 in new revenue and only $1 in spending cuts.
Speaker Boehner is right: America has a spending problem, not a taxing problem. While the President has consistently told the American public that he is merely asking the wealthy to pay just a bit more in taxes, when was the last time the President also reminded the American public that we borrow 46 cents out of every dollar we spend? Congress is chasing the wrong rabbit. Raising taxes on small businesses is no more a solution to fixing the deficit than is cutting worthy social programs. The problem lies much deeper than that.
Federal Reserve Chairman Ben Bernanke admitted that the spending levels of this administration are unsustainable. Just as President Clinton declared years ago that the era of Big Government is over, this Congress needs to man up and declare the era of taxing, spending, and borrowing into perpetuity is over as well. Now is the time for the President to provide leadership, to level with the American people, and to set aside the campaign rhetoric of class warfare, division, and envy.
Small, family-owned businesses cannot and should not be painted with the same broad brush as millionaires, billionaires, and Wall Street executives. We must protect our small businesses and stop promoting the treatment of their income to be the same as that of the wealthy.
At the same time, this administration needs to admit that raising taxes on businesses will not pay the excesses of spending that has occurred over the last 4 years. We must prioritize our fiscal negotiations by putting spending reductions before addressing new revenues.
Mr. Speaker, I came to Washington 2 years ago to get something done. Speaker Boehner has shown that he understands the gravity of the situation and wants to find a solution that is balanced and realistic. I stand solidly behind him. Protecting small businesses and addressing our spending problems are too important to the economy to ignore. The situation demands that we deal in reality. Once again, Mr. Speaker, America can handle the truth if given all the facts.
BREAK IN TRANSCRIPT