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Is Obama's tax plan a 'job-killer'?

Conservatives say the tax plan will harm small businesses – the nation's top job creators. But Obama says only about 3 percent of such firms are affected, while others call the tax-hiring link 'simplistic.'

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“A higher tax bill would deprive the most successful flow-though employer-businesses of resources they would otherwise plow back into their business,” writes Mr. Dubay in a new analysis of Obama’s plan. “These investments would allow them to compete for more business and create more jobs in the process.”

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Washington Editor

Peter Grier is The Christian Science Monitor's Washington editor. In this capacity, he helps direct coverage for the paper on most news events in the nation's capital.

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The Obama camp sees this issue differently. As Obama pointed out in his announcement, in terms of numbers his proposal would affect only about 3 percent of the nation’s small businesses.

And some of the businesses included in that 3 percent are small in name only, with revenues of up to $50 million, notes Washington Post fact checker Glenn Kessler.

Furthermore, “Romney’s assertion that taxes affect business hiring decisions is simplistic,” writes Mr. Kessler in an analysis of the response to Obama’s tax proposal.

Money used for business expenses, such as employee wages, is fully tax deductible, according to Kessler. In that context, raising the taxes of small business owners could even provide an incentive for them to hire more workers, as it would be one way of shielding income that otherwise might be taxed at a new, higher rate by Uncle Sam.

In any case, this argument is notional. Obama’s plan has no greater chance of enactment into law than does ex-GOP hopeful Newt Gingrich’s proposal for a colony on the moon. With the campaign for the general presidential election fully upon us, proposals to close the nation’s yawning deficit gap or deal with the possible expiration of Bush-era tax cuts may have to wait until after November – or even well after November.

“After the all-out election wars, the warring parties will need to lower their voices, reduce their aspirations and sweeten up their attitudes. The election may help them to understand that the electorate is not going to give either one of them single-party control of government,” writes former Rep. Bill Frenzel (R) of Minnesota, a guest scholar in economic studies at the Brookings Institution, Tuesday in an analysis of the politics of the nation’s fiscal problems.


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