The Obstructionists Are Wrong Telling the Rich to Pay their Fair Share Will NOT Destroy Small Businesses

Read CTJ's new fact sheet: House Surcharge Proposal Unlikely to Have Noticeable Impact on Small Businesses

Sign-on Letter for National Organizations in Support of the Proposed Surcharge to Fund Health Care

Throughout the debate over health care reform, Citizens for Tax Justice and other organizations working within the Rebuild and Renew America Now (RRAN) coalition have suggested a variety of ways to eliminate or limit loopholes and preferences in the tax code. These changes would make our tax system more rational and also raise revenue to partially finance the health care overhaul. Some lawmakers object to any proposals that would impact special interests. Some even rise to defend groups that do not really have anything to fear (like the few non-profits that seem to think contributions will decline if itemized deductions are limited for the rich).

So Democratic leaders in the House of Representatives proposed to leave untouched the various loopholes and preferences in the tax code and simply ask the rich to finally pay their fair share in a more straightforward way. The leaders of the three House committees with jurisdiction over health care proposed a surcharge on adjusted gross income above $350,000 (or $280,000 for single taxpayers) with three graduated rates. Health care legislation including the surcharge has been approved by the Ways and Means Committee and the Education and Labor Committee, and is still being debated in the Energy and Commerce Committee.

(See our previous analysis and data on how the surcharge and other proposals would impact people in each state).

Well, it turns out that some members of Congress don't like this idea either. Most of those objecting to the surcharge are simply opposed to the type of comprehensive health care reform that will rein in insurance companies by forcing them to compete with a public plan and barring them from discriminating against the sick.

But some lawmakers who object to the surcharge may be confused about its potential impacts on small business. Twenty-two House Democrats, mostly freshman, signed a letter sent to House Speaker Nancy Pelosi last week claiming that the surcharge would hurt small businesses.

They're wrong. As a new fact sheet from Citizens for Tax Justice explains, everything you're hearing about small businesses from opponents of the surcharge is incorrect.

As CTJ explains:

1. Only about one in one-hundred taxpayers are rich enough to be subject to the surcharge.
2. The surcharge would be paid mainly by the richest one percent of taxpayers and would amount to less over the next decade than this group received from the Bush tax cuts over the previous decade.
3. Only a tiny fraction of small business owners would pay the surcharge.
4. Even for those few small business owners who would pay the surcharge, the surcharge would have no effect on their hiring decisions.
5. The health care reform that will be funded by the surcharge will make it cheaper to hire workers.

The RRAN coalition is urging national organizations to sign a letter in support of the surcharge by COB Wednesday. The signatures are being collected online by the Coalition on Human Needs. (Remember, you should only sign this letter if you are authorized to sign on behalf of a national organization.) A pdf of the letter with the list of organizations signed on so far can be found here.

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