Republicans seize on new report linking tax cuts, jobs

new study linking tax hikes for the wealthy to the loss of more than 700,000 jobs added fuel to Republicans' near constant attacks on President Obama's plan to end tax cuts for individuals earning more than $250,000 a year.

If lawmakers allow the 2001 and 2003 Bush-era tax cuts to expire, the increased tax burden could fall heavily on small businesses that file their taxes in the individual code, a business structure called a pass-through entity, according to the study released Tuesday by professional services group Ernst and Young. 

The research was commissioned by the Independent Community Bankers of America, the National Federation of Independent Business, the S Corporation Association, and the United States Chamber of Commerce, some of the biggest advocates for the pass-through-style businesses defended in the study.

Republicans from House Speaker John Boehner to tax writers in the House Ways and Means Committee pounced on the study.

A release circulated by Ways and Means Committee Chairman Dave Camp, R-Mich., highlighted the long-term estimates in the study as evidence of Obama's policy failures on taxes and job creation.

"This report is more proof that the President doesn't understand the economy or what it takes to create jobs in this country," Camp said in the statement. "We need these employers and investors creating more paychecks, not paying more taxes."

The study does outline potential one-year impacts for 2013 based on evidence that more than 20 million workers are employed by pass-throughs that have more than 100 employees and more than 81 percent of all manufacturing companies in the U.S. are organized as pass-throughs. Those businesses pay a significant chunk of business income taxes under Obama's proposal.

Researchers estimated that the expiration would lead to a 0.5 percent drop in long-run hiring and a 1.3 percent drop in economic output the study does not specify what "long-run" means. They only specify that "roughly two-third to three-quarters of the long-run effect is reached within a decade."

The White House responded with a blog post refuting the methodology used by Ernst and Young. "The study's estimates are based on policies that are at odds with the President has actually proposed, omit key proposals the President has made and employ flawed assumptions that are at odds with respected independent analysts like the Congressional Budget Office," the post read.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

    Download
  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

    Download
  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

    Download
  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

    Download
  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care

    Download

When you download a report, your information may be shared with the underwriters of that document.