Among the bad ideas in President Barack Obama’s $3.8 trillion budget proposal is a plan to hike various federal taxes on families earning more than $250,000 per year or individuals earning more than $200,000 per year.
Mr. Obama and Democrats in Congress seem to think “soaking the rich” is a source of free money with no negative consequences. They hope to bring in hundreds of billions of dollars with the tax increases.
What Mr. Obama doesn’t understand is that many of “the rich” are small-business owners. Small businesses are the backbone of our economy, and we desperately need them to be hiring workers. Instead, as they face tax increases, they are more likely to lay off employees.
That’s a horrible approach in a recession. The official unemployment rate is 10 percent. But when the people who have stopped trying to find work or who can find only part-time jobs are added, the true rate comes closer to 20 percent.
The president does propose some aid to businesses. But isn’t it more sensible to keep their tax rates lower to begin with rather than to employ a confusing “give here, take there” scheme that may wind up being of little value to small businesses?