GOP: Tax hikes hurt small businesses

March 14, 2009 at 12:10 PM

WASHINGTON, March 14 (UPI) -- U.S. President Barack Obama's budget raises taxes on small businesses that are vital to economic recovery, a Republican Party spokesman said Saturday.

U.S. Sen. Chuck Grassley, R-Iowa, delivering the GOP's weekly address, said Obama's budget treats Americans as "an endless source of tax dollars to pay for government spending" and that its provisions to raise taxes on those making $200,000 or more will hurt small businesses.

"The president's proposed budget raises taxes. For the vast majority of people who earn less than $200,000, raising taxes on higher earners might not sound so bad," Grassley said. "Yet a lot of small businesses are in that category. The landscaper or the general contractor with a dozen employees could land in the bull's eye."

The effect will be for those businesses to cut spending, laying workers off rather than creating jobs, he said.

"Businesses of that size account for two-thirds of the small business workforce," Grassley said. "The tax increase is equal to 20 percent of the marginal tax rate paid by those small businesses."

"Eventually the middle class gets hit," he said.

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