NAM Disappointed By President's Endorsement Of Massive Tax Hikes On Small Manufacturers

07/23/09 -  WASHINGTON, D.C. — In response to President Obama’s statement endorsing House legislation that would impose a tax surcharge on small businesses to pay for health care reform, National Association of Manufacturers (NAM) President John Engler issued the following statement:

The NAM is disappointed with President Obama’s endorsement of a tax on small businesses to pay for health care, as proposed by the House of Representatives in America’s Affordable Health Choices Act (H.R. 3200).

The President and the Speaker have called for a new tax that would hit incomes above $1 million, but the reality is that this would impose a nine percent surtax on small manufacturers. Nearly 70 percent of manufacturers are organized as S-corporations or some other type of “pass-through” entity. When Congress decides to increase taxes on individuals, it is actually hitting small businesses and their ability to compete and create jobs.  

Manufacturers are hit especially hard by these tax increases because of the intense capital demands of modern manufacturing. A small manufacturer’s revenue is not take-home pay. It is the money needed to pay workers, provide benefits — including health care (97 percent of NAM members offer health care) — and invest in equipment.

Adding a surtax onto individual rates that are already expected to rise means that  federal tax rates will skyrocket to nearly 50 percent for these manufacturers (with state taxes adding even more burden). These new taxes will have massive negative consequences for an industry that has already lost 1.8 million jobs. 

At a time when our country is desperately trying to recover from the worst economic crisis since the Great Depression, these tax increases will have a devastating impact on our economy and cost jobs. This isn’t health care reform; it is a jobs-killing tax increase.   

The NAM urges members of the House to oppose these ill-advised revenue raisers at every possible juncture in the legislative process.