In the following Fox news interview of an accountant and a CEO of a business, a tape of Obama speaking to an audience at the White House is played a number of times. On the first showing Obama says “raising taxes on millionaires and billionaires, using the pre-Bush tax cut rates, will raise hundreds of billions of dollars and solve the debt crisis”.
Upon hearing this the CEO says raising taxes on those whose income is over $250,000 using pre-Bush tax cut rates would bring in only $82 billion assuming those taxed did not change their business habits after the raise; in addition some of the businesses might fail and others would not be able to hire new employees.
Note how clever but dishonest Obama is, in saying millionaires and billionaires, surely knowing full well he is fooling people who think he means those whose income is in the millions and billions, not realizing his definition of millionaire is one with income exceeding $250,000. Then in a matter of seconds Obama himself proves this point by saying “the 98% of taxpayers who earn less than $250,000 will not have their taxes raised at all (and he emphasizes this point). It’s not clear if he realizes he has just in effect said that the 2% earning more than $250,000 are the millionaires and the billionaires. But no matter, Obama must really think that a significant majority of people are dumb and won’t catch the misleading play on words.
The truth is that about 27 million small business owners who would be hit by this tax are operating on a razor thin profit margin of about 3%; Profit = (income minus expenses which can be substantial if employees are hired). Thus, barring any kind of relief, his profit margin becomes too low to continue, leading to business failure or having to reduce the number of employees, which in turn leads to decreased production and smaller income. Eventually a lower income may mean the businessman may not be able to pay fixed or possibly rising costs to maintain his family and the business, leading to another business failure and jobs lost by his employees.