Treasury Secretary Timothy Geithner admitted on Wednesday that the administration's budget plan will, in fact, raise taxes on small businesses. However, it's a move he said is necessary and justified because revenues must increase in a way that's "fair to people as a whole.”
Geithner's testimony came after he was confronted by Rep. Renee Ellmers (R-NC) on the administration's proposal to raise taxes on those earning above $250,000. Many small business owners file taxes the same way individuals do, giving the appearance that they are bringing in higher earnings.
“Looking into the future, you are supporting the idea of taxation, increasing taxes on those who make $250,000 or more. Those are our business owners,” Ellmers said. Geithner responded that it would only affect “three percent of your small businesses.”
When pressed further by Ellmers, Geithner revealed that the motivation behind the increase is based on fairness.
“But just to put it in perspective, it's important to recognize why are we doing this," he explained. "You know, our deficits are 10 percent of GDP, higher than they've been since any time in the postwar period really. We have a big hole to dig out of, and we have to figure out how to do that in a way that's balanced, good for growth, fair to people as a whole.”
Watch the exchange below via CNS News:
“We're not doing it because we want to do it, we're doing it because we see no alternative to a balanced approach to reduce our fiscal deficits,” Geithner said later.
But that's not entirely true. Geithner and the administration to have an alternative. Congressional Republicans are proposing an alternative to tax hikes that would cut about $2 trillion in spending over 10 years.
"Sadly, the Democrats' response has been a mystifying call for more stimulus spending and huge tax hikes on American job creators. That's not serious, and it is my hope that the president will take those off the table on Monday so that we can have a serious discussion about our country's economic future," Senate Minority Mitch McConnell said today.
Read more of Geithner's quotes at CNS News.