Regardless of how today’s elections shake out, the next president and Congress will have to deal with the so-called “fiscal cliff”: the set of tax increases and spending cuts that were scheduled to hit on January 1st by the 2011 debt ceiling deal. The amount of fiscal contraction included in that deal would be larger than several of Europe’s austerity packages, which have stunted growth and driven up debt.
But already, Speaker of the House John Boehner (R-OH) is trying to ensure that a deal to avoid the fiscal cliff does not involve tax increases for the wealthy:
[Boehner's] not willing to even consider hiking taxes on people making more than $1 million — something that’s been floated in the past as a possible compromise by members of both parties.
“We’re not raising taxes on small-business people,” Boehner told POLITICO during an interview in an Italian restaurant here. “Ernst and Young has made this clear: It’s going to cost our economy 700,000 jobs. Why in the world would we want to do that?
Boehner also told National Journal, “I think it’s important that we avoid the fiscal cliff, but that doesn’t mean I’m interested in raising tax rates and killing jobs.”
Conflating small businesses and millionaires is a favorite tactic of Boehner’s, but has no basis in reality. Less than 1 percent of small business owners are millionaires, meaning the vast majority would be untouched by a tax increase on income above $1 million. Plus, even if a millionaire owns a small business, he or she should be taxed like a millionaire, not given special treatment for how that million was earned.
The Ernst and Young study to which Boehner referred has also been contradicted by a vast amount of research showing that increasing taxes on the wealthy has little to no effect on job creation. A recent Congressional Research Service report found no correlation between economic growth and the top tax rate, a finding so hard for Republicans to swallow that they forced CRS to pull the study offline.