MESSINGER: Tax hikes aimed at the rich hit everyone

Small-business owners aren’t wealthy - they’re just taxed as if they are

It is time to set the record straight. Small-business employers and their employees face a looming crisis come Jan. 1. That is when hefty tax increases will take effect if Congress does not act to reinstate the 2001 and 2003 tax rates. Worse, there is a misperception among policymakers and the general public that increases to the top-tier rates will only be a tax on the rich.

Our company, Power Curbers Inc., is a manufacturer that makes and sells concrete paving equipment. We were founded in 1953 and are still a family-owned company that grosses more than $20 million per year and employs more than 130 workers at our facilities in Salisbury, N.C., and Cedar Falls, Iowa. Like many other manufacturers, we have struggled through this crippling recession by making difficult pay, time and expense cuts - cutting anything and everything we can just to stay above water. We are doing better than we were a year ago, but we are still struggling. We face a great deal of uncertainty ahead, and much of it comes from the policies being created in Washington - especially the tax increases.

Back in 2001 and 2003, when Congress initially passed legislation lowering tax rates across the board, the economy was struggling, much like today, and manufacturing had been hit especially hard by the 2000 recession. Congressional action cut tax rates for individuals and businesses and opened growth opportunities that sustained us for many years. We were all working together then to bring our economy back from the devastation of the Sept. 11, 2001, terrorist attacks and the recession. Tax cuts to spur the economy had bipartisan support, and they worked. Now we are faced with a far greater economic challenge and stubbornly high unemployment, yet some elected officials want to raise taxes. This misguided approach will make employers even less likely to grow and expand. We simply will not make any moves until there is an incentive to do so.

However, there is a perception among politicians and pundits that letting the top-tier tax rates expire and revert to the higher, pre-2001 levels will simply increase taxes on the wealthy. That is not true. Seventy-three percent of manufacturers file their business taxes at the individual rate - including Power Curbers Inc. Let there be no doubt, these burdensome tax increases will hit small manufacturers like us, and they will hit hard.

As a result, instead of reinvesting, hiring and expanding, employers are going to make more cuts. This concern is not unique to us but something I hear from other manufacturers as well - forcing difficult choices regarding wages, benefits and other actions that could have negative consequences for employees. As hard as the tax increases will be on employers, they will hurt employees just as much.

My employees understandably are very concerned - not just about the tax increases they may face if Congress fails to act - but about their jobs, especially when they hear news of policies that will burden their employer with more costs. Charles Lamb, a Power Curbers employee and a talented metalworker, shared his thoughts on this issue with me. He and his co-workers are worried about pay-rate freezes, reduced work opportunities, from 36 to 32 hours per week, and rumors of downsizing. They understand that tax increases and policies that add costs hurt businesses and their employees and only contribute to more uncertainty.

Manufacturers are America’s job creators and offer quality, high-paying jobs. Placing even more burdens on them at a time of uncertainty only makes it harder to create those desperately needed new jobs or contribute to economic growth. The longer politicians equivocate, the more harm they create, as the uncertainty spreads from employer to employer and begins to trickle down from employee to employee. Employers already are delaying hiring decisions, reducing investments and making other cuts to help manage the rising costs associated with the tax increases. This is precisely the wrong message to send to America’s job creators.

We urge Congress and the administration not to raise taxes on small businesses. Instead, extend the current tax rates to alleviate uncertainty and help get jobs growing again.

Dyke Messinger is president of Power Curbers, a member of the National Association of Manufacturers.

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