Sen. Susan Collins is to be commended for her willingness to discuss raising revenue as a way to answer questions about the nation’s budget and deficit.

There is no doubt that, after a supplemental budget in 2012 that made $1.5 trillion in cuts to services that help the most vulnerable members of our community, it is time to make our tax system more fair and increase the amount of revenue collected from the wealthy.

Ending the Bush tax cuts on earned income over $250,000 is the most direct way to immediately raise money that would help lower the deficit, adding almost $1 trillion over the next decade.

Unfortunately, small businesses are being used as the curtain behind which elected officials hide to avoid taking a stronger stand on behalf of tax fairness.

To be clear, 97 percent of small business owners earn less than $250,000 a year in net personal income.

But, under the definitions used by some politicians to argue for continued tax cuts for the wealthy, Donald Trump and the Kardashians would count as small business owners.

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The kinds of small businesses they’re talking about don’t have a whole lot in common with Dave Mongeau’s Fusion Bistro (six employees) in Sanford, or Mary Zarate’s Z Fabrics in Portland (two employees), or the Bangor Radiator and Service Center (four employees), all members of the Maine Small Business Coalition, which represents 3,400 small businesses in Maine.

In search of a solution, Sen. Collins has floated the idea of excluding small business income from higher tax rates on the wealthy.

While the notion of a “small business carve-out” may stem from genuine concern for the health of small businesses, the solution is misplaced.

Creating a new loophole would only give millionaires and billionaires another way to game the system and avoid their tax responsibility by disguising their earnings as “small business” income.

A “Kardashian carve-out” would be no friend to legitimate small businesses.

Shielding the wealthy from their tax responsibility would force greater sacrifice by middle-class and low-income families in the name of deficit reduction.

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It would only exacerbate the most acute problem faced by small business owners — lack of consumer demand.

That’s why even those few Maine business owners who do receive more than $250,000 in personal income from their businesses often favor a higher tax rate.

Who better than a small business owner to understand the importance of a balance sheet that works for today while simultaneously planning for the future?

If a business owner is doing well enough to net $250,000 a year, we are confident that those business owners understand the importance of paying their fair share.

As Maine Small Business Coalition member Jim Wellehan, owner of Lamey-Wellehan Shoes, noted recently: “It makes no sense, from any perspective, to preserve the tax cuts for the wealthiest people in the country. It will just increase the wealth gap and create more of a social problem.”

We believe, as Sen. Collins writes, that successfully navigating the fiscal showdown is a national imperative.

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As a small business organization, our members understand that ending these tax breaks for the wealthy would help their ability to grow the economy.

They are frustrated that a warped idea about what a small business is and what small business owners want has been allowed to shape the political discussion. Our members are speaking clearly from Aroostook to York: Let these tax cuts for the wealthy expire.

Kevin Simowitz is an organizer at the Maine Small Business Coalition.

 


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