Feature Story

March 28, 2009

History Contradicts Claim That President's Budget Would Harm Small Business Job Creation

From Center on Budget: Comprehensive News Feed:

Critics have claimed that President Obama’s proposal to roll back tax cuts for families with incomes above $250,000 would kill job growth in the small business sector. But under the Clinton Administration, when the tax treatment of high-income families was very similar to what President Obama has proposed, small businesses generated jobs at twice the rate as under the Bush tax code.

Thus, the last two decades provide a useful test of the argument that the President’s proposed tax changes would badly damage small business job creation. Small business employment rose by an average of 2.3 percent (756,000 jobs) per year during the Clinton years, when tax rates for high-income filers were set at very similar levels to those that would be reinstated under President Obama’s budget. But during the Bush years, when the rates were lower, employment rose by just 1.0 percent (367,000 jobs).

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