http://www.cnsnews.com/news/article/geithner-taxes-small-business-must-rise Geithner: Taxes on 'Small Business' Must Rise So Government Doesn't Shrink Thursday, June 23, 2011 By Terence P. Jeffrey Treasury Secretary Tim Geithner Treasury Secretary Tim Geithner testifies in the House Small Business Committee on Wednesday, June 22, 2011. (Congressional photo) (CNSNews.com) - Treasury Secretary Timothy Geithner told the House Small Business Committee on Wednesday that the Obama administration believes taxes on small business must increase so the administration does not have to âshrink the overall size of government programs.â The administrationâs plan to raise the tax rate on small businesses is part of its plan to raise taxes on all Americans who make more than $250,000 per yearâincluding businesses that file taxes the same way individuals and families do. Geithnerâs explanation of the administration's small-business tax plan came in an exchange with first-term Rep. Renee Ellmers (R.-N.C.). Ellmers, a nurse, decided to run for the U.S. House of Representatives in 2010 after she became active in the grass-roots opposition to President Barack Obamaâs proposed health-care reform plan in 2009. âOverwhelmingly, the businesses back home and across the country continue to tell us that regulation, lack of access to capital, taxation, fear of taxation, and just the overwhelming uncertainties that our businesses face is keeping them from hiring,â Ellmers told Geithner. âThey just simply cannot.â She then challenged Geithner on the administrationâs tax plan. âLooking 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,â said Ellmers. Geithner initially responded by saying that the administrationâs planned tax increase would hit âthree percent of your small businesses.â Ellmers then said: âSixty-four percent of jobs that are created in this country are for small business.â Geithner conceded the point, but then suggested the administrationâs planned tax increase on small businesses would be âgood for growth.â âNo, that's right. I agree with that,â said Geithner. âBut just to put it in perspective, it's important to recognize why are we doing this. 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.â Geithner, continuing, argued that if the administration did not extract a trillion dollars in new revenue from its plan to increase taxes on people earning more than $250,000, including small businesses, the government would in effect âfinanceâ what he called a âtax benefitâ for those people. âWe're not doing it because we want to do it, we're doing it because if we don't do it, then, again, I have to go out and borrow a trillion dollars over the next 10 years to finance those tax benefits for the top 2 percent, and I don't think I can justify doing that,â said Geithner. Not only that, he argued, but cutting spending by as much as the âmodest change in revenueâ (i.e. $1 trillion) the administration expects from raising taxes on small business would likely have more of a ânegative economic impactâ than the tax increases themselves would. âAnd if we were to cut spending by that magnitude to do it, you'd be putting a huge additional burden on the economy, probably greater negative economic impact than that modest change in revenue,â said Geithner. When Ellmers finally told Geithner that âthe point is we need jobs,â he responded that the administration felt it had âno alternativeâ but to raise taxes on small businesses because otherwise âyou have to shrink the overall size of government programsââincluding federal education spending. âWe'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,â said Geithner. âIf you don't touch revenues and you leave in place the tax cuts for the top 2 percent that were put in place by President Bush, if you leave those in place and you're trying to bring our deficits down over time, then you have to do exceptionally deep cuts in benefits for middle-class Americans and you have to shrink the overall size of government programs, things like education, to levels that we could not accept as a country,â said Geithner. âSo to do a balanced approach to reduce our deficits you have to make modest changes in revenues,â he said. âThere's no realistic opportunity to do alternatives to doing that.â According to historical budget tables published by the White House Office of Management and Budget, federal spending has climbed from $2.89 trillion in 2008âthe year President Obama took officeâto $3.82 trillion this year, an increase of approximately $930 billion. Meanwhile, according to the National Center for Educational Statistics, although federal education spending in inflation-adjusted dollars has jumped from $71.64 billion in 1995âwhen Bill Clinton was president--to $163.07 billion in 2009âwhen Barack Obama was presidentâfederal spending still accounted for only 8.2 percent of spending for public primary and secondary education in America in the 2007-2008 school year. Historically and presently in the United States, local and state governments have funded the cost of public education. CNSNews.com is not funded by the government like NPR. CNSNews.com