Health Care Plan Returns to Pre-Reagan Tax Rates; Small-Business Owners Warn of Impact

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Byline: David M. Dickson, THE WASHINGTON TIMES

Small-business owners are warning that the economy would suffer under a health care bill proposed by House Democrats, which would drive tax rates for high-income taxpayers to levels not seen since before President Reagan's tax reform of 1986.

The top federal income tax rate, which Mr. Reagan and a bipartisan Congress lowered from 50 percent to 28 percent, would reach 45 percent in 2011 if Congress and President Obama enact the surtaxes that are part of the health care reform plan that House Democrats announced Tuesday.

Small-business owners, who would take a direct hit from the surtaxes, expressed dismay over the proposal, saying it would force them to curtail hiring and reduce wages amid the worst recession in a generation.

If they institute a 5 percent surtax on income, it will have a severe impact on small businesses that are already hurting, said Michael Fredrich, whose Wisconsin company, MCM Composites, molds plastic parts.

We run maybe three days a week, sometimes four days a week, sometimes zero days, he said. I can tell you that at some point, people ... running a small business are just going to say, 'To hell with it'"

Not everybody is worried about the proposed tax's impact on business.

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