AUBURN — A local business owner on Wednesday urged the state's congressional delegation to let the Bush administration tax cuts for the wealthiest Americans expire at the end of the year.
Jim Wellehan, owner of the Lamey-Wellehan shoe stores, refuted arguments made by many Republicans and the U.S. Chamber of Commerce that eliminating the tax break for businesses with profits of more than $250,000 a year would hurt economic and job growth.
Wellehan, a member of the Maine Small Business Coalition, said the tax cuts had little impact on most small businesses like his because most don't make the $250,000 in net profit to qualify. Instead, the break would benefit wealthy owners of hedge funds and law firms.
"It makes no sense, from any perspective, to preserve the tax cuts for the wealthiest people in the country," Wellehan said. "It will just increase the wealth gap and create more of a social problem."
Wellehan's comments are a counterpoint to national organizations like the U.S. Chamber of Commerce, which argues that letting the cuts expire on Dec. 31 would stunt small business growth when the economy could ill afford it.
That view is shared by Dana Connors, president of the Maine State Chamber of Commerce. Although the chamber hasn't taken an official position on the issue, Connors said he would argue for extending all of the cuts.
Connors said that despite encouraging signs of economic recovery, business owners needed a boost of confidence, which the extension would provide.
"Frankly, (ending the cuts) would discourage business owners from making business investments," Connors said.
However, Wellehan, along with the Maine Small Business Coalition and the Maine People's Alliance, said few small businesses benefit from the tax break.
Congress' Joint Committee on Taxation, a nonpartisan panel, in August reported that only 3 percent of taxpayers with any business income would benefit from tax cuts for the wealthiest 2 percent of Americans.
The panel also projected that extending the tax cuts would add $36 billion to the deficit in 2011.
Connors said the cost to the deficit would be repaid in job and business growth.
President Barack Obama has proposed extending the cuts only for families making less than $250,000 a year and for individuals making less than $200,000, which is about 98 percent of American taxpayers.
Extending tax cuts for the wealthiest 2 percent has become a sticking point for Congress. The current Democratic majority in September postponed voting on extending the cuts until after the election.
The lame-duck session is expected to vote on an extension before the end of the year.
In a written statement, U.S. Rep. Mike Michaud, D-Maine, said he supported extending tax relief to the middle class and incentives for small businesses, "but our country can’t afford to borrow hundreds of billions of dollars to provide tax cuts to the wealthy."
Wellehan hopes Congress heeds the advice of small business owners like him and puts the money it would cost to extend cuts for the wealthiest Americans into extending unemployment benefits.
The Maine People's Alliance claims 21,500 Mainers will lose their jobless benefits over the next few months if Congress doesn't extend unemployment insurance. The statistic is supported by the Maine Department of Labor, which on Tuesday released its latest unemployment data.
Wellehan said the tax cuts wouldn't benefit his business one way or another.
"It's not going to have any impact on the people who work here except to see the wealth discrepancy increase," he said. "Whether or not we're impacted isn't critical; it's whether society functions as it should."