Small-business Tax Hysteria: Let's Do the Math

[blueapplepaste]

Last week, Senate Democrats decided, at least for the moment, not to pursue the Obama administration’s plan to let the Bush tax cuts expire for those in the top tax brackets. Most Democrats supported the plan. Most, if not all, Republicans opposed it, arguing primarily that increasing taxes on the wealthiest Americans would be devastating to small businesses.

First of all, it’s true, as many articles on the topic point out, that most small businesses will not be affected if we let the tax cut expire for the top 2 percent of wage earners. That said, those businesses it does affect will be, by definition, the most successful small businesses and the ones most likely to be in a position to hire new employees.

Basically, the actual monetary impact is negligible for small businesses.

As a personal anecdote, my father owns a small business that will be impacted by letting the tax cuts for the top 2% expire. But as he points out, it is better for him and his business to pay a little more in taxes if the long term economy is helped to be stabilized. At least his business is somewhat tied to the economy and his hiring (or lack of hiring) is completely independent of taxes. If he pays a little more, that won't cause him let people go, or not to hire someone. An economy gather steam will.

 

[sinner/SAVED]

For someone with taxable income of $250,000 the difference in their tax bill will be less than $1500.

 

[Voegelin]

The goal is the destruction of the middle class and this Obama tax hike is just another manifestation of it.

 

[blueapplepaste]

The goal is the destruction of the middle class and this Obama tax hike is just another manifestation of it.

You do know he's proposing extending tax cuts for the middle class? Or is your argument that the middle class will suffer if the wealthy elite don't have an extra $1500 in their pockets?

 

[Staccato]

You do know he's proposing extending tax cuts for the middle class? Or is your argument that the middle class will suffer if the wealthy elite don't have an extra $1500 in their pockets?

That's precisely his argument.

You see, if you subscribe to GOPnomics, the belief is that the $1500 you mention, or any amount really, would otherwise have gone on directly into the pockets of the middle class via increased wages for the workers, purchase of additional goods or services or even the creation of new jobs.

Where it certainly doesn't go into the pockets of the wealthy elite as an imperceptable increase in profit margins. Nope. Not at all.

 

[Belk]

The goal is the destruction of the middle class and this Obama tax hike is just another manifestation of it.

Yes. A 3% tax increase on income over 250K will destroy the middle class.

 

[lordbt]

But as he points out, it is better for him and his business to pay a little more in taxes if the long term economy is helped to be stabilized.

Except that there is no evidence that this increase in taxes will do any of that. Your father will simply be throwing good money after bad. And as a businessman, he will know the pointlessness of doing that.

 

[HerbieHeadleyJr.]

Basically, the actual monetary impact is negligible for small businesses.

snip anecdote

So, may I gather now that the Democrats "plan" is that it is OK to Kill "small business" as long as most "small business" might not be effected based on articles?

Some plan.

I would think with the unemployment numbers as they are, that would qualify as a negative effect.

 

[lemmings]

Except that there is no evidence that this increase in taxes will do any of that. Your father will simply be throwing good money after bad. And as a businessman, he will know the pointlessness of doing that.

Most of our tax money goes to infrastructure of some sort. Education, roads, public health, maintenance, ect. If your business is somehow dependent on one of these utilities, and most of them are, it is in your best interest to help maintain these utilities. If you are a technology firm, for instance, you will need future engineers to remain competitive, to do this, education needs proper funding. If you sell cars, it is in your interest that there be roads for people to drive on. If a moderate increase in taxes insures that the infrastructure remains operational, it is in your best interest.

There are other, less direct, examples. In governments with extremely high taxation rates, businesses have been known to hide their profits in investments. If your company makes 20 thousand a month in profits and the government wants 80% of these, it would be absurd to give away 16 thousand. Instead, you invest in new equipment and that improves the company's net worth in the long run.

 

[Harpuia]

So, may I gather now that the Democrats "plan" is that it is OK to Kill "small business" as long as most "small business" might not be effected based on articles?

Some plan.

I would think with the unemployment numbers as they are, that would qualify as a negative effect.

Is there some secret "business tax" that apparently is going to come up if the Bush Tax Cuts expire on those ~$250,000/yr?

Does anyone know how difficult it is to make $250k/yr? One of the most successful small pizza shops I ever seen ran 2 stores in this town and made ~$400/day after profits. They would have needed to run 2 more stores, maybe 3, to reach this level of profit.

 

[Umaro]

The thing I want to know is that if the tax cuts for the wealthy are supposed to help small businesses, why hasn't it helped for the last 10 years? Where was all the job growth? Where was all the trickled down? And why does no one ever seem to answer me when I ask this?

 

[HerbieHeadleyJr.]

The thing I want to know is that if the tax cuts for the wealthy are supposed to help small businesses, why hasn't it helped for the last 10 years? Where was all the job growth? Where was all the trickled down? And why does no one ever seem to answer me when I ask this?

For the first time in over 40 years, congress had a Republican majority.

And the Republican congress only had a very slim majority to pass legislation.

One senator changing party afiliation was a "big (bleep) deal".

 

[lordbt]

The thing I want to know is that if the tax cuts for the wealthy are supposed to help small businesses, why hasn't it helped for the last 10 years? Where was all the job growth? Where was all the trickled down? And why does no one ever seem to answer me when I ask this?

Prior to the crash at the end of 2008, unemployment was quite low.
Portal Seven | Unemployment Rate - US

 

[lordbt]

Most of our tax money goes to infrastructure of some sort. Education, roads, public health, maintenance, ect. If your business is somehow dependent on one of these utilities, and most of them are, it is in your best interest to help maintain these utilities. If you are a technology firm, for instance, you will need future engineers to remain competitive, to do this, education needs proper funding. If you sell cars, it is in your interest that there be roads for people to drive on. If a moderate increase in taxes insures that the infrastructure remains operational, it is in your best interest.

Except that is not where this new tax money is going to go. At best, it is going to be thrown into the bottomless pit known as our national debt. At worst, it is going to be wasted on some make-work project. All of the things you mentioned are already being funded. But the point is this, if your goal is to stimulate the economy, is that done best by sending $1500 checks to the IRS? Or leaving that $1500 in the hands of individuals?--to whom it rightly belongs, I might add.

 

[HerbieHeadleyJr.]

At midnight tonight, there will be millions of wallmart customers bringing thier carts to the "race" to the cash registers, to have the funds to pay for thier shopping, because that will be when the "government" "funds" will be available on thier government cards.

 

[JustOneWay]

At midnight tonight, there will be millions of wallmart customers bringing thier carts to the "race" to the cash registers, to have the funds to pay for thier shopping, because that will be when the "government" "funds" will be available on thier government cards.

Do you believe that government welfare checks or "funds" have not been distributed on the first of every month for years?

This has nothing to do with the topic. Do you have any point here?

 

[HerbieHeadleyJr.]

Do you believe that government welfare checks or "funds" have not been distributed on the first of every month for years?

This has nothing to do with the topic. Do you have any point here?

My point was that stores are noticing a massive increase in the 12:01 am mark from the first of the month.

Why are they noticing this you ask?

Because of the increase of this type of customer.

It really is noticed.

 

[JustOneWay]

My point was that stores are noticing a massive increase in the 12:01 am mark from the first of the month.

Why are they noticing this you ask?

Because of the increase of this type of customer.

It really is noticed.

Yes, plenty of people are out of work and still need food and clothing....you never heard of capitalism?

Your point has nothing to do with the topic, unless you are trying to tell us that Walmart is small business....

 

[HerbieHeadleyJr.]

Yes, plenty of people are out of work and still need food and clothing....you never heard of capitalism?

Your point has nothing to do with the topic, unless you are trying to tell us that Walmart is small business....

Well, yes plenty of people are out of work and the stores have also noticed that food stamps are very much on the increase as well.

We should tax more job producing business to maintain this "plan".

 

[sinner/SAVED]

Is there some secret "business tax" that apparently is going to come up if the Bush Tax Cuts expire on those ~$250,000/yr?

Does anyone know how difficult it is to make $250k/yr? One of the most successful small pizza shops I ever seen ran 2 stores in this town and made ~$400/day after profits. They would have needed to run 2 more stores, maybe 3, to reach this level of profit.

My business grosses over $5 million every year. Over 50 employees currently. We have NEVER hit $250000 in profit.