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Pro-Growth is Fair

Submitted by kmorrison on Wed, 03/04/2009 - 21:40
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Unfortunately, many in America are losing track of the logistics of the economy and are getting caught up in emotion. People are angry about bailouts and white collar crooks running ponzi schemes and are becoming resentful towards big business and the wealthy. Yet we risk losing site of the real goal of turning the economy around when emotion and arguments about fairness start start trumping logic and math. The reason not to raise taxes on the rich, businesses, and capital gains is not because one loves, hates, or feels indifferently about wealthy people. The reason not to raise taxes on those of means is because they are the ones able to create jobs, and invest in the businesses that are so desperately needed right now. The argument that the rich should pay more because that is what is fair ignores the fact that, particularly in a struggling economy, increasing taxes slows growth. Consequently economic recovery slows, and that is fair to no one. In reality when the economy slumps those just getting by pay check to pay check suffer the most. The rich may not be as rich as before, but they're still rich. Those being laid off and struggling to pay their bills are hurt the most in a prolonged recession, and implementing policies that hinder growth is not fair to anyone.

Also, small business owners are being grouped into the 'rich' category in an unfair manner. If a small business owner makes $250,000 a year that becomes a rather average income if he or she has to pay two to three employees salaries with that income. Also if they are trying to grow their business, it is likely a chunk of that income is being put right back into their business. That isn't the life of the highly privileged wealthy class. We'd be well served by taking the emotion and morality judgments out of economic policy, and simply look for policies that are pro-growth.

Larry Kudlow and Donald Luskin voice their frustration about the current policies that are anti-growth. Certainly, not unemotional in their criticism, they point out why a pro-growth strategy is simply the most fair economic strategy for all Americans.

Pro Growth is What is Truly Fair

 

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Comments

Small business accounting 101

Submitted by NextRightNando on Wed, 03/04/2009 - 22:01.

If a small business owner makes $250,000 a year that becomes a rather average income if he or she has to pay two to three employees salaries with that income.

Stating the obvious - the salaries paid to employees are EXPENSES that will be accounted for BEFORE profit is calculated.

Other than that, I'm sure you totally know what you are talking about.

 

Small business tax increases

Submitted by artigiano on Wed, 03/04/2009 - 22:48.

As a small business owner I am constantly amazed how conservatives are either too stupid to understand how our accounting works. Or maybe they just pretend not to understand so they won't have to face the fact that maybe 2-5% of all small businesses will actually see a tax increase.under the  President's plan.

When my business grosses 250K in a year , after expenses, of which employee labor represents about 33%, I end up with a net income of about 40K. After Form 1040 credits and exemptions and Schedule A deductions, my taxable income is about 25K, or about 1/10th as much as I would need to make before my taxes would go up.

In order to worry about an Obama tax increase my business would have to grow 10 times and gross two and a half million dollars a year. Even then I don't think a 3% increase would give me any worry since I'm not an insufferably selfish prick.

rofl. you're doing pretty well for yourself.

Submitted by RisingTide on Thu, 03/05/2009 - 10:42.

are you making over minimum wage? ;-)

(yes, I'm cheeky for asking. no you don't need to answer)

Willful conflation of revenue with income

Submitted by johnson springs on Thu, 03/05/2009 - 10:57.

The spin-meisters and apologists for the 2% like to make the tax increases about "small businesses" which are the engine of job growth because that plays better than making it about the 2%.

I don't want to have my taxes raised, but I'm not sure I want the GOP and its apologists constantly muddying the water with this nonsense either. In the long run it is deleterious to our credibility.

So repeat after me: busines revenue is not business income is not personal income. As artigiano states, business revenues of 250K are not taxed his personal income. If his business were to file as a C corp which few small businesses do, it would not pay income taxes on its revenues either it would pay income taxes on its income.

No one cares

Submitted by Paleo-Skeptic on Thu, 03/05/2009 - 06:14.

... if the wealthy are to create jobs in New Delhi or invest in Asian trading markets.

The wealthy have all kind of write-offs anyway.

If they were struggling to make it and on the verge of losing their home, then maybe they would get a bit more sympathy.  But don't count on it. 

Biggest GOP lie is that the rich create jobs for the poor.

Submitted by artigiano on Thu, 03/05/2009 - 08:48.

The GOP would have you believe that if the rich see a tax increase then they will stop their magnanimous efforts to create jobs for the poor. Total bullshit!

Rich people do not create jobs, market opportunities create jobs. If there is an unfilled niche in the marketplace that is worth say one billion in gross sales per year on paper projections. Then the only factor in whether or not that niche gets filled is how much capital must be put at risk in order to exploit the niche. Someone will find a way to get the profit.

Tax rates are hardly any consideration because there is always a way around that. If I am a big corporation I have a billion accounting tricks at my disposal to turn my 35% nominal rate into a 7% actual rate. If I am a small fry start up with deep pocket silent partners I can split the profits twenty different ways or "reinvest" in the business by hiring outside consultants like the wives and daughters of all the silent partners.

Heck, you might even find a "crazy" Richard Branson or Ross Perot type who has so much cash he's willing to take a gamble and put up 2 or 3 billion and wait for the profits to catch up in year 5 or 6.

One thing is guaranteed, that niche will be exploited by someone. I don't care if the top tax rate rises to 95%. Someone will find a way to squeeze that 5% sliver and put the public's consumer cash in their pocket and "create" jobs.