Two-edged sword- The over $250,000 mark hits right at the heart of small business ownership. Over 1/2 (roughly 52%) of all employees work for small businesses whose ownership would be hit by the over $250,000 model. 99% of all US business entities are small businesses Between 70-80% of net new job creation is by small businesses So, there is great danger with the over $250,000 model and it would probably hasten a huge economic meltdown resulting in rapid unemployment and business failure. The under $250,000 model doesn't work either because those making less than $250,000 are already being squeezed by bad debt to savings ratios, and inflationary pressure due to excessive govt. debt The problem with footing the bill for all the excessive debt of the last 8 years is that the solution is going to be bad for everyone; really the only question left is timing. The only people that might be able to afford the bill are the Buffets of the world. Good luck pulling them in to it.
LOL - How many of you have ever owned a small business? How many have actually made more than $250,000 a year running that business? It is not hard to avoid the income tax increase, if you own the business, you can take a dividend out of it for instance. There are tons of ways to avoid the increase, and the vast majority of small businesses do not make more than that anyway. As someone that owns a small business, if I have to pay the increase....so be it...we need to leave this country in better shape for our kids and grand kids. DD
Agreed. If there is any way possible to pay less taxes, it's by owning a small business. There are so many freaking loopholes that its crazy.
This stat is incredibly questionable, at best, for many reasons: http://www.gather.com/viewArticle.jsp?articleId=281474977453286 I can tell you from my own knowledge that this statistic is probably wrong and ultimately meaningless even if true. By the letter of this statement, you appear to count all US Business Entities - this includes an incredibly large chunk of holding companies, LLP's, SPV's and other alternative entities formed solely for transactional or tax purposes, and that have no employees and no revenue, as small businesses. Come on. And even if it were true - almost none of them make over 250k in income so it's moot in any event.
Crappy poll. Everyone needs to pay. I'd expect most of the dollars (from citizens, ignoring businesses for now) to come from the under $250k group because they are more numerous. But, the over $250k set should be carrying a larger burden individually because they can.
Good post in terms of addressing a common and deliberate (not in your case) confusion created by the wealthy opponents of tax paying. They try to piggyback on the warm fuzzies created by the concept of "small business". With no clear definition of "small business" they can use the term to generate all sorts of bogus statistics to justify the Reagan-Bush status quo of tax breaks for the wealthy. 1) What percentage of Americans are small business owners who NET OVER 250,000 per year. (I bet it is very small. 2% or less). 2) What percentage of Americans who make over $250,000 are small business owners? (pretty small if you discount capital gains and investment income). 3) You say 52% work for small business netting over $250K. Where do you draw the line? Is $2 million per year still seen as "small business". If a business owner nets $250,000 to $500,000, if they pay say $25,000 more in taxes it is not valid to assume they then will say: "Ok, that's it. I am laying everyone off and will close down the business". That is not the way it works. They stay in business. Nobody gets laid off. They just have less money after they pay their taxes.
The point is, the bill is too big for all the categories unless you tap the super-mega-wealthy (personal assets/resources over 100 billion) who I am convinced are not the ones who will be footing the bill. Think of it this way. The economy cannot foot the bill (the debt is trillions out of control with no end to govt. spending in sight- even though the end to consumer debt may be nearing) so it is a matter of how you are going to spread the pain. Do you start with the average worker and hit him with a sledge hammer? Or do you start with the average small business owner and use suffocation on the workforce? Or do you divide it up and let the weak go by way of hammer and the rest suffocation? The current economic model is solely designed to prevent panic for as long as possible. Small businesses- I've owned 2. Worked in management for 2. A good % of the small businesses that make it and employ that 52% of the US workforce are definately in the $250,000+ category. Check out the Small Business Assoc. report dated 2005 for the stats.
That's because the SBA is playing it loose with the numbers in order to exaggerate the impact. For example, here's a small business according to the SBA definition (500 employees or less) www.wlrk.com This place had net profits of $474 million spread out among its 81 or so partners last year. The mean small business owner's income, according to other stats, is about $35,000.
Rhester, If you have owned a small business, then you know that there are ways to shelter the income or to use it more efficiently other than just as profit. For instance, buying a company car, paying for gasoline for yourself, business expenses, dividend payments. The vast majority are not going to be hurt one bit...and if you make $300k and have to pay 39% instead of 35%...BIG DEAL !!! You weren't using that money to HIRE a new employee, but to pay yourself...so pay yourself a teensy bit less. DD
Thanks, Sam. It is maddening to see the GOP anti-taxers hide behind the concept of "small business". Rhester, so you are saying that in all the small busineses that you were involved you would say: "Screw it. I am having major lay offs or shutting down just because, even though I have PROFITS IN EXCESS OF $250K, perhaps a million, I will have to pay 10% more tax or our net? Get real. Don't just rely on conservative talking points.
For times sake if you wouldn't mind researching this, but that is the majority of all your franchises- burger kings, arbys, subways, chilis etc; aamco, ramada inns, etc etc etc there are over 5000 separate franchises in the US. Plus your sole proprietorships- real estate offices, funeral homes, construction companies, auto repair, dealerships, etc- a really long list. While it is true that start ups are rarely making over $250,000, a majority of established sole proprietorships and franchises are in range. According to the SBA, 99% of all individual US businesses are considered small businesses. I don't know how many make over $250,000 but I am certain not enough to pay off the debt and also the ones who make over $250,000 and have assets/income over $250 million I am quite sure aren't considered small business owners and aren't going to pay either. Not all small businesses make over $250K. Many don't. Many do. $2 million could be a small business. Starting at $2 million vs. $250K would be a better place, but I still don't see it getting the debt of the last 8 yrs. paid without hurting the economy. One reason small businesses make money in that range is that they are very successful, well run, and have a good workforce. $25,000 from small businesses a year won't begin to pay off the debt or stop the crisis. That doesn't deal with the size of the debt and the increase in spending/debt that is taking place. But I can say for certain that a 5-10% hit to profits like you are suggesting would definately impact any small business especially for the same reasons that those making under 250K cannot pay off the debt- inflationary policy by the Fed and moer govt. spending. My whole point is that we cannot pay off the debt without alot of pain to most everyone unless we revitalize the industry and value of the US economy which means moving from a service economy to an production based value added economy, reduce significantly govt. spending (which isn't going to happen) and we would have to stop borrowing money at all levels. What the Fed has done during the last 20 years is manage pretty well a bunch of credit bubbles that now are just getting too large to manage. IMHO
No I am not saying that. I am saying the debt is too large to lay at their feet. 10% is not enough. I think the leveraged debt globally might be around 50 trillion, but I don't know for sure, I only have read about it. Just the coming 2 trillion $$ deficit is enough to sink most any wage class at this point in the credit cycle.
Rhester, Why would you look at the debt from only a taxing stand point? We are also going to have to cut spending as well. The burden is going to be carried by everyone. DD
I agree 10% is not enough. Their are lots of corporate and investor types that make in excess of $250k. It is a start. I like the Buchanan idea of cutting back on Empire. As far as your idea that we really can't tax the very rich, even if we try, we can succeed somewhat, but only if we try. One good step is to limit their ability to buy elections, lobby and therebye twist the tax code to their advantage. Again, tough, but guaranteed failure if we don't try.
I just think we are borrowing way more than we can pay back. Especially during the last 8 yrs. I know very little about the economy (duh!) I just go by my own household finance. If you borrow more than you can afford and you are borrowing more to keep going, it probably isn't going to end well. So really I don't think it matters who gets the hit first, those making over 250K or those making under 250K- that's why I said double edged sword. both groups are likely to hurt alot before things get back to where we have a healthy economy with a healthy middle class... both groups free of unreasonable debt with significant savings and liquidity.
Yes, but you don't build the middle class by taxing more than they can afford... I would be in favor of a pure consumption tax....but that would never fly... DD
