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Obama: Lower Corporate Taxes; Keep Small Business High

Discussion in 'News & Current Events' started by Don, Jul 30, 2013.

  1. Don

    Don Well-Known Member
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    http://m.weeklystandard.com/blogs/o...28-corporations-40-small-business_742312.html

    How does keeping small businesses at almost 40% while reducing corporate rates to 28% make any sense?

    What about all those 99%ers that were so anti-corporation, and causing so much controversy while the administration sat back and basically encouraged them? What must they be thinking?

    Why does this strike me as a move to help Democrats in the 2014 elections?
     
  2. InTheLight

    InTheLight Well-Known Member
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    Article is very misleading, actually shamefully misleading. While he did "raise the top individual income tax rate", to 39.6 percent it is NOT "paid by many small businesses". Only about 5% of small businesses, and only those that are structured as LLC's or S-Corps pay this rate, and even then, most of these entities do not employ more than a handful of employees. These types of businesses are typically dentists, doctors, accountants, financial advisers, and yes, plumbers. Disclaminer: I opposed the raising of the top marginal rate to 39.6%.

    The reason he would lower corporate tax rates to 28% is because that is the segment that would quickly hire more people. Your local dentist is not going to hire another dental assistant or receptionist if they get a $12,000 tax cut next year, so it makes some sense (not much, but some.)

    That they've been sold out to corporate America by another lying politician?


    Because almost everything a politician does has an angle that involves retaining power and re-election.
     
    #2 InTheLight, Jul 31, 2013
    Last edited by a moderator: Jul 31, 2013
  3. Revmitchell

    Revmitchell Well-Known Member
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    There is no real foundation to suggest that only big corps will do the hiring.
     
  4. InTheLight

    InTheLight Well-Known Member
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    You're right, there isn't. But if anyone were to start hiring it would be big corps and not 2 or 3 man shops. You DO want corporate tax rates cut, don't you? Too bad Obama is tying it to another spending program.
     
  5. Revmitchell

    Revmitchell Well-Known Member
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    Most small businesses want to expand to some level. This would be like penalizing small businesses for being small. But in the end I have doubts that Obama would give into less taxes just to compromise. Most likely there is something hidden in there that makes the reduction null and void.
     
  6. InTheLight

    InTheLight Well-Known Member
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    Sure, most small businesses want to expand. But the percent of small businesses that fall into the category of high earners (greater than $250,000 in W2 wages) and have business income flow to their form 1040 (LLC's and S-corps) is about 5% of all small businesses. These types of businesses aren't the ones that will be doing much hiring. So they aren't going to hire and there isn't that many of them out there.

    It's one of the most effective Republican myths ever told--raising taxes on small business owners will stifle job creation. It just isn't supported by the facts.
     
  7. Revmitchell

    Revmitchell Well-Known Member
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    Raising taxes (ie taking money away from) job creators regardless of what size it is prohibits job creation. That is not a myth. Have you ever owned a business? I can tell you that taxes effect how business a lot. You cannot pass them on to the consumer as the cost of doing business because that only increases your taxes more.
     
  8. InTheLight

    InTheLight Well-Known Member
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    OK, it's not a myth, it's a gross exaggeration. The fact is that the number of small business owners affected by the rise in personal income taxes that could directly affect how they run their business is only about 5% of all small business owners. There simply are not that many owners of LLC's and S-Corps that declare they are making over $250,000 on their tax returns. Of these owners most of them would never hire another person anyway. Again, these types of people are professionals--doctors, lawyers, dentists, accountants, plumbers, financial advisors. Even Republican sponsored studies showed that the number of new jobs that would not be created in the next 10 years if taxes were raised on these particular business owners was 700,000 jobs. During the Reagan recovery that was about 3 months worth of new jobs.

    Furthermore, the size of the business does matter. Most large corporations are classified as C-Corps. There is no direct relationship between the tax rate of the business owner and the business' cash flow. If an executive at General Electric has their tax rate raised from 35% to 39.6% that has no direct bearing on General Electric's ability to hire someone.


    Have you? I currently own a business (24 years) and am an 11% owner of another one.
     
  9. saturneptune

    saturneptune New Member

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    Regardless of the exact distribution of the numbers of the proposed taxes, the fact is, small businesses are the engine that runs the American economy and creates the most jobs.

    There is much more to small business owners than profit and taxes. It takes a special person and my hat is off to them. It takes a combination of courage, being a risk taker, having a vision, and having the fortitude to turn failure into success by picking up the pieces and starting over. This is a very rare combination of person. Most people do not have this and go to work for someone who does have these qualities. This is the pinnacle of leadership.

    What makes me sick is that these special people who create jobs and make the economy grow is obligated to pay a useless entity that never created a job (the government) a tax to be able to run their business.
     
  10. InTheLight

    InTheLight Well-Known Member
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    Very true. However, when raising tax rates on the upper 2% of earners happens to intersect with small business owners who have a particular tax situation and only make up 5% of the totality of small business owners, Republicans start demagoguing the issue of job creation being destroyed.

    Think about it--we're talking about a slice of the population consisting of the top 2% of all earners and then out of these people, those people that own a small business, and then out of these people only those that have a certain business tax filing status, and then out of these people only about 5% of whomever is left over. And that if we raise their taxes, Republicans say job creation will be destroyed!


    Everybody has to pay taxes. Surely you're not saying these people should be exempt?
     
  11. church mouse guy

    church mouse guy Well-Known Member
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    American corporate taxes are the highest in the world. People who make money overseas leave it overseas because to bring it home is to pay very high taxes. It is better to start a new business overseas than to start one here in this country. If you already have a business overseas, it is better to expand there than to expand here.

    The Democrats are keenly aware of this competitive disadvantage and they also realize that prosperity begins with making corporate taxes low. However, the Democrats are control freaks. They want to run the corporations by coupling a corporate tax cut with expansion of domestic hiring. It is not the business of government to run business but the Democrats are so power hungry that they do not want to let the market take its course.

    Obama wants to use the rejection of his power grab by the GOP as an excuse to do nothing to lower corporate taxes. As long as Jews, blacks, gays, and unions vote Democrat, the Democrats will move this country to a European welfare state while at the same time denouncing Europe for their past as colonial powers in an imperial domain. Europe already has lower corporate taxes than we do, and even Japan has reduced corporate taxes.

    Bernanke and the Federal Reserve Bank will just keep printing money to issue food stamps, unemployment checks, and welfare checks. But as Romney warned recently in a trip to Utah, in about ten years the Chinese will be so strong that they will no longer need our business or need to buy our worthless debt. Then things will be grim if they aren't already.
     
  12. Revmitchell

    Revmitchell Well-Known Member
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  13. InTheLight

    InTheLight Well-Known Member
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    <Sigh> The implication being that I have not thought this issue through? I totally agree that taxation affects economic growth. My objection is to the Republican mantra that if you increase taxes on the wealthiest small business owners you will destroy job growth. Simply not true.

    Anyway, as to corporate tax rates, the segment of small business owners I'm talking about, owners of LLC and S-Corps, are not affected by corporate tax rates.
     
    #13 InTheLight, Aug 1, 2013
    Last edited by a moderator: Aug 1, 2013
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