American Elephants


Small Business Doesn’t Much Like ObamaCare Either! by The Elephant's Child

Democrats are debating the expiration of the Bush tax cuts.  They particularly want to end any tax cuts that went to “the rich,” for they have been yapping about “tax cuts for the rich” for the last ten years.

This theme sounds good, and is a favorite populist sound bite.  What Democrats refuse to grasp, because they need that sound bite,  is that many of those who are defined as “the rich” are small business owners who file as individuals. If you own a business, even though you may employ many people, there are advantages to filing as an individual rather than incorporating.

Democrats are anxious to blame the Bush tax cuts, and the War in Iraq for the financial crisis.  “The Bush tax cuts substantially reduced 2006 revenues and expanded the budget deficit,” they say. ” Capital gains tax cuts do not pay for themselves,” they say.  “Raising taxes is the best way to raise revenue,” they say.  “The Bush tax cuts are to blame for the projected long-term budget deficits,” they say. No!  No!  Sorry! And just plain wrong!

The economy usually responds strongly to tax cuts.  Capital gains tax revenues doubled following the 2003 tax cut.  Higher tax revenues correlate with economic growth, not tax rates.  Pro-growth tax cuts support incentives for productive behavior.

Obama has already put in place all sorts of taxes and mandates that will make doing business harder, especially for small businesses, whether in ObamaCare or the Financial Reform bill or in new energy requirements and costs.  The uncertainty about what taxes will be raised, how new government bills will affect them when applied, and what rules will make their activities more difficult has business sitting on their hands and not hiring.  Obama has no one to blame but himself for the dismal unemployment scene, but he continues to blame Bush, and thus solves nothing, nothing at all.


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