Filed under: Capitalism, Economy, Election 2012, Progressivism | Tags: Another Recession?, Massive New Taxes, Small Business Defined
President Obama in his weekly statement called for Congress to extend the middle class tax cuts for the 98 percent of Americans making less than $250,000 for another year. These are the celebrated Bush tax cuts that drove spectacular growth and prosperity in the Bush years. The Congress would not agree to tax cuts without an expiration date. Much more attractive for politicians to have tax cuts just expire than for them to have to raise taxes in the future. Best of both worlds, they don’t get blamed, and they can expect more revenue, or can they?
This is the game Obama is playing when he wants to “extend” the tax cuts for just a year. But he definitely wants to raise taxes on “the rich” because this is campaign season and he is running against someone who is rich, and he wants you to hate and envy the rich.
What interests me this part of his statement:
In fact, the President’s proposal extends tax cuts for 97 percent of all small business owners in America. If Congress fails to act, a typical middle-class family of four will see its taxes go up by $2,200, and America’s small business owners would take a big hit. The President refuses to let that happen.
I have long thought that the president does not understand the concept of “small business.” The dividing line for him is $250,000. So what’s a reasonable take-home pay for someone operating a small business with a few employees with reasonable salaries and benefits? You get past $250,000 pretty quickly. The president’s “97 percent” of all small business owners turn out to be sole proprietors with occasional help or free-lancers. These people contribute to the economy and some may grow well beyond the $250,000 barrier, but the growing small businesses that represent dynamic growth and new hires are mostly going to be beyond that $250,000 level.
I have been a free-lancer, I know dozens of free-lancers. All pay their small business taxes as individuals reporting business income. The White House says “Congressional Republicans define as small businesses any individual who receives ‘small business income.’
- Over half of the 400 Highest Earners in the United States Would Be “Small Businesses”: According to IRS data, in 2009, among the 400 taxpayers with the highest adjusted gross income – group that averages over $200 million each in taxable income – at least 237 would have qualified as “small businesses” under this definition.
Obama has been speaking lately, claiming he’s cut small business taxes 18 times since he’s been in office. Award a few Pinocchios here. All but four have either expired or will soon expire, aren’t cuts at all, or are double-counted, and the rest are pretty much worthless.
For example, the tax credit for hiring unemployed workers enacted as part of the so-called hire act in 2010 is gone. So is the beak for estimated tax payments and the expanded deduction of health care expenses for the self-employed. Bonus depreciation, expanded expensing rules, a five-year carry-back rule for business credits, and capital gains exclusions are due to expire this year. One makes it easier to deduct cellphone costs and another limits penalties for errors in tax reporting.
These shotgun approaches don’t have the same benefit as permanently lowering individual income tax rates because most of them are temporary. They are designed to give Obama something to brag about, rather than actually help small business.
Hiring a new employee is a long term cost for a business, involving benefits, promotions, vacations and so on. A one-time tax credit for hiring someone unemployed is not an incentive.
The Heritage Foundation’s Center for Data Analysis has calculated that the average American with $250,000 or more in income can expect an average $24,888 tax increase next year under Obama’s proposed policies. That’s enough to hire another person.
Heritage says: More than 4 million businesses in the U.S. have employees and file their taxes under the individual tax code. President Obama’s plan to raise taxes on income over $200,000 a year would raise the taxes of 1.2 million of them. There businesses, however, earn almost all the income of tis group. They are the most successful and therefore biggest job creators.
Well. There’s a rather major difference of opinion. You have three links here, one for the Heritage Foundation, one for the White House, and one for Investors Business Daily. You decide. Who gets the Pinocchios?
Filed under: Democrat Corruption, Election 2012, Health Care, Law, Politics, Taxes | Tags: Massive New Taxes, Obamacare, SupremeCourt