I saw an ad from a business group today - a gentleman standing in front of tractors in a field saying how he would not expand his business by 20 - 30 people if Barack Obama is elected. I thought it was a very effective ad except that he didn't have the facts straight.
First, the statements made in these commercials are false. Obama will not raise taxes on small businesses. His tax plan is spelled out in detail on the website www.barackobama.com for all to check. What his tax plan WILL do is eliminate loopholes for businesses that ship jobs overseas. Joe the Plumber - your small business is obviously safe.
Second, by increasing individual taxes on those making more than $250,000 / year, the tax plan persuades the successful small business owner to re-invest more money into their businesses. By removing capital gains taxes from small businesses, it is actually encouraging those entrepreneurs to INCREASE their investments in their companies, since many business expenses are already tax deductible. You see, if someone makes $250,000 a year, it will be to their benefit to invest an additional $50,000 of that back into their business, keep the personal tax cuts in place, and grow their small business at the same time.
Third, let's look at tax plans this way. Let's say you are given a $10,000 / year raise. You say to yourself - 'Let's see. If I take this raise, I'll keep $8,000 and I'll have to pay $2000 in taxes. Do I come out ahead or behind?' Seems like a simple answer, doesn't it? You now have an additional $8000 in your pocket at the end of the year. You pay more in taxes, but you put much more money into your family budget. You come out ahead. Everyone comes out ahead. And remember that nearly everyone, 95% of us, get a tax cut anyway. The campaigns are only quibbling about the top 1/20 of wage earners here.
All this talk of not wanting to earn more money because it will cause your taxes to increase is a smoke screen painted by John McCain's continuation of George Bush's failed trickle-down policies. This is simple. There is not a 100% tax bracket where you pay everything to the government. The very wealthiest, like the Wall Street CEOs, will go into a 39% tax bracket, which is only 3% higher than they pay now. Do you think they'll even notice the difference? Everyone who makes less than a quarter of a million dollars a year, which is $5000 / week to you and me, will get a tax break. Even then, if you earn more money, you still bring home more money. If you re-invest money into your small business by hiring more workers or buying equipment, your business grows and your employees make more money. The only way you won't grow is if your small business ships its jobs overseas, which means an American worker is out the door anyway.
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It is obvious you do not own
It is obvious you do not own or operate a business. Please remember Obama said we would not see an increase. He did not say we would not be taxed. So consider the fact that any business has to purchase materials and supplies in order provide the goods or services they provide.
These small business will generally purchase these goods, materials from a larger company who will fall into a higher bracket. Since the providers of the materials or goods will be taxed more, they will increase their prices in order to offset the new taxes Obama has just increased. Now the smaller business has to either raise their prices or cut employees. Maybe both.
The consumer is then charged more for the goods or service. It kinda filters down. It is the reverse of Regan’s filter down on cutting taxes.