Bloomberg and Obama Misrepresent Tax Hikes on Small Business
The current administration wants to raise taxes on individuals earning over $200,000 a year and it is a really stupid idea. Many small business owners file taxes as individuals because the business is set up as an LLC. The higher tax rates would not affect most small businesses but would still cause unemployment rates to skyrocket.
Most businesses that are classified as small businesses represent the part-time efforts of their owners or are businesses that don’t hire workers. They can range from side jobs such as a person selling items on eBay out of his basement to academics conducting studies or giving lectures to doctors and lawyers practicing their professions on their own.
The Treasury Department, in a study linked to by Bloomberg, reports that there are 34.8 million businesses that it describes as small businesses. Of those, only 4.3 million are employers. More than 30 million, or 88 percent of small businesses, do not hire workers.
It gets even worse.
The Treasury study reports that 1.2 million of those 4.3 million small businesses that employ workers would face higher rates under Obama’s tax increase. Those 1.2 million businesses earn 91 percent of all the income earned by the small businesses that employ workers.
Let me translate. Success = more employees. Those small businesses that are successful work damn hard to be that way and provide jobs for many, many people.
In fact, a recent report by the accounting firm Ernst and Young found that Obama’s plan would destroy more than 700,000 jobs, because the higher rates he calls for would fall on these biggest, most successful small-business employers that employ 54 percent of the private workforce.
Fifty four percent. Think about that number for a moment. More than half of the people in this country that still have jobs work for a small business owner who will be facing increased financial strain during tough economic times. How many small business owners will lay off a few workers? How many are close to retirement and will choose to shut down entirely?
The bottom line is that if the Obama administration goes through with its plan to increase taxes on earnings above $200,000 the end result will be less tax revenue and more unemployment.