Increase or cut

Bush's tax cuts, Obama's tax increase, which is it?  Well we all know that during the Bush administration Congress passed legislation reducing taxes for ten years.  At the end of the ten years the tax rates were scheduled to revert back to their original levels.  So Bush and the Republican congress played politics with the expiration date of the tax cuts.  Great plan if you lose the Presidency, House and Senate.

Today, President Obama inherited a dilemma, he doesn't want the taxes to revert to their original levels especially for the middle and lower classes.  But he also understands, as do all the major economists, Alan Greenspan included, that to reduce the deficit taxes must go up somewhere.

Internal Revenue Service statistics indicate that only 3 percent of small businesses would be subject to the higher tax if President Obama pushes for the group making $250,000 and over. Innumerable studies of previous tax increases suggest that it would have a minimal impact on hiring.

According to the Joint Committee on Taxation, "Ninety Seven percent(97%) of all businesses owners do not earn enough to be subject to the higher rates, which would be levied on income over $200,000 for individuals and $250,000 for families."

Now here is an interesting factoid, the I.R.S. classifies small businesses differently from the public perception of the neighborhood laundry or the small mom and pop corner grocery store. A report released by the Joint Tax Committee in July found that many of the tax returns categorized as small businesses were actually filed by wealthy taxpayers who earned business income through limited partnerships or S corporations to allow their firms to avoid paying corporate taxes.

You have heard of sole proprietors?  Well many of the above are wealthy individuals with NO EMPLOYEES and guess what else, they won't be hiring any time soon.  Those S corporations consisting of lawyers, hedge fund managers, lobbyists, consultants, actors, athletes, authors and even some doctors will certainly be enlarging their employee base...right?   How many employees do you think they have, and how many more do they need, and how exactly is that tax money going to create jobs?

Using mom and pop business's as a political tool to get more money for the wealthy won't work this time around. The tax money is not coming out of the business, it is coming out of the pockets of the individuals that made the money.  Once it is in their pocket it is no longer used in the business.  If those business owners(that might actually grow their business) were to expand, they would do it before taking the money out, which means before taxes. 

A business decision to hire new employees is based simply on the calculus that the new employees hired will make more profit for the business, and ultimately it's owner. An additional tax of 3% or 4% on those increased profits, after the  profits are removed from the business, does not affect that calculus.

If i can hire an additional employee who will make another $20,000 per year in profits for me, i will do that whether or not i have to pay another $800 in taxes on that profit.  Mitch McConnell and his conservative buddies want you, the middle class, to loose your tax cut unless his wealthy buddies get theirs.  The right is using a false pretext, using small business to convince you and make you sympathetic, to make you feel like it is coming out of your pocket. Its not.

The key to new jobs is that if demand doesn't go up no one hires, regardless of a tax break or not.

Here is another point about higher taxes.  Employers at the end of the year try to find ways of reducing their tax liability by buying things they can deduct.  In some ways that buying keeps other business operating.  Farmers buy new equipment, companies buy new computers and i think you get the idea here.  Higher taxes can actually stimulate business.  You don't pay taxes on the money you invest in the company.

Back in the day when taxes were higher companies plowed their money back in by hiring more employees and expanding business instead of paying higher taxes.  Now they are just sitting on it, putting it into bonds and waiting for the market to move.  They should really be using the money not hoarding it.

"Between 2003 and 2007 we experienced the first-ever economic 'recovery' on record where productivity and profits grew but poverty went up and median incomes fell. The middle class and low-income families did not benefit from the gains accrued over the last decade, which was due to the failed economic policies of the Bush administration and the focus on tax cuts for the wealthy that did not lead to growth in investment." Melissa Boteach

Profits and productivity do not mean more jobs.  How many friends do you have that are working double time at their jobs for fear of being laid off?  Giving tax breaks to the wealthy will not change that scenario.
                                           

Jobs in the service sectors are about the only things that can't be out sourced or moved offshore any more.  We've let China and the European countries lead the way in alternative technology that we invented.  We are no longer investing in the USA and a tax break for the wealthy will not create more jobs.  If the mom and pops are where the jobs are then lets give them the tax breaks they need to at least keep what little we have left churning at home.  Those real mom and pops don't make over $250,000 a year and they will get a break.