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Saturday, July 16, 2011

Tax Fight: Small Business Owner Explains How Democrats Have Blurred The Lines

There was a comment made on a post written last week. The comment was made by a small business owner, J. Motes, and was in response to another comment left, and his response is by far the best explanation from a personal point of view, on how Obama and Democrats have managed to blur the lines between the non-productive rich and the productive small business owners who would pay the price of Obama/Democrat's policies should they be allowed to raises taxes.

J. Motes:

Good questions. I think the confusion arises because we are talking about two different groups of wealthy folks, and politicians deliberately want to blur the distinction between them. First are the job creators you noted. Most of these people are not super rich, but they are responsible for creating most of the jobs, and job growth, in our economy. The uncertainty in our economic climate -- tax rates, regulations, health care requirements, all the onerous burdens the dead hand of the state can place on businesses -- makes these job creators reluctant to commit to new employees and business expansion. If they take the risk and government then punishes them for it, they may end up going out of business entirely. This would not be good for their employees or for their own incomes. Many small business owners, like me, are not raking it in. Losing a business would be an even bigger financial blow than it would be for the employees who will have lost a paycheck, but who won't have also lost a lifetime of investment in the cost of building a business. Many of us have made considerable sacrifices to achieve even a small measure of profitability, and a rapacious government is too formidable an opponent to trust.

The second group of wealthy folks includes the super rich most people think the politicians are targeting. The most popular target in the class war being waged is found in the financial industry: bankers, investors, stockbrokers, etc. These people do not actually do anything to create wealth, that is, to produce something that adds money to the economy (as, say, a maker of tennis shoes or backhoes or wine does). Instead, the financial class merely moves around the money that others have earned. By gambling and speculating, they are able to rake in wealth from other gamblers who hope to make an easy profit. The small business owner doesn't benefit from any of this financial activity, but he will be castigated just the same and subjected to tax rates and other costs that will wipe out his small margin of profit. Similarly, the homeowner whose mortgage is resold to others, always with enough profit built in to create a huge pile of dough, benefits those who are moving money around, but doesn't deliver a penny to those whose property is the collateral. The "big money boys" use political donations and other means to ensure they receive privileged treatment from legislators, including exemptions from the rules that burden small businesses.

Some of these super rich are not individuals, but are huge corporations that seek privileges from government that let them prosper while forcing smaller, less well connected competitors to the side. Jeffrey Immelt, who runs GE, is making fantastic sums for his company by exploiting his relationship with Obama. Taxpayer subsidies underwrite many of their expenses, and they are exempt from rules others must follow. Their privileged status means that GE avoids paying taxes. Again, the burden falls on small business owners -- the bedrock of our economy -- not on the big boys.

Other classes of people also make pots of money by redistributing other people's money. Trial lawyers build personal fortunes not by producing anything of tangible value, but by redistributing money from one party to another -- mostly to themselves. Trial lawyers are among the biggest contributors to the Democrats, which they use to achieve privileged status denied to most small business owners. Unions do the same thing: they deliver union dues to Democrats, who then make laws that privilege unions. The pension crisis most states now face is but one example of the ruinous nature of this arrangement. Well, ruinous for taxpayers, but pretty swell for union members, union bosses, and politicians. (Note the retribution that unions and government are taking against Boeing, which wants to open a plant in a state that does not require employees to join a union. No union = no union dues = no dollars in political coffers. Can't have that!)

So when politicians are talking about raising taxes on the filthy rich, they want us to think that those nasty old bankers, corporate swells, and union thugs are finally going to get what's coming to them. Unfortunately, these protected groups will be largely immune to the tax and regulatory burden. The real losers will be the small business owners, ordinary folk like you and me who have no means of protecting ourselves against the power of the government.

Don't be fooled by political rhetoric that claims taxes will be extracted from the super rich. It's the small business owner, already suffering in a poor economy, who will be hurt the most.

I wouldn't mind taxes if everyone followed the same rules and if government weren't spending our money on stuff taxpayers don't want. And I really don't like feeling that I have been turned into a slave who works to support the half of America that lives off government subsidies and handouts. Cut government spending first!

Well put Mr. Motes.