I have discussed the tax cuts and what was needed to move the economy forward on my blog avoiceforindependentvoters.com. After watching various news shows and listening to the politicians, economists and various commentators and so called "Wall St." experts I began to wonder if all that was needed to talk about business and taxes was to have a pulse. I listened to some incredibly stupid statements being made. I have no problem if someone wants to say something stupid it's a free country. What I have a problem with is that someone that may not understand an issue will believe what is coming out of this person's mouth as fact. I listen to news people and so called Wall St. analysts make statements that you know are things they have heard or been told.
Some of the things that drive me crazy when I hear them are:
Small businesses aren't hiring because they are unsure of heath-care costs. First, only about a third of small businesses even provide heath insurance. So what's the excuse for the other two-thirds? Secondly, it took me about five seconds on the Internet to find out everything that would be required or will be provided to small businesses. Items like: tax credits of up to 35% of health insurance costs to small businesses with fewer then 10 employees and salaries averaging less then $25,000, a lesser credit for those with average salaries of $50,000. The fact that only small businesses with more then 50 employees will be required to offer health insurance. Which eliminates a majority of small businesses. Oh and by the way that requirement doesn't go into affect until 2014. There are more details that anyone can find out in less then a minute. So the only reason any small business would be unsure as to how heath care reform would effect their business is if they didn't bother to look. Health-care reform isn't the reason small businesses aren't hiring.
Raising taxes on the top two percent will hurt Small Businesses. Depending on what set of numbers you look at only 2-4% of small businesses make over $250,000. The majority of that percentage is professionals such as; lawyers, doctors, dentists, accountant firms, financial advisors and those in sports and entertainment.
There is uncertainty with the government,regulation and taxes that's why businesses are not hiring. There is only one reason why businesses hire or lay-off employees. Demand. If demand exceeds what you produce or provide in service you hire more people. If demand is lower then what you produce or provide in service you reduce your workforce to meet that demand level.
To say what I pay in taxes has any impact on hiring or firing says you don't understand business. I am not going to negatively impact my business by reducing my ability to provide the products or level of service below what demand is because my taxes went up. I am also not going to hire anyone just because my taxes have been reduced. Why would I hire someone to stand around if there isn't enough work for them? No sane business owner hires or fires because of their personal tax rate.
Also as to this all uncertainty garbage, nothing is certain in business. I've heard talking heads say that they've talked to business people and they like to plan out ahead and don't like uncertainty. As someone who has worked on hundreds of business plans and thousands of budgets let me say with 100% certainty the only thing that is certain is that nothing is certain. Business plans are developed with best and worse case scenarios and one for in between. Budgets are only as good as the first day they go into effect. Things happen in business and life and you have to make adjustments. Business plans and budget are guidelines. You make adjustments as things change. When companies exceed expectations was it because they failed to follow their business plan or budget? When companies fail to meet expectations was it because they wrote a business plan or budget that was designed to have them miss expectations? No, it was because things happened and they either took advantage of it or failed to recognize it and didn't adjust.
As for the statement that investors aren't investing because of taxes going up that's not true either. If an investor has an opportunity to invest in a company or new product or service and can make a return on it they will invest. Do you believe that an investor who could invest a million dollars into a company and get ten million dollars back would refuse to do the deal because his tax rate has gone up several percentages?
The statement that raising the taxes on the top 2 percent will hurt our economy doesn't pass common sense. How can anyone make the statement that two percent of the population purchases the volume that is needed to push the economy forward. You noticed I said volume not dollar amount. Which has the greater impact on the economy in producing demand, someone paying $2,000 for one dress or twenty people paying $100 for a dress. If someone builds a $2,000,000 house they hire one company/business of carpenters, electricians, plumbers, roofers, landscapers, etc. Now if we build ten $200,000 houses you increase the number of carpenters, electricians, plumbers and roofers being hired. The dollar amount may be the same but the economic impact is different. High-end products service niche markets, which by definition means smaller markets since fewer people will buy that product or service. The top 2 percent cannot buy in enough volume to push the economy forward. It is simple math.
Now some changes in taxes can have a positive impact on the economy. A hundred percent write-off on capital investment, a payroll tax holiday. The write-off for R&D investment is nice windfalls for corporations but do you believe that a software, computer, microchip or pharmaceutical company won't do R&D because of a lack of a tax write-off? Any CEO who says he didn't do the R&D to improve on or develop a new product that would expand their product-line and possibly increase market share should be fired immediately.
Just once I like to see one of these talking heads ask one question to the politician or other "expert" who starts going on about how the tax increase to the top 2% is going to hurt businesses and the economy. That question would go something like this. "You would agree that the United States started to become a economic superpower starting in the late forties and grew stronger in the fifties and sixties. You are telling me that raising the tax rate would stop businesses from hiring and hurt the economy. So can you explain how the United States was able to grow into such an economic superpower and have a strong middle class when the tax rate for the rich was 90% to 60%? How come high taxes back then didn't prevent the economy from growing? Could it have been demand,foreign and domestic, which is the only factor that determines growth of an economy?"
Here is one last thing to remember when you hear experts say that the corporations are sitting on a trillion dollars of cash and aren't hiring because of taxes or regulations. Heads of corporations lie! If demand were there they would hire. Since its not there they'll blame taxes and regulations so they can get taxes reduced and regulation weaken.