I own a small business. A very small business. Up until July of this year, I was my only employee. I'm a psychologist, so my needs for "workers" is pretty small. But I pay a lot in taxes. At least relative to my income. That's why I am frustrated by the blanket statements that small business owners wouldn't hire with the money saved by tax cuts.
As with many things, there's no cut and dry, one size fits all way to approach this issue. But for a business like mine where the single largest, non-salary expense is payroll tax, a tax cut would help immensely. The 50% payroll tax deduction would allow me to hire a secretary part-time.
Do I need a secretary? No, but this is where the "liberal" part fits in.
I was unduly offended by Armando's post on Sunday where he said that small business owners wouldn't hire out of the goodness of their hearts. That the problem is demand and without more customers, businesses won't hire. That may be true for many businesses but not all. Like I said, I don't need a secretary but I would hire one with a payroll tax cut. Why? Because I'm a liberal and I know that there are many qualified people out of work. I know my fellow Durham-ites are struggling through no fault of their own and I believe in helping people to the best of my ability.
Could I instead take the money saved as increased salary for myself? I sure could and I wouldn't have to work a bit harder for it. I'd still have to do all the stuff I do now - billing insurance, arguing with their doctors about why my patient needs continued care (don't get me started on the way insurance companies get between doctors and their patients!), scheduling, returning phone calls, filing, etc. I don't like these tasks, but I can't afford to hire someone to do them for me.
Cut my payroll tax and I save on two fronts - the employer side and the employee side. I could effectively give myself pay cut and still take home the same amount. Which I would do and I could roll that money into a new employee. It would add nearly nothing to my business's productivity, in fact it would hurt our "numbers", but it would be something I would do. (There's a very convincing, demand side case for reducing productivity as a liberal cause. Problem is, we'd be labeled lazy. The "I don't like productivity. I'm a liberal." messaging need some massaging.)
So when we talk about job creation and tax cuts, we need to remember that not every business owner will pocket the extra money. Tax cuts are part of our political debate, for better or worse, and we need to figure out how to make it serve our progressive cause and not fight it at all costs. I think that if more business owners had their humanitiarian side appealed to and understood the value of our own "make work" projects, we could make this tax thing work for us rather than fight it as we always seem to do.
