AMERICAN FORUM

By Rick Poore

A good friend and fellow businessman once told me, “Give me more customers and I’ll be forced to buy equipment and hire people to meet demand. Give me a tax break without more customers and I’ll just go to Aruba.”

Ending the Bush tax cuts for the wealthiest taxpayers is the right thing to do for small businesses. I’ll say that again: it’s the right move for small business. Let me explain.
I consider myself an example of an average small business owner in Nebraska. I have 30 employees. My business does $2 million plus in annual sales. My personal income as the owner is less than $85,000 a year.

It’s a comfortable living, but ending the Bush-era cuts on the top two brackets won’t come close to impacting me. And it won’t impact the other small business owners I know, either. The top brackets won’t kick in until your taxable income is over $200,000/year for individuals and $250,000/year for couples, and they’ll only apply to the portion of your income above those amounts, not below them. Less than 3 percent of taxpayers reporting any business income (not limited to small business income) earn enough to break into the top two brackets.

But that’s not all. That 3 percent figure includes Wall Street hedge fund managers and K Street lobbyists whose income is reported as business income on their personal tax returns. Not exactly what you’d think of as small businesses, or our nation’s job creators.

Last time I checked, Wall Street types and their K Street friends had driven the economy into a ditch the size of the Grand Canyon and killed over 8 million jobs. Do they really deserve another tax giveaway to reward their efforts?

The idea that ending the Bush cuts for the top brackets will hamper small businesses’ ability to reinvest is a complete red herring. Any true small business that ends up with more than $250,000 net profit flowing through to the owner at the end of the year needs to hire a better accountant and rethink its business plan.

Let’s use me as an example. I gross a lot in sales, sure, but I’m busy reinvesting that money back into my business – buying equipment, promoting my business and hiring more workers. The dollars I reinvest don’t pass through onto my personal tax return so I don’t care if that rate changes a little bit, and neither do the millions of other true small business owners in this country.

Despite all this, some politicians continue to recycle the tired old myth that a small change in the top brackets will hurt business owners’ ability to reinvest in our businesses. There are two possible explanations for this.

First, these politicians have never been close enough to a small business to learn how our taxes actually work. We’ll call that an accidental sin of ignorance. A simple cure is to get out and meet some small business owners in their home states and hear about our day-to-day operations.

Second, some politicians are playing fast and loose with the facts. They know better, but they just don’t care. That’s intellectual dishonesty – a different kind of sin. Not much I can do to help there.

The bottom line is small businesses don’t need another tax giveaway. What we need are policies that restore our customer base by getting people back to work in our communities and putting money in their pockets to spend in our businesses.

Ending the high-end tax cuts would free up close to $40 billion in 2011 and $700 billion over the next 10 years to invest in job creation and rebuild our customer base. That’s what small businesses really need.
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Poore is owner of Design Wear, Inc., a custom screenprinting business with 30 employees in Lincoln, Nebraska. He serves on the steering committee of the Nebraska Main Street Alliance.
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Copyright (C) 2010 by American Forum. 10/10

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