This week has brought a big political backlash against President Obama for saying, “If you’ve got a business, you didn’t build that.” The President should have chosen his words more wisely and small business owners have every right to be upset about this comment. No one from the government has risked everything and worked tirelessly to help make their business a success. In fact, the government causes most of the problems for businesses. Yet, the President is calling for a higher tax contribution from small business owners to support the bloated government.
It’s not Easy Running a Business
I have had a couple of small businesses, starting in 1990. These were side businesses, where I didn’t make a lot of money or have a lot of overhead. But, I still had to get a business license, pay taxes and keep books. For every hour I worked and got paid, I had another 20 minutes of unpaid work to bill customers and comply with the government. It has been a great experience and I enjoy being an entrepreneur. But, I have a great day job and don’t need to depend on the income from my business. Others need that income desperately.
Entire industries have been devastated since 2008 and small businesses have absorbed most of the hit. The housing and construction industries virtually disappeared for a couple of years and are barely starting to trickle back. Real estate and mortgage brokers, most of whom are independent business owners, also took a big hit. Many auto dealerships closed, when people stopped buying cars and trucks. Millions have lost their jobs as these businesses failed.
Are Higher Taxes Fair?
Anyone who has owned a small business knows more tax write offs are available than for regular employees. They also know the self-employment tax is very high, because they have to pay both the employer and employee positions of Medicare, Unemployment, Disability and Social Security. This can add up to a 40% tax rate on their net profits. They also have to pay very high prices for health insurance and they may not be able to write it off.
Meanwhile, many large corporations make billions of dollars, received government stimulus or bailouts and pay very little federal income tax. The President isn’t on TV asking them to pay their fair share. He is targeting the small businesses and working professionals, who have no lobbyists or political clout. Small business owners already pay a big share of the taxes and create most of the new jobs. Large corporations are sitting on huge piles of cash, getting government contracts and special tax credits, while hiring very few new workers. I believe it’s the large corporations that should be asked to pay their fair share of income taxes.
The Bottom Line
The bottom line is that small businesses are the engines that drive our economic growth. Some entrepreneur or small business owner is going to create the next Apple, Google or Facebook. The government will make this as difficult as possible and then show up with their hand out, asking for taxes and campaign contributions.
“We have to get away from the class warfare and recognize that we are growing jobs by helping small business.”
Norm Coleman – U.S. Senator (R-MN, 2003-2009)
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