I’m assuming I may have missed a memo at some point, since the latest Republican line is that they are the “mighty protectors of small business”. Implying by extension, then, that Democrats must be the sworn enemy of small business owners, somehow.
As evidence of this, they have spent a great deal of time lately in front of the press espousing their belief that the administration’s stimulus plan is terrible, strictly by virtue of its lack of tax cuts. Tax cuts presumably being the savior of the economy, somehow, and benefiting small business in untold, near-miraculous ways.
But how much would the Republicans’ penchant for extensive tax cuts actually improve the economy for everyone, and how much would they actually benefit the average small business owner?
Mitchell Bard, writing for HuffingtonPost.com, sums up recent Republican statements as follows:
“It’s clear that Republicans have gotten their talking points. All over the media you hear the same terms over and over again come from their mouths: “tax credits,” “small business” and “more government.” On This Week, new Republican National Committee chairman Michael Steele talked about “tax credits” to help “small business” as being the key to stimulus. He even made a laughable point that the Democrats’ stimulus bill doesn’t create jobs, but only “work.” Steele explained that the government-supported projects would only be temporary (like 18 months), which is not a job. I’m sure unemployed workers will feel great relief that Mr. Steele is trying to save them from 18 months of wages, rather than the zero dollars they are making now.” (Full Article on HuffingtonPost)
Presently, this is one defining difference between Democrats and Republicans – One wants to jolt the economy back into form with extensive spending, providing liquidity and capital to the markets and (hopefully) stimulating the resumption of lending, spending and hiring. The other believes, for whatever reason, that tax cuts (mainly targeted at big business) will allow those businesses to resume spending and lending and perhaps even hiring.
However, if the last 8 years should have taught us, and our elected representatives, anything, it’s that tax cuts for the wealthy cause more problems than they solve.
There are a number of reasons for this, not the least of which being that if rich people can avoid spending money, they generally divert that money into investments, tax shelters, etc. And if that money that the Federal government, by virtue of those tax cuts, allowed the wealthy to hang on to doesn’t flow back into the system through spending, it only continues to exacerbate the problem that was to be remedied in the first place.
Where does all of this love for tax cuts come from, particularly for small business? The Republicans, as mentioned before, are singing the same tax cut melody that dominated Capitol Hill for the last 8 years, to no avail. But there are still those voters who believe that tax cuts are a wise idea.
The cause, as far as I’ve been able to surmise, is as follows: For whatever reasons, there are those in this world who are still falling for the old concept of the “American Dream” hook, line and sinker.
The love of tax cuts among certain constituencies, and the reason that Republicans continue to shill for such tax cuts, is in part the result of a pervasive belief, however subconscious, that we can all get rich. Doesn’t that sound awesome? Of course, it bears no resemblance to reality (particularly in an economic system that is based on financial hierarchy and with a built-in unemployment requirement in order to function properly). But none of that matters…We could all be rich!
Targeting small business owners is just the latest tactic that the Republicans have chosen in order to gain ground-level support for their scam.
In many respects, as a freelance copywriter, I am, technically, a small business owner. There is no office building or storefront, and my only equipment is an Internet connection and a desktop PC in dire need of an overhaul. As such, given the choice between the President’s concept of tax cuts for 95% of working families, or the Republican’s concept of a tax cut for small business owners, I would have throw my support to the former.
The reason is simple…I don’t pull in enough revenue to qualify for, or benefit from, Republican tax cuts. I make a little side money writing. That’s it. Beyond that, I still have to maintain a “real” job in order to have health insurance and to pay the bills on time.
Additionally, I have no illusions (or delusions) about making a fortune doing freelance copywriting, from home, in my pajamas, for just a few hours a week. No matter how many “work from home and get rich” ads you read on Craigslist and Monster.com, nobody’s making a fortune doing it.
But herein lies the problem, and the reason why there’s any support at all for the Republicans’ tax cut concept; There are plenty of deluded masses who believe that they’ll be able to turn their small business into an empire, or at least a small fortune.
I hate to be the bearer of bad news, but no one is going to come along anytime soon and offer to franchise the Country Thyme Tea Room in Tolono, though they certainly qualify as a small business.
Similarly, the only way that my friend’s business, Squadfitters, would benefit from a stimulus plan is if the money to spend were given to their customers – Local and regional law enforcement agencies.
That’s where the spending in the stimulus plan comes into play. To get the economy rolling again doesn’t require a lot of fancy calculations and tax maneuvering.
It requires money. Plain and simple.
What the Republicans fail to mention about their concept of tax cuts for small businesses is that, in spite of their rhetoric appealing to the entrepreneur in all of us, their tax cuts actually benefit “…big accounting firms, law firms and real-estate partnerships, and “businesses” that are really only sidelines – such as occasional rental income from a corporate chief’s ski condo.”
Just as you should have suspected – Republicans in the House and Senate have a very, very different definition of what constitutes a small business.
Of course, they also fail to mention that they actually loathe small businesses. But that’s another discussion entirely.
Many small business owners do pull in slightly more per year than perhaps your average salaried employee, but not a lot more. Particularly after expenses are factored in. And if you think the recession is hitting hard at major banks, lenders and brokerages, imagine the effect it has on the locally owned coffee shop or bookstore in your town (such as the liquidation and closing of Pages for All Ages, a bookstore here in Savoy, IL).
But maybe a hard look at some numbers will finally show that the Republicans are, in fact, better for business.
OK…maybe not.
The point is this – Don’t believe everything that you hear or read. When it comes to Republican economic plans, nothing is quite as it seems.
4 Comments
February 26, 2009 at 5:25 pm
Nice work – and thanks for letting me know there are still Republicans. I thought they’d all changed their minds or left the country by now….
February 27, 2009 at 10:19 am
So the way to stimulate the economy is to further stir the class warfare pot, take money out of the public’s hands and put it in the government’s hands and add a trillion dollars to the deficit in just one year? Sorry my comrade but I am not buying. BTW, am I the only one who has noticed that the Federal and State Governments aren’t experiencing a recession? When was the last time you’ve heard of a government employee being downsized? That’s right, it hasn’t happened…
February 27, 2009 at 4:55 pm
For those of you wondering, “Alphonz” above is the nom-de-plume of the one and only Gary K. That clarified, please fire at will, and don’t leave out the snark.
February 28, 2009 at 10:52 am
I’ll start off by saying that I think you’re a damned good writer.
The philosophical Armageddon that has been raging since at least 1980 continues to be fought today and will be well into the future. The trenches have all been cut along this line of “free market vs. domestic welfare”, and I would argue that both sides have their merits and their respective times of required action.
That said, right now is the time for reinvestment of capital in the country – through infrastructure improvements and programs meant to put money in the hands of 95% of Americans.
Business has outpaced LOGICAL regulation for the last 30 years, and as a result the bubbles keep getting larger and keep popping louder. I don’t want to continue down the same path – there is a metric ton of executives on Wall Street looking for the next bubble and they’d love to get their hands on my money to finance it.
And to Alphonz, the money (taxes) are already in the government’s hands. For once, the money will go towards infrastructure and programs that will almost directly benefit you, and create jobs in the process.
Government downsizing happens, and it is happening now. Unfortunately, in most cases the burden of a shrinking federal government budget first hits the contractors (Boeing, etc.). And remember that the government was greatly expanded during a Republican presidency (W. Bush) via what was a necessary increase of programs to protect our borders. Like it or not, the majority of federal jobs are necessary ones.
Regarding federal/state/local government job downsizing:
NASA: http://www.chron.com/disp/story.mpl/front/6209784.html
CA: http://www.cnn.com/2009/POLITICS/02/17/budget.states/index.html?iref=newssearch
VA: http://www.virginiabusiness.com/edit/news/20070918_buzz.shtml
State, Local (General): http://money.cnn.com/2008/06/23/news/economy/local_government_layoffs/index.htm