The party of Hoover has its usual broken-record playing of what to do to help small businesses, and that is "cut capital gains taxes."
That, of course, is nothing other than the usual GOP-brand bullshit of pretending to care about small businesses while offering tax breaks that benefit the rich. Long-term capital gains taxes already are lower than income taxes; so if you are able to make a profit with your investments, you get a lot more income out of it than you do if you work for the same gross dollar amount.
No, if you really want to help small businesses, then what you should do is this: Eliminate income taxes for people making under $40,000.[1] That would help small businesses because they would not have to pay the income-based payroll taxes. They would not have to withhold the income taxes from their employees and then pay them to the IRS every quarter. You could also cut the employer's share of Social Security taxes for those employees making under $40,000, which could be made up by lifting the current cap on Social Security taxes from $106,000 or so.[2]
Cutting capital gains taxes won't help small businesses. If someone is trying to keep a small business afloat during this recession, they probably are not in a position to pay capital gains taxes on anything. Hell, they're probably losing money, so they are likely not personally paying any income taxes. The only tax help they can get is to cut the taxes that they pay on their employees. And we should do that.
[1] I chose $40,000 for that is roughly equivalent to a pay rate of $20 an hour.
[2] Income from dividends and investments is not subject to Social Security taxes, so there is another area where the wealthy make out like bandits.
Sorry, But Santa Is Way Ahead Of You
1 hour ago
6 comments:
Good points all.
Hope someone in this administration in a position of budget/financial authority can think as clearly as you.
S
The tax code and all its tentacles are strangling the vast majority small businesses and working people. Love your suggestions, as a starting point.
As I point out on my own blog today, what small business needs is *customers*, not tax cuts, because taxes are less than 2% of the cost of doing business for the average business. The only tax cuts that will actually increase employment are tax cuts aimed at increasing consumption -- i.e., consumer tax cuts, not business tax cuts. If the Federal Government held a Sales Tax Holiday where they'd reimburse you 100% for any sales tax you paid, that would increase consumption by 8% right there, since sales taxes are currently averaging around 8% and money spent on sales taxes is money *not* spent on purchasing consumer goods. And I'll tell ya, pretty much every small business I know of would be *overjoyed* to have 8% more business right now...
Of course, the *real* solution is jobs, jobs, jobs. But we have to increase consumption to get more jobs, whether consumer consumption or government consumption. More jobs will then increase consumption even *more*, and we'll get a beneficial upward spiral, rather than the current downward spiral of fewer jobs leading to less consumption leading to fewer jobs leading to less consumption wash repeat rinse. But all this makes sense, which is why President Hoover II isn't doing it. Siiiiigh!
- Badtux the Economics Penguin
"That, of course, is nothing other than the usual GOP-brand bullshit of pretending to care about small businesses while offering tax breaks that benefit the rich."
Yeah, because little kids are all the time starting small businesses with their paper route money...
Badtux, the problem there is that the Feds don't have anything to do with sales taxes.
Tam, most of the small businesses I know of were no started by rich kids. YMMV.
EBF, that wouldn't stop the Feds from reimbursing you for every cent of sales tax you paid. I.e., I understand that the Feds don't levy the tax. But they can certainly give you a sales tax credit.
Not going to happen, of course, because where would the money come from? A tax on the investor class that led us into this economic abyss? Borkborkbork! I just made a funny!
- Badtux the Cynical Penguin
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