Obama's meaningless small-business vow
A week after his re-election, President Obama held a news conference to push for a spending and tax agreement — and to talk about small business.
He began by saying, “Our top priority has to be jobs and growth.”
With job creation as a top priority, that puts small business at center stage.
The U.S. Small Business Administration reports that small business “generated 65 percent of net new jobs over the past 17 years.”
The small-business sector of the American economy “employs half of all private-sector employees,” says the federal government's official count, with the Small Business Administration defining a small business as “an independent business having fewer than 500 employees.”
Obama also said he wants a budget deal, “but what I'm not going to do is extend Bush tax cuts for the wealthiest 2 percent” — defined as individuals earning $200,000 or more per year and couples filing jointly making $250,000 or more.
“When it comes to the top 2 percent,” he continued, “what I'm not going to do is extend further a tax cut for folks who don't need it.”
That “need” part is a novel concept, one that puts us on a slippery slope. If politicians get the power to determine how much of our earned income we actually “need,” a Bureau of Asset Counters might be on the way.
If a classic car aficionado owns a dozen Chevy and Ford convertibles from the 1960s, will a government committee be empowered to determine that he doesn't “need” more and raise his taxes?
If a successful businesswoman has three homes, four cars, a yacht and $10 million in the market and wants to expand her retail clothing business, should her taxes go up — and business/job expansion be abandoned — because she doesn't “need” more business, more income or more employees?
In any case, Obama is advocating several things simultaneously that can't be synchronized.
He wants more jobs, a growing small-business sector — the section of the economy that creates the majority of new jobs — and more income redistributed from the “top 2 percent” to the government.
Attempting to show that those positions aren't, in fact, incompatible and represent instead a feasible plan for job creation, Obama injected the same misleading statement into his news conference at four different points.
With tax hikes on incomes of $200,000 and $250,000, “97 percent of small businesses are not going to see their taxes go up a dime,” he repeatedly stated.
That sounds like the vast majority of jobs in small businesses won't be threatened by his proposed tax hikes. But the Treasury Department reports that 30 million of the 35 million small businesses in America employ no workers.
Additionally, just 1.2 million of America's 35 million small businesses earn 91 percent of all small-business income, and that 3 percent of all small businesses “employ a stunning 54 percent of the total private U.S. workforce,” reports Investor's Business Daily. “They are, in short, the nation's job creators.”
And they are directly in the cross hairs of Obama's proposed tax increase.
Ralph R. Reiland is an associate professor of economics at Robert Morris University and a local restaurateur. His email: email@example.com