Argument over stimulating job growth and supporting small business was of particular interest to me, and not because I am a micro business owner. After listening to weeks of former Governor Rmoney’s rhetoric in favor of assisting small business in lowering taxes, I was hopeful the truth would be exposed during last night’s debate.
President Obama did begin to uncover the disingenuous claims made by Mr. Rmoney when he stated, “Donald Trump is a small business.” President Obama did not articulate the point very well, nor did he expand on it as much as he should have. The Rmoney campaign gimmick, of creating jobs by reducing taxes for small business, simply promotes existing malfeasance.
Small business is defined by the US Small Business Administration as businesses with a 500 worker maximum. The Internal Revenue Service allows for S corporations, which permit corporate income, losses, deductions and credits to be reported on the partners’/shareholders’ individual returns at a lesser rate. Yes, I know this is boring and I can see your eyes glazing over but, please, stick with me. The unintended consequence of S corporation status is that it has allowed fabulously wealthy people to establish businesses to purchase assets, quasi-investment properties and amenities, that are strictly for personal use, i.e. vacation homes, constructed of the finest materials money can buy, at delightful locales, fully staffed, with all of the conveniences of Westchester County.
Mr. Rmoney said that lowering taxes will support job growth, adding jobs to our struggling economy. I am here to give testimony that the claim is not true, at least it is not true in the real world. The real impetus for job creation is positive cash flow in businesses that are not overly leveraged, because the profits are reinvested in the business, thereby affording owners the funds to hire more people.
Business owners, including me, have seen their share of payroll taxes increase as well as the costs of doing business increase. Insurance rates have escalated. Businesses are hiring in spite of increased taxes. We have hired another employee, paid that person a living wage, reinvested in our business and will, if the year end balance sheet supports it, reward the people who work with us by increasing their pay.
The reality is $1.00 per hour wage increase adds $2,080.00 to a workers gross annual earnings, based on a 40 hour work week. It increases the payroll tax burden for the employer as well as increasing some insurance costs, which are directly affected by payroll size. It also increases the revenue share for both state and federal coffers while it supports a struggling economy.
Financial responsibility creates jobs, tax cuts for Mr. Rmoney’s small businesses do not.