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Originally Posted by dc_dux
Not according to the Joint Committee on Taxation (and other sources).
Restoring the temporary tax cuts on those with income over $250,000 would impact about 3 percent of small businesses....or less than 1 million taxpayers who pay their business taxes at the individual level.
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According to the link I provided previously there were 4.8 million businesses that employed less than 100 people. So are we talking about 20% of these businesses - and then what percent of potential start-ups - those that are in the precarious stage of less than 5 years in business. Start-ups are often devastated due to poor tax planning and the inability or unwillingness to get professional help, these issues that may appear trivial can be the difference between further growth or closing the doors. People who risk their life savings and have it culminate to a big year literally may be forced out of business over a few thousand dollars - especially if credit is not available.
Also think about the 1 million on the margin of hiring one person, staying put, or laying one person off - that marginal tax rate difference will play a role in their decision - wouldn't we prefer 1 million businesses hiring one additional person - wouldn't the net to the treasury in that scenario more than off-set the "tax cut"?
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And there is no evidence anywhere that restoring that tax to the marginal rate of 39% from the current (and temporary) rate of 36% would impact their businesses.
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Many businesses run on very thin profit margins, taxes make a difference. More importantly it makes a difference in the calculations used to determine future investment. If I had money to invest in the growth of my business or in some other vehicle, my internal rate of return calculation factors in taxes. If I can get a risk free return(like triple AAA municipal bonds), that is greater than my risk adjusted return on investing in business growth - the decision is an easy one. Wouldn't we rather people invest in business activity rather than in non-productive financial vehicles? Many people are buying and holding gold rather than in something productive - we need to encourage business investment. Not raising taxes more important than the actual rate, sets a tone that will encourage such investment. This administration desperately needs to send a message to all those who have investable capital on the sidelines or in non-productive assets. Perhaps Obama is starting to get it, too bad others don't if he is.
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But it would continue to drain significant revenue from the federal treasury....to the tune of nearly another $1 trillion over ten years.
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Look at it this way, the government can increase taxes, even confiscate property any time they want. The national net worth will not decrease just because people write smaller checks to the IRS.