How Obama’s Plans Could Affect Entrepreneurs
President Obama mentioned “entrepreneurs” and “small-business owners” – “the hardest working people on earth”- several times in his first address to Congress.
The U.S. economy, he says, relies on innovation and small businesses continuing to hire workers to stay strong.
Though the President didn’t offer new proposals geared directly at entrepreneurs, he spoke about several new budget plans that will surely affect them, including soon starting talks to reform the U.S. health-care system and investing government money in renewable energy projects.
President Obama also said he intends to raise taxes on households earning more than $250,000 annually – an issue that has varying degrees of effects on entrepreneurs, depending on whom you ask.
Some research has shown that less than 5% of small-business owners earn that much annually.
Still, some experts worry that raising taxes will disproportionately hurt high-growth businesses – the ones that create the most jobs.
Photo by Kris Kros.
Jaclyn on March 3rd, 2009 11:34 am
I think it’s a great idea for higher income households to be taxed higher. the lower end income people have been getting hit hard with taxes for years and they really cant afford it considering they are on the low end of the income ratio. i think taxes should be based on your income, the more you make the more taxes you pay, the less you make the less taxes you pay.
Tomas on March 3rd, 2009 2:26 pm
Only a slacker in life would think this is a good idea….Who needs some foolish govt with a liberal agenda telling me I am too successful and he needs to steal my money to give to the lazy slackers of society that sit home with 5 kids. I never got a job from a poor person. This president has no idea how to stimulate this economy and is a complete joke…..Our only hope is to wait four years when his butt will be kicked out of office. You don’t declare war on those that create jobs and punish them for being hard working and successful. Obama will learn this the hard way!
Tomas on March 3rd, 2009 2:26 pm
To All My Valued Employees,
There have been some rumblings around the office about the future of this company, and more specifically, your job. As you know, the economy has changed for the worse and presents many challenges. However, the good news is this: The economy doesn’t pose a threat to your job. What does threaten your job however, is the changing political landscape in this country.
However, let me tell you some little tidbits of fact which might help you decide what is in your best interests.
First, while it is easy to spew rhetoric that casts employers against employees, you have to understand that for every business owner there is a back story. This back story is often neglected and overshadowed by what you see and hear. Sure, you see me park my Mercedes outside. You’ve seen my big home at last years Christmas party. I’m sure; all these flashy icons of luxury conjure up some idealized thoughts about my life.
However, what you don’t see is the back story.
I started this company 28 years ago. At that time, I lived in a 300 square foot studio apartment for 3 years. My entire living apartment was converted into an office so I could put forth 100% effort into building a company, which by the way, would eventually employ you.
My diet consisted of Ramen Pride noodles because every dollar I spent went back into this company. I drove a rusty Toyota Corolla with a defective transmission. I didn’t have time to date. Often times, I stayed home on weekends, while my friends went out drinking and partying. In fact, I was married to my business — hard work, discipline, and sacrifice.
Meanwhile, my friends got jobs. They worked 40 hours a week and made a modest $50K a year and spent every dime they earned. They drove flashy cars and lived in expensive homes and wore fancy designer clothes. Instead of hitting the Nordstrom’s for the latest hot fashion item, I was trolling through the Goodwill store extracting any clothing item that didn’t look like it was birthed in the 70’s. My friends refinanced their mortgages and lived a life of luxury. I, however, did not. I put my time, my money, and my life into a business with a vision that eventually, some day, I too, will be able to afford these luxuries my friends supposedly had.
So, while you physically arrive at the office at 9am, mentally check in at about noon, and then leave at 5pm, I don’t. There is no “off” button for me. When you leave the office, you are done and you have a weekend all to yourself. I unfortunately do not have the freedom. I eat, and breathe this company every minute of the day. There is no rest. There is no weekend. There is no happy hour. Every day this business is attached to my hip like a 1 year old special-needs child. You, of course, only see the fruits of that garden — the nice house, the Mercedes, the vacations… You never realize the back story and the sacrifices I’ve made.
Now, the economy is falling apart and I, the guy that made all the right decisions and saved his money, have to bail-out all the people who didn’t. The people that overspent their paychecks suddenly feel entitled to the same luxuries that I earned and sacrificed a decade of my life for.
Yes, business ownership has is benefits but the price I’ve paid is steep and not without wounds.
Unfortunately, the cost of running this business, and employing you, is starting to eclipse the threshold of marginal benefit and let me tell you why:
I am being taxed to death and the government thinks I don’t pay enough. I have state taxes. Federal taxes. Property taxes. Sales and use taxes. Payroll taxes. Workers compensation taxes. Unemployment taxes. Taxes on taxes. I have to hire a tax man to manage all these taxes and then guess what? I have to pay taxes for employing him. Government mandates and regulations and all the accounting that goes with it, now occupy most of my time. On Oct 15th, I wrote a check to the US Treasury for $288,000 for quarterly taxes. You know what my “stimulus” check was? Zero. Nada. Zilch.
The question I have is this: Who is stimulating the economy? Me, the guy who has provided 14 people good paying jobs and serves over 2,200,000 people per year with a flourishing business? Or, the single mother sitting at home pregnant with her fourth child waiting for her next welfare check? Obviously, government feels the latter is the economic stimulus of this country.
The fact is, if I deducted (Read: Stole) 50% of your paycheck you’d quit and you wouldn’t work here. I mean, why should you? That’s nuts. Who wants to get rewarded only 50% of their hard work? Well, I agree which is why your job is in jeopardy.
Here is what many of you don’t understand … to stimulate the economy you need to stimulate what runs the economy. Had suddenly government mandated to me that I didn’t need to pay taxes, guess what? Instead of depositing that $288,000 into the Washington black-hole, I would have spent it, hired more employees, and generated substantial economic growth. My employees would have enjoyed the wealth of that tax cut in the form of promotions and better salaries. But you can forget it now.
When you have a comatose man on the verge of death, you don’t defibrillate and shock his thumb thinking that will bring him back to life, do you? Or, do you defibrillate his heart? Business is at the heart of America and always has been. To restart it, you must stimulate it, not kill it. Suddenly, the power brokers in Washington believe the poor of America are the essential drivers of the American economic engine. Nothing could be further from the truth and this is the type of change you can keep.
So where am I going with all this?
It’s quite simple.
If any new taxes are levied on me, or my company, my reaction will be swift and simple. I fire you. I fire your co-workers. You can then plead with the government to pay for your mortgage, your SUV, and your child’s future. Frankly, it isn’t my problem any more.
Then, I will close this company down, move to another country, and retire. You see, I’m done. I’m done with a country that penalizes the productive and gives to the unproductive. My motivation to work and to provide jobs will be destroyed, and with it, will be my citizenship.
If you lose your job, it won’t be at the hands of the economy; it will be at the hands of a political hurricane that swept through this country, steamrolled the constitution, and will have changed its landscape forever. If that happens, you can find me sitting on a beach, retired, and with no employees to worry about….
Signed,
Your boss
Cassy on March 4th, 2009 5:17 am
the government should really look how people have each own living, its really good that taxes should be based on every person’s earning.
Vinny on March 4th, 2009 9:14 am
Tomas – Thank you!! That letter was perfect. For some reason our country has become full of people with an entitlement attitude that think that they should get everything but do no work to do it.
Jaclyn – First of all 48% of Americans already pay no tax. Second, why should someone who earns more, pay a higher percentage of their income as taxes? They are already paying more dollar-wise since taxes are based on a percentage of income (25% of $100,000 is more than 25% of $20,000 – wait the person earning $20,000 already pays no taxes)
We could tax the richest people in this country 100% of their income, and it would make an insignificant dent to the federal budget/deficit.
For a solution that could solve this for everyone, rich and poor alike (it’s sad that we’re heading towards class warfare in this country by using terms like this) check out http://www.fairtax.org Without changing the amount of taxes the government collects, but simply changing the way it collects them, we can free those under the poverty level from any tax, make sure that everyone pays a fair share of their tax burden, close most tax loopholes, and turn around our economy at the same time!
http://www.fairtax.org
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