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Small Business Owner Retorts GOP Talking Point: 'Tax Cuts Don't Trickle Down'

by Lew Prince

I've run a small business for more than 30 years, and the claim that more tax cuts for the rich can generate jobs at small businesses is ridiculous. Expecting high-end tax cuts to trickle down as job creation is about as reasonable as pouring gasoline on your hood and expecting it to run your engine.

As the clock runs out on the Bush-era tax cuts, Congressional Republcians are in a game of chicken with Democrats about extending them for all Americans or just those making less than a quarter-million dollars a year. (CBS/ AP) My company's success or failure is tied to the economic health of our 24 employees, our customers, our community, our state and our country. The quick-buck artists who have increasingly dominated our financial system since the 1970s don't care about the long-term growth of companies they temporarily "invest" in or the well-being of the people who work at them. Now they're trying to sell us more tax cuts for the rich - cloaked in concern over small-business owners and jobs.

When tax cut lobbyists tell you that small-business owners will use the money saved from lower tax rates to hire someone, they've got it backward. Either they've never run a small business, or they're trying to mislead you.

My tax rate doesn't affect hiring. If I think I can do more business, I hire more workers. The costs of finding, hiring and paying new employees are business expenses. They're deducted upfront from our taxable income.

Ultimately, those new employees are going to earn my company more in profit than it costs to find, train and pay them. That's how capitalism works.

So if Congress wants to help my company - and other small businesses - create jobs, it should support tax and economic policies that boost broad-based consumer income and spending.

"Experience shows that lower tax rates for high incomes don't generate better job creation," says a new report by Business for Shared Prosperity. "As The Wall Street Journal reported, President Bush ‘shows the worst track record for job creation since the government began keeping records' in 1939. The Bush administration created just 1.1 million jobs net, while the Clinton administration created 22.7 million."

We can't afford to extend the Bush tax cuts for the 2 percent of Americans with yearly income above $250,000 for couples or $200,000 for individuals. And contrary to myth, the average small-business owner makes a lot less.

Actually, fewer than 3 percent of taxpayers with any business income at all make more than this - and many in that 3 percent are not small-business owners. They include Wall Street investment partners, chief executive officers getting paid to sit on the boards of other big companies and partners in wealthy real estate or law firms.

Giving a tax cut windfall to the guys who made billions trashing our economy and ripping off ordinary investors and pension funds by selling worthless mortgages and derivatives is wrong. They were bailed out and didn't even have the decency to thank us. Instead, they turned right around and poured their profits into obscene paychecks, more speculation and lobbying. And they're likely to do the same with their tax cut money. Is that good for our economy?

When I look around, I don't see small-business development programs, road and bridge repairs, public transit projects, libraries, schools, job training, water treatment or health and safety inspections that could be cut so wealthier people can pay less taxes. Do you?

This budget-busting tax giveaway to the rich is expected to add $700 billion to the federal budget deficit in the next decade. That's money we need to invest in infrastructure, education, renewable energy and economic development.

It'll put people back to work today and lay a strong foundation for Main Street businesses and middle-class jobs in the future.

Those jobs are likely to mean more people walking into my store - and into the neighborhood restaurant, realtor, grocery, auto dealer and all the businesses that make up our Main Street economy.

Congress and President Barack Obama should extend the middle-class tax cuts. But additional tax cuts for high-income households would be irresponsible.

Lew Prince is managing partner of Vintage Vinyl, an independent music store in St. Louis. He is a member of Business for Shared Prosperity (www.businessforsharedprosperity.org).

 

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