Should The Rich Pay More Taxes?
I thought about the ignorance related to gun control and then thought it pales in comparison to the ignorance related to the rich paying more taxes. The ignorance about gun laws is nothing compared to the continued idea in Washington that government (& more government regulations) is the answer to any of our current problems. The only answer is less government, lower taxes, lower spending, no nat'l debt and a balanced budget mandated by law.
Everytime I here the idea that we have to stop giving tax breaks to the wealthy I cringe. Because in the next breath some politician says we have to create more jobs. The obvious question is, who creates jobs? Not the government (even for all its bailouts & stimuluses). It's the private sector and its not those who work for a wage. It's the business owners & the entrepreneurs. The top 10% of those taxed already pay 90%+ of the taxes. Asking them to pay more? The direct effect of those "fat cats" paying more taxes is jobs lost.
I'll give my personal example. I owned a successful aerospace design & manufacturing company that was started by myself & 3 others. We incorporated as a sub-Chapter S corporation. For those of you who don't know, that is a tax choice most small businesses make. It means the company pays no federal income taxes directly. Instead any income is divided/distributed among the ownership. In most cases this means, at the botton line, it will mean an approx 5% tax break versus being a C-corp like large businesses & pay corp income taxes directly. Companies can choose s-corp status if there are 100 or less stockholders. For other federal considerations a small business is defined as employment is under 500 employees and revenues under $250M.
But let's look directly at my company, we eventually grew to approx 200 employees and had revenues of $40M when we sold the company. The four owners eventually drew an annual salary of $150K each (none at first). In the last 5 yrs, we reported distributions of approximately $8-10M annually. According to Obama, that makes me one of the fat cats, the rich millionaires. But remember, I only drew a salary of $150K. And we never actually distributed the margins of the $8-10 million. Instead we put the money back into the company, into expanded employment - except what we had to pay in taxes. Unfortunately, I had to report income of not only my $150K salary but also K-1 distribution of the 1/4 of our business earnings. Meaning my taxes were over $250K per yr for several yrs., even while my salary was only $150K. So instead of being able to put that money into additional jobs we had to pay taxes. Had we been able to hire additional employees and grow faster we would have put many more tax paying employees to work to exceed what the IRS collected directly from me. But politicians (because they never ran a business) and most wage earners don't understand the effect of taxing small business owners. While small businesses such as mine employ most of the people in this country, Obama says these fat cats should be paying their fair share. The result is lower employment. Things are never as simple as the politicians want you to think. While the real fat cats are those born with a silver spoon in their mouths, collecting their income passively from stock appreciation, dividends, etc based upon wealth accumulated by an earlier generation, our politicians don't seem to be able or willing to make a distinction that would make a difference in creating a lot of jobs - stop taxing small business owners as if they are rich millionaires. If that were done, overnight we would have no employment issues. But instead its politics as usual.
And by the way, when we sold our business, under Clinton, we still had a 45% capital gains tax. So we were taxed yet again on what we invested.