Kathleen McCaffrey, Associate Editor
Ideology: Libertarian | Writing from: New Jersey
Associate Editor Kathleen McCaffrey calls out the impending assault on small business.
In 2005, Robert Greenwald directed a documentary entitled “Wal-Mart: The High Cost of Low Price.” In the film, Wal-Mart was portrayed as soul-crushing titan of retail, destroying communities and small businesses around America. The film received great reviews and sparked a whole anti-Wal-Mart movement. It received endorsements from many unions, Wal-Mart watch groups, and organizations like MoveOn.org.
In 2009, Barack Obama fulfilled his promise to the American people by proposing drastic healthcare reform legislation. While I can fill several pages with all of its fallacies and silliness, one facet that will be particularly detrimental to the average American is its restructuring of small businesses. Under ObamaCare, business costs will increase dramatically because of requirements for comprehensive employee healthcare coverage, or fine businesses that waive healthcare compensation. (Let’s not even broach the subject of energy/utility costs under Cap and Trade.) To help pay for healthcare reform, Rep. Charles Rangel, champion tax-dodger, drafted a bill that “would impose a ‘surtax’ on individuals with adjusted gross income of more than $280,000 a year. This would hit job creators especially hard because more than six of every 10 who earn that much are small business owners, operators or investors, according to a 2007 Treasury study.” This new tax system would cause small business owners to pay higher tax rates than the Fortune 500 and most companies around the world! Most small businesses have been struggling in the past year; a tax increase this dramatic will certainly wipe out a significant portion of the ‘Mom and Pop’ stores that Wal-Mart missed. Perhaps this is why Wal-Mart is behind this legislation…
Small businesses matter more than Charles Rangel apparently realizes. In fact, businesses with less than 500 employees account for roughly half the GDP and more than half the employment in the United States. With unemployment at a twenty-six year high, making every employee cost more to the employer will not open up more positions at every business. It will, in fact, do just the opposite. Small businesses are a source of innovation in an economy that believes in bailing out losers with dated practices. The mind of the successful entrepreneur is forward thinking, with a true stake in a company’s failure that manifests itself in an exceptional work ethic. Of course, taxing this progress will only make it easy for larger, slower corporations to seize control of our market. (Prepare your ribbon-cutting ceremonies or protests signs for more Wal-Mart openings.) It is unproductive to skew this playing field and punish entrepreneurship. Despite this, Barack Obama, in a surprising act of denying money to someone who asked politely, will probably not be bailing out CIT, a bank that specializes in small business loans.
Personally, I love Wal-Mart. There is little in this world I enjoy more than a bargain. (ClifBars at .65/piece? Sign me up!) If hatred of Wal-Mart can be harnessed to oppose ObamaCare and save small businesses though, I’ll take that too.
You are absolutely right. I also love Wal-Mart but agree that the healthcare bill will make paupers of us without providing necessary timely healthcare. If it passes I will buy Wal-Mart stock! It may end up as “the only game in town.” Of course any dividends and any money I make will end up being taxed to pay the huge debt that is being incurred by the so-called “healthcare” bill and I will end up with a penny on the dollar!
I couldn’t agree with you more. Small businesses being able to grow is one of the most important factors to economic growth and big government is not making any room for this growth.
There’s a difference between taxing the owner’s income and taxing the profit of the small business. Just because the owner is being taxed more, it does not mean that the company is being taxed more. In response to criticism, Rep. Charles Rangel (D-NY) said, “We exempt small business from a lot of the penalties. We give tax credits so that they’re able to hire and get people health care in small businesses. This is a tax on less than 1 percent of the wealthiest people in the United States of America.”
$250,000 is a lot of money. A tax increase on anything over $250,000 will probably not break the bank (the first $250,000 dollars keeps the same tax rate. It is the money over $250,000 that gets taxed, and even that is on a graduated taxing scale.)
On another note, yeah I like cheap prices too, but Wal-mart’s bad press not only came from ruining “mom and pop” stores, but also because it paid no attention to worker’s rights. They are probably supporting this measure so that they can look better in the media, as if to say,” we love our workers!”
Taxing the people who put money into a business is just as detrimental as taxing a business. When it comes to investors, 250k is hardly anything to brag about. There is no small business tax rate – its taxed as a component of a personal income. This tax rate would apply to the income of the business because the income of the business is listed as personal profit according to the IRS.
Also, what does Charlie Rangel know about paying taxes anyway? http://online.wsj.com/article/SB124753106668435899.html#mod=todays_us_opinion
I’d hardly accuse Wal-Mart of “not paying attention to worker’s rights.” Wal-Mart pays higher than many other jobs, promotes from within, and its suppliers in developing countries provide higher wages. They also employ elderly and disabled. I agree, though, that it could also be a ploy to look good. I believe my original theory is correct though.