Who’s not paying their fair share? According to Elizabeth Warren, those who build factories and create jobs – meaning those who create wealth. Quoting her…
“You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police-forces and fire-forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory — and hire someone to protect against this — because of the work the rest of us did.”
My question is: Who are “the rest of us” that Elizabeth Warren talks about? The top 1% pay 38% of income tax, the top 10% pay 70%, the bottom 50% pay 2.7%. Who’s not paying their fair share?
The small business owner, who can’t afford lobbyists to buy loopholes, works 60, 70 hours a week, creates jobs by hiring employees, and maybe makes 2, 3, 400 thousand a year and what happens? He/she pays 50% taxes in fed income, state income, state sales, sometimes city income tax and city sales tax, property tax, fees up the ying-yang, and for what? Continue reading .
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Do politicians never learn? California, like many other states, just passed a law mandating online companies (like Amazon.com) collect state sales tax if their “presence” in the state includes affiliate marketers.
The Supreme Court has already ruled that a state can’t mandate collection of sales tax unless a company is physically within its boundaries. So, whenever a state passes some silly law that says an online affiliate constitutes a corporation’s physical presence, Amazon tells all those poor affiliates that they can’t be affiliates anymore.
So what happens to the state? NO MORE INCOME TAXES FROM THE REVENUE ON AFFILIATE SALES!
California, which has about the worst budget deficit in the country, just shut down 25,000 sources of income tax. Why do you think so many companies are leaving California? Why have California and other liberal states lost population over the last few decades?
Because you can’t do business in California without the government as an unwanted partner. An overbearing, micromanaging, ignorant partner to boot. (A State Board of Equalization? Really? I’m just saying.)
I’ve written about this often, but the stupidity of politicians is truly mind-boggling.
It’s like when the federal government passed a special 10% surtax on any recreational boats over $100,000. What happened? The boat manufacturing business lost 20,000 jobs. With that loss of income tax, the government ended up losing money.
When a government gets too greedy, the economy goes underground. Look at Greece. 30% of its economy is “off the books”. When taxes get too high people find some way around them or just move somewhere else.
So why do governments do it? Because of the way government does accounting. Say that in your state 10 million cartons of cigarettes are sold per month. If you raise taxes by $1.00 a carton, the state gets an extra $10 million a month, right? WRONG!
People quit smoking. The politicians even say that’s why they’re doing it, to make people quit smoking (for their own good, of course, that’s why they’re called sin taxes). Or people start smoking pipes, or buy their cigarettes in the next state, or on the black market. The government KNOWS that will happen.
If that’s the case, why do they figure on collecting $10 million/month? It’s called “static accounting”. They don’t take human nature into account.
As a small business person, you know if you triple your prices you’re NOT going to triple your revenue. Why? Because people quit buying if the price is too high. If you start counting on that income you are going to be in for a rude awakening. It’s called the law of diminishing returns.
It’s the same thing with taxes only politicians are just too damn stupid to figure it out. They all just pat each other on the back and start spending the money they think they’re going to get.
This week President Obama stated that businesses don’t like added regulations “because it eats into their profits”. Well, duh! How does the government think it makes money? Through JOBS. Through BUSINESS. And the government is doing everything it can to ruin both while complaining of those ‘greedy businessmen” and companies “hoarding” cash.
Let me ask you something, would you go to Las Vegas and gamble your money if the pit boss changed the rules every 10 minutes? I don’t think so.
I don’t know about you, but I am so tired of hearing about greedy businessmen during the last 2 years. How about a few news stories on greedy governments?
Further reading:
The silly California law (PDF)
Amazon ends deal with 25,000 California websites
[Update Oct. 7, 2011]
Amazon has worked out a deal with the California legislature to hold off for a year while Amazon tries to prod the federal government to come up with a nationwide solution regarding online sales taxes (yeah, good luck with that). Amazon then sent emails to former California affiliates asking them to re-up..
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Would you play poker if they kept changing the rules in the middle of the game? Yet you, as a small business owner, are expected to plan ahead when the rules keep changing and you need a government interpreter just to figure out what the hell is going on.
What are your tax rates going to be on income, capital gains, or dividends in two months? No one knows. Hell, Congress not only left before addressing next years mammoth tax hikes, they never came up with their own budget for the government. That’s their job!
How is Obamacare going to affect your business? No one has actually read the bill and the regulations are still being written. But everyone knows it’s going to be bad for business – like the new 1099 requirement, which doesn’t even concern health care.
How about payroll? According to Inc.com,
For many business owners this year, the budgeting process may grind to a halt once they hit the payroll line item.
Aside from pervasive concerns over the pace of economic growth, there’s the rising cost of health care, new health care rules and regulations, and a tax environment that’s anything but certain. Even the small business incentives recently legislated seem to many to be too little, too late.
Let’s just take a quick look at small business health care incentives. First, it depends on the number of employees and their average salary. Then, it only lasts for two years! Then, you’re stuck with the full price. How’s that going to affect your hiring decisions?
Most small business owners I know are just “hunkering down”, trying to weather the storm. But it’s going to last for years and you have to make decisions about your business’s future.
So where do you turn? If you have a good accountant you may be able to get some advice on the government’s maelstrom of regulations.
One CEO I saw on one of the financial channels said that their employees who could interpret all of the new regulations were being snapped up by other companies at salaries starting at over $300K a year.
One good resource I often use is NFIB.com (the National Federation of Independent Business). It has a ton of free content and memberships are available at $180/year.
My only other advice is to vote the idiots out tomorrow (Nov 2). Down here in Florida we have an invasive plant called kudzu – it takes over everything and destroys the natural ecology, just like the federal government is trying to do with the economy. It’s time to break out the herbicide..
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Where are tax rates going in 2011? If you guessed “up”, you’re absolutely correct. If Congress doesn’t do anything about the Bush tax cuts which are slated to expire in 2011 here’s what happens.
The estate tax, 0% this year, will go to 55% on assets above a million dollars. Now, your estate has already been taxed. You’ve paid income taxes, property taxes, dividend taxes, capital gains taxes and you’re sitting on what’s left over and the government still wants over half of what you own when you die.
George Steinbrenner’s heirs saved $500 million dollars – that’s $500 million they wouldn’t have if George had died 6 months later.
The income tax rates, which Democrats keep insisting are “tax breaks for the wealthiest Americans” will change as follows:
- 10% goes to 15% – If you pay a 10% tax rate you are not one the “wealthiest Americans” and your tax rate is going up 50%!
- 25% goes to 28% – a 12% increase
- 28% goes to 31% – a 10.7% increase
- 33% goes to 36% – a 9% increase
- 35% goes to 39.6% – a 13% increase
Because most small business owners in America pay personal income tax rates on their business profits, this affects your bottom line. And that’s just for starters… Continue reading .
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This got my attention. In a column by Deroy Murdoch he explained one of the many consequences of Obamacare. More paperwork for us small business owners.
Specifically, ANY vendor you spend more than $600 a year on will require an IRS form 1099 starting in 2012. Whether it’s a graphics artist or Best Buy, it doesn’t matter.
According to Rep. Dan Lungren (R, Calif.)
They will have additional accounting costs that will consume time and money,” Lungren tells [Murdoch]. “They will be required to keep a running tab with every vendor, all the way from restaurants to anything they buy — a piece of equipment, an airline ticket, or a hotel room. And when they reach the $600 threshold, they will be required to file 1099s for each of those vendors.
What is Home Depot going to do with the million 1099′s it receives from all those contractors out there?
Lungren also points out that small business owners will likely do more business with big box stores rather than local businesses to alleviate the paperwork.
My question is what the hell does this have to do with health care? Now we’re starting to find out what was in those 2600 pages.
You know what else is in there?
Atop this, the Galen Institute’s Grace-Marie Turner reports that Obamacare will require employers to evaluate their health plans’ affordability by calculating each employee’s household income, not just that worker’s individual wages. This likely will involve, at a minimum, collecting income declarations from every staff member.
You’ll also have to find out whether they have an 18-26 year old at home and whether they need health care from your company.
Can the government be a bigger pain in the ass of small businesses?
“YES, WE CAN”.
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Connecticut is not quite there yet, but they’re considering it. They’re the latest in a growing number of states attempting to force Amazon.com and other large Internet retailers to collect state sales tax due to a “nexus” in their states composed of affiliate marketers.
Connecticut, like several other states, is trying to find its way around a 1992 U.S. Supreme Court decision that held a state cannot force businesses to collect sales taxes unless they have a physical presence within that state.
So, the poor Connectcuttian(?) sitting in his home office that puts an affiliate link on his web site means that Amazon has a physical presence in their state? Continue reading .
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