November 23 2010
Obama's Got My Back
I'm not worried about the Bush tax cuts. I'm not one of the millionaires who signed a letter to Obama yesterday, willingly giving up more of their money. I'm not a millionaire at all. So why should I care if their taxes are raised?
During the past decades, small business has been responsible for about 60 to 80 percent of new job creation in the U.S. A lot of my college-educated friends are unemployed, and they could use a job opening in a small business somewhere. But I'm still not concerned because, hey, I've read it in the Huffington Post and the Washington Post - most small businesses won't be affected because they don't earn more than $200,000 a year in profits. It's only the richest small business owners who will suffer.
No, I'm not worried about those rich people at all.
But here are a few inconvenient truths to consider:
The top three percent of small businesses employ the majority of people who work in small business. You can bet that these firms will be subject to a tax increase under Obama's plan, and you can bet that it will cost people their jobs. That's adding to unemployment, not lowering it.
Furthermore, the small businesses at the top are the ones who typically can afford better benefits and faster wage growth for their employees. The job market is competitive, and when the best businesses make a job offer, other small businesses feel pressure to offer the best benefits and salaries possible to compete for the best laborers. But wait - if the most productive small businesses are punished with a tax hike, they won't drive benefits and salaries up anymore. In fact, they'll have to limit these things, and/or raise prices to consumers (like you and me).
Oh, but these high-earning firms are just lawyers and stockbrokers, right? "I don't have a lot of sympathy for them," said a clothing salesman in Nebraska. Well, what about doctors' and dentists' offices? Do you want to see their prices increase to cover their higher tax burden?
With my modest salary, I thought Obama had my back on tax policy. He doesn't want to raise taxes on me. And in his plan, he says he won't. But the indirect effects will keep more of my unemployed friends out of work, and will slow wage growth, business growth, and GDP growth in the U.S. That hurts people like me, even though I'm a few brackets away from a millionaire's income.
I thought he had my back. But it looks like he doesn't get it.