I've been swamped lately and haven't had too much time for the poli-talk. Plenty of it going around as it is anyway, though I've been itching to critique some of the things going on with the McCain campaign.
I wanted though, to jump in on the small business discussions going around. I have had a few people tell me that small businesses making more than $250,000 are the exception, not the rule, and they'd love to be banking 250k ebt, etc.
I think this is where it's important to keep a little perspective.
Small business is defined in the U.S. has companies with 100 employees or less. Let's take a 100 person company, and divide $250,000 in revenue out. That leaves you with $2500 for each employee to cover costs, salary, etc -- with nothing left over for reinvestment, growth, rent, utilities, supplies, etc.
$250,000, more likely, is about enough to cover 5 employees with enough left over to reinvest, pay benefits, taxes, rent, utilities, etc. etc. Even with that, thats assuming each employee makes/costs around $30,000-$40,000 a year.
But, but, that's all a write off! Yep. But it's a discussion about growth, not maintaining. If you want to grow your company, you'll need to reinvest a substantial amount. Keeping $250k isn't something that will get you very far, especially in the midst of a credit crisis where no one can borrow anything. It's a lot of money when looked at as take home revenue for one individual owner, it's not when looked at from a re-investment stand point. For my tech friends -- think about blowing up a startup with full time employees with $250,000 in total VC money. It may be enough to get you going, but heaven forbid a speed bump shows up.
And thats the argument. Companies looking to grow need to keep every penny they can in order to properly reinvest and survive economic swings. If we're looking to create jobs, we need to grow business. We're heading into a questionable economy that will likely take years to play out. Companies, specifically small ones with out a lot of resources, need to be very, very cautious of cash flow. Higher taxes will almost certainly play a part of that. And regarding companies banking far more than that, if we want to keep jobs here, we need to provide manageable corporate tax rates (one of the major reasons AB sold to InBev earlier in the year.) We're global now and "them's the breaks".
It wasn't that long ago when it was the primaries. Obama, when pushed, admitted he may not be able to implement his tax policy immediately depending on the economy. He knows, precisely, what the costs of this are. And that's fine. He calls it like he sees it, which is, to quote him, "to spread the wealth around." (the joe the plumber discussion).
I'm just surprised by how many Obama supporters aren't willing to call it out the same way. Look past the talking points (for both candidates). Tax increases do not equate to higher revenue. Tax cuts do not equate to lower revenue. There are pros/cons to both plans, and truthfully it likely maps out to a bell curve when it comes to growing the economy properly. Our goal is to find the right mix of tax rates to reach the highest point of efficiency. With a decreasing amount of growth, the answer isn't to raise taxes to cover spending, it's to cut spending and provide as much relief as possible to tax payers. Specifically tax payers looking to grow revenue (and even more specifically, companies looking to take revenue in from other economies around the world, but I digress).
I wanted though, to jump in on the small business discussions going around. I have had a few people tell me that small businesses making more than $250,000 are the exception, not the rule, and they'd love to be banking 250k ebt, etc.
I think this is where it's important to keep a little perspective.
Small business is defined in the U.S. has companies with 100 employees or less. Let's take a 100 person company, and divide $250,000 in revenue out. That leaves you with $2500 for each employee to cover costs, salary, etc -- with nothing left over for reinvestment, growth, rent, utilities, supplies, etc.
$250,000, more likely, is about enough to cover 5 employees with enough left over to reinvest, pay benefits, taxes, rent, utilities, etc. etc. Even with that, thats assuming each employee makes/costs around $30,000-$40,000 a year.
But, but, that's all a write off! Yep. But it's a discussion about growth, not maintaining. If you want to grow your company, you'll need to reinvest a substantial amount. Keeping $250k isn't something that will get you very far, especially in the midst of a credit crisis where no one can borrow anything. It's a lot of money when looked at as take home revenue for one individual owner, it's not when looked at from a re-investment stand point. For my tech friends -- think about blowing up a startup with full time employees with $250,000 in total VC money. It may be enough to get you going, but heaven forbid a speed bump shows up.
And thats the argument. Companies looking to grow need to keep every penny they can in order to properly reinvest and survive economic swings. If we're looking to create jobs, we need to grow business. We're heading into a questionable economy that will likely take years to play out. Companies, specifically small ones with out a lot of resources, need to be very, very cautious of cash flow. Higher taxes will almost certainly play a part of that. And regarding companies banking far more than that, if we want to keep jobs here, we need to provide manageable corporate tax rates (one of the major reasons AB sold to InBev earlier in the year.) We're global now and "them's the breaks".
It wasn't that long ago when it was the primaries. Obama, when pushed, admitted he may not be able to implement his tax policy immediately depending on the economy. He knows, precisely, what the costs of this are. And that's fine. He calls it like he sees it, which is, to quote him, "to spread the wealth around." (the joe the plumber discussion).
I'm just surprised by how many Obama supporters aren't willing to call it out the same way. Look past the talking points (for both candidates). Tax increases do not equate to higher revenue. Tax cuts do not equate to lower revenue. There are pros/cons to both plans, and truthfully it likely maps out to a bell curve when it comes to growing the economy properly. Our goal is to find the right mix of tax rates to reach the highest point of efficiency. With a decreasing amount of growth, the answer isn't to raise taxes to cover spending, it's to cut spending and provide as much relief as possible to tax payers. Specifically tax payers looking to grow revenue (and even more specifically, companies looking to take revenue in from other economies around the world, but I digress).

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