Here are two news bulletins for new members of Government
-- Small-business owners will not go out and hire people if by doing
so they have to reduce their take-home pay -- they will continue to do
most of the work themselves and pocket the profits.
-- Asking small-business owners to increase their expenses today in
return for a tax deduction or credit, which they won't see until next
year, is a non-starter -- it's like the Wimpy character in the old
Popeye cartoons, who "will gladly pay you Tuesday for a hamburger
For small-business tax breaks to be really effective, they will need
to put more money in small-business owners' pockets (or at least not
reduce their current ODI).
Here are the tax breaks America's small businesses really need to grow
and create jobs the way the government wants them to do. Newly elected
members , whatever your party affiliation, please take note.
- -- Eliminate employment taxes for small payrolls. Most employee
salaries are artificially inflated because of Social Security,
Medicare and other employment taxes. This makes employees extremely
expensive and discourages small-business owners from hiring people. By
eliminating these taxes for payrolls of less than $5 million, three
wonderful things will happen:
- -- Small businesses will actually go out and hire people, because they
can now pay them lower wages that employees can live on without
drastically reducing the owners' own incomes.
- -- Employees will end up with more after-tax money in their pockets
(many existing employees will get a "de facto" wage increase), which
will encourage them to spend more on stuff.
- -- Small-business owners will no longer have to pay huge sums to
bookkeepers, accountants and payroll services to help them keep track
of the byzantine employment tax rules.
eliminate these taxes on the owners' "self-employment income" as well.
A "pre-emption" of state and local payroll taxes eliminating those as
well on payrolls of less than $5 million would be nice, but I'm not
holding my breath for that.
For the ideas file on how to make things work better