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Name:
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MartiniMan
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Subject:
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No hope for the illiterate
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Date:
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10/11/2008 11:34:24 AM
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GF, I don't know what it was about my posts that you didn't comprehend. You are either hopelessly economically illiterate or so partisan that you are blind to cold, hard realities. So I am going to explain in detail why increases in taxes will cost jobs. But first, do you find it ironic that the Messisah Obama is now saying he may have to hold off on his tax and spending increases because of the negative effect it will have on the economy. Do you also remember Bill Clinton saying that he "increased taxes too much" which hurt the economy and probably lost the election in 2000 for Algore? Both of your heroes admit tax increase hurt the economy. But I suppose you don't care because it is an issue of "fairness", regardless of who really gets hurt which is the middle and lower classes.
So here I go again. And this is not for your benefit because you are impervious to any truth that questions the wisdom of your decision to vote for Obama. This is for those that actually have an open mind.
Running a small business is done with finite resources. What that means is I only have a certain amount of cash to run the business (payroll, rent, etc.). That cash comes from payments by clients (which occurs 60 to 90 days after service is rendered) and my line of credit. When I hire a new employee I begin to pay them a salary and all their benefits, purchase a computer, desk, cell phone, etc. from day one. I do not generate any cash from their work for 60 to 90 days. On average I spend $25,000 over that 60 to 90 days until their work starts to generate cash from client payments. Follow me so far?
So, lets assume for the sake of ease of math that I generate $1M in taxable income and am taxed at 35% on the federal level. That equals $350,000. Let's say that marginal tax rate is increased to 40% (I know it may only be 39.5% but it could be higher but I will use this rate for ease of math). That equals $400,000 in tax payments or $50,000 more in CASH that I have to send to the government. For me that equals two new jobs EACH AND EVERY YEAR THAT I CANNOT CREATE! Are you still with me because if you do not understand the preceding or are impervious to this cold, hard reality then stop reading now because you are hopeless. For those who get this please read on.
You say, well thats only two jobs, big deal. Well, multiply that by 1 million small busineses and that is 2 million new jobs each year that aren't created. It is actually even worse than that. My $25,000 per employee is actually quite high because I hire technical personnel (engineers, scientists, etc.) with degrees. Imagin how many jobs are lost if it only costs $10,000 per employee (5 jobs lost) or $5,000 (10 jobs lost).
You might say so what if small businesses can't create as many new jobs. Here's why it is important. According to the U.S. Department of Commerce, Bureau of the Census, in 2006 alone firms with fewer than 500 employees had a net gain of 1.86 million new jobs, while large firms with 500 or more employees had a net loss of 181,000 jobs. Another interesting fact, in 2006 there were a total of 6.6 million small firms (less than 500 employees) and over 16 million self employed and generated $1.9 trillion in salaries. So, increasing taxes on small businesses has an undeniable, concrete and signifiicant negative impact on our economy.
Does any of this mean anythig to you or are you going to cherry lick some quote from the Obama campaign website or spout some meaningless platitude?!?!?! I keep saying the same thing over and over again. THOSE WHO ARE GOING TO BE HURT BY OBAMA'S TAX INCREASES ARE THE POOR AND MIDDLE CLASS!! I can generate my net income just as easily with 100 employees as I can with 250 employees, and in some ways it is easier. But I feel an obligation to try to create jobs and will do so as long as the government doesn't unduly impede my ability to do so.
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