The coming end of the Bush tax cuts has once again come to a boil but this time with the Democrats vowing to block any change that would add to the deficit. This after the Republicans all ran their elections on a platform of lowering the deficit, and are now happy to do it as long as the high earners don’t get taxed. They are even shamelessly holding the unemployed hostage to get what they want and it’s just business as usual.
This morning a Congress woman from I don’t know where was interviewed on a morning talk show about this. She was repeating what everyone has already heard in every other interview that if the people who create jobs have to pay more in taxes then they won’t be able to create more jobs.
Forgive me if I’m missing something and maybe someone can explain this to me better but here is my understanding.
You own a business. You’re business is selling more product, or doing more business and you can’t keep up and need to hire someone to keep up. So you hire someone and pay them let’s just say $40k a year. But because you hired them your business made $80k more than you would have without him. Now your profits have gone up, and you just have to pay a little bit more on your taxes. Aren’t you still making more money?
If you had to pay more taxes, why would it prevent you from hiring someone to make your business more profitable?
You’ve already had these tax breaks for 10 years. If you couldn’t hire someone 6 months or a year ago why would not taxing you more change that?
Another example that keeps being repeated by Republicans is Joe the Plumber. He’s not rich, he’s a small businessman who also hires his brother in-law and makes gross sales of $250k. But he wouldn’t be able to continue his business because his taxes would go up.
Again, forgive my ignorance. but here is my understanding, and please correct me if I’m wrong.
His gross sales are $250k, He pays his brother in-law $40k, his cost for parts, vehicles, and just doing business is $100k. So he gets taxed on the $110k that he profited as his income. This is below the $250k and above range that the Democrats proposed to tax higher. So where is the problem?
Even if someone made $1 Million Dollars in gross sales in a small business. After business costs let’s say you profited $500k. You would still only pay the higher tax rate on anything above $250k and the lower tax rate on the first $250k. Again, What is the problem? If you want to lower your profit margin by investing more directly into your business (like hiring more workers) you can do that also. This will make your business more valuable, and it will lower your higher tax burden.
So, why do I feel like I’m missing something? Is this too simple to understand. Why have examples like this not been pushed by the Democrats? I know the Dems are pissed at the deal the President has made and I think they should be. Maybe that was the idea, nothing else seemed to stir them up before. Am I wrong?
