The corporate media was pushing back hard today against President Obama’s announcement that the Bush tax cuts will expire as scheduled with no possibility of extension. You can expect this item to be of great concern to the network news readers who all have incomes much high into the $250,000 plus bracket. They don’t mention this however and make a point of interviewing crotchety old Republican businessmen who make claims about how many jobs they will cut if they have to pay more taxes. This is a false premise of course that I will come back to.
They try to make much of the estimate that this re-imposition of taxes will affect close to one million small businesses. This is a totally made up number as at least half the people in the top income bracket aren’t businesses in any real sense, but are partners in law firms and such or have a business on the side and don’t really make their money from “creating” jobs.
Most small businessmen simply don’t take that much money out of their businesses, but re-invest to minimize their taxes or they are being hammered by big business (you know, the real Republicans) and don’t make anything like 250,000 a year anyway. This is of course the false premise the Republicans are using to paint this a job killer. A business only pays income taxes on profit, taxing profit has nothing to do with how many jobs are created. In fact just the opposite is true as a higher top marginal tax rate encourages re-investment to avoid paying the higher tax.
Not a single owner operated business will cut jobs to spite Obama for raising taxes and they are by no means compelled to do so since wages are paid from gross income and not from net taxable income. The number of jobs “created” depends entirely on demand for the product or service the business provides and nothing else. The austerity the Republicans are pushing would of course cut demand for products and services that’s why the Republicans don’t want any stimulus money spent as it would have a positive effect.
Since a higher tax rate has no effect on business except to encourage re-investment and therefore growth which will ultimately add jobs, that is if the small business isn’t crushed by some big box store or driven under by imports dumped into the US market at below the cost of production. If either of these things happen the top marginal tax rate is irrelevant since no profit results in no taxes. This is why Republicans love to replace income taxes with user fees, flat taxes and sales taxes that still must be paid by small business regardless of the lack of profit.
The Republicans talk about jobs even though the eight million jobs they lost in the last two years alone that will never come back under their policies, policies that they campaign on continuing as if we will magically get a different result this time. www.prairie2.com