Thursday, June 23, 2011
After a month long slumber from posting I have been rudely awaken by "Tiny" Tim Geithner boldly admitting to being in favor of higher taxes for small businesses. I found the link through the Drudge Report. Normally I would give the out of context quotes the benefit of the doubt. (Geithner saying taxes need to go up on the wealthy) However based on the actions of this administration and Tiny Tim, I will not give the benefit of the doubt. Mainly that they refuse to address long term structural deficits in the form of entitlements and they add to the entitlements in the form of health "reform". The Obama administration has done nothing to correct the hidden low effective tax rates born by large business. In a sense they will effectively punish the small business owners and the working (productive) wealthy. If you want to go after somebody go after the "helicopter rich" folks ($2mil+) that earn their monies through capital gains (private equity comp), stock options, and other benefits. The constant solution for Obama has been to focus on raising taxes/revenues versus taking care of the spending problems. I don't pray at the "no tax anytime" alter of most Republicans, but the vast majority of the gaping budget hole has to be filled with cuts.
My solution is level the playing field with my version of the Carrot & the Stick. The Carrot: lower corporate tax rates for all business. The Stick: eliminate all subsidies in the form of corporate welfare & simplify the tax code. Loopholes are created and exploited by the larger corporations. Small biz doesn't have the ability to employ legions of lawyers & accountants nor has the ability maneuver operations oversees. This all would be revenue neutral and in time would grow revenues as business and capital infusion will sustain new business activity.
Until there are real solutions that fix these long term structural problems business and individuals will be frozen in uncertainity and we as a country will not be able to heal from the decades of profligate spending & excess. Expect a muddle through economy at best and continued pressure on capital markets absent of temporary government & monetary intervention.