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home : opinion : opinion April 29, 2016

4/24/2014 6:10:00 PM
Progressives regressive tax position is killing the golden goose
Bill Forhan
Publisher

Declaring the Great Recession is over does not make it true. And concluding that American business is making windfall profits based on the stock market shows complete ignorance of how our economy really works. It is this ignorance that keeps the powerful engine of our capitalistic system sputtering.
Last week my progressive friends from the "Center for Effective Government" and "National People's Action" teamed up to blame our continuing economic woes on irresponsible corporations. While they admitted the Great Recession was only "officially" over they just couldn't pass an opportunity to bash corporate America for our political leaders inability to force the private sector to pay for government's waste and ineffectiveness.
Here are a few inconvenient statistics for my fact challenged friends on the left: 1) There were 27.9 million businesses in the US in 2010, only 18,500 had over 500 employees; 2) There were only 4,900 companies large enough to be traded on the public exchanges last year; 3) Small business created 67 percent of net new private sector jobs since 2009; 3) Small business makes up 99.7 percent of all US employer firms.
The problem with the above facts is that what is happening on main street is not driven by the large publicly traded firms whose stock prices make the headlines every day. But too much of our tax policy is made on how the 3 tenths of one percent conduct their business. The nearly 28 million who are struggling every day to provide service to their customers and jobs to their employees are the ones hit hardest by the misguided and misinformed opinions of the "fair share" crowd.
Small businesses rarely have the option to move their corporate office to another state or country in order to take advantage of more favorable tax treatment. But small businesses are the ones who get penalized most for the punitive tax policies of our economically challenged legislators and misinformed voters.
Eisenhower is often cited by the left as the conservative Republican President who kept taxes high and his economy boomed. But like most liberal arguments they leave out some really important parts of the history. While it is true that Eisenhower refused to cut taxes. It was because his primary push was to balance the budget and pay down the debt built up during WWII.
Eisenhower was successful reducing the debt to 60 percent of Gross Domestic Product by the end of his term. He maintained but did not expand welfare programs and succeeded in creating economic stability. His conservative policies led to a robust private sector economy that created the largest expansion of personal wealth in history.
The world has changed since the economy of Eisenhower's time. We now live in a global economy where our businesses and our workers must compete in the global marketplace. But progressives want us to manage our tax and economic policies based on a 1950's model. It won't work.
It is true that a number of large American corporations are sitting on significant cash in overseas bank accounts. Money that could undoubtedly spur economic progress if spent here at home. But instead of finding positive ways to encourage those companies to invest in our country we demonize them and look for ways to punish them for their lack of civic responsibility.
The problem is that business is not a charity. Businesses exist to create economic activity in a sustainable - that's progressive for "repeatable" - way. Giving away their profit to sustain government activity that is misguided and wasteful is not good economic practice.
The current crop of high tax advocates want to raise taxes so they can spend more. That will further exacerbate the problem of runaway government spending by robbing private sector businesses of much needed capital.
Progressives have failed to recognize the changing nature of the world and our place within it. It is the policies our misinformed friends on the left have promulgated and endorsed that is creating the economic instability we all must now endure. Demonizing otherwise productive Americans for taking advantage of the laws and programs our misguided government has established is just one more example of the insanity that characterizes our current national malaise.
We do need to change our tax system so our businesses can compete on a global scale. The current tax code, which was originally written to encourage economic growth and development, is now being used as a cudgel to punish the successful. It is time we put true fairness back into the process of funding our government. Those that benefit the most from government programs are paying nothing.
Increasing taxes on business because liberals are angry about CEO pay for less than three tenths of the businesses that provide the jobs in our economy is incredibly short sighted. If we really want to help the businesses on main street that drive 99.7 percent of our economic activity and are the first to hire when the economy improves, government would develop programs to help small business.
Reducing regulations and the reporting burden on small business would be a great start. But more effective would be using the Small Business Administration to actually help small businesses get low interest loans to pay down any current debt in order to help them free up resources to expand their businesses.
Main street businesses today are in survival mode. Many are forced to cut payroll in order to pay down debt accumulated during more robust economic times and nearly all are avoiding any expansion activities until the economy begins to show signs of sustainable new life.
Raising corporate taxes because the corporations haven't demonstrated the necessary level of "responsible" economic activity is a guaranteed way to insure the Great Recession continues.





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