Raising Taxes on the "Rich"

President Obama has come out today with his new budget and plan for fixing the deficit. His plan is to raise the taxes on the so called "Rich". What does this mean? This means raising taxes on those whom make $250k plus. Who are these people? Yes, these people are people like Bill Gates and Warren Buffet.

The problem with these numbers are that while they do include CEO's like Rex Tellerson of Exxon/Mobil who is compensated about 5mil for his work to Robert Kanode of Valence Technology INC who is compensated $250k/year for his work, they do not take into considerations small businesses.

If you look into your community you will see many small businesses that net more than $250k/year. The local small automotive shop that you get your car worked on, the dry cleaners you use, even the small lawn service you might have come by to take care of your lawn so you do not have to mow.

What most people do not realize is that many small businesses operate under the owners social security number. What does this mean, or what does it matter? This is significant b/c when the company makes $250,000 for a year, the business owner is not taking that home. Odds are more likely that one $250k, a business owner may bring home about $30k.

Okay, now you are asking "How many people does this effect?" Well I have an answer for that too. The U.S. Small Business Administration (a Government administration) reports that small business makes up 99.7% of all employer firms (http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24) and have created 65% of the Net NEW jobs over the past 17 years.

Those are not little numbers. This means that when you increase the taxes on people who make + $250k, you limit the ability for the private sector to create new jobs and for them to also create more products.

Here is how this works for the consumer. The Government increases taxes on the so called "Rich". Small Business has three options; 1) shut the doors b/c you can not afford the taxes and lay off the employees so that you can get a job that pays more and keeps you under the "Rich" threshold, 2) Try to tough it out, maintain the status quo, lower salaries to employees and try to maintain, and 3) Raise prices to the consumer and let the consumer take the hit. Which method is going to be chosen by most small business? It will be the later. As a small business it makes better sense for a business to turn the hit over to the consumer and cover the problem. This means the price of EVERYTHING goes up. Milk, Gas, Food, Car Repairs, Funeral Arrangements, Entertainment, ETC...

So, who does this hurt in the end? The lower class. Those who as a family make under 100k. Those who live on a tight income. They are the ones who will be with less money at the end of the day. Their dollar is the one that will not go as far.