Pro & Con: Will allowing the Bush tax cuts to expire harm small business?

He took issue with the idea that individuals who earn more than $200,000 annually — as well as married couples who make north of $250,000 — “needed a tax cut to induce us to play ball because otherwise we’re going to take the ball and go home.”

Obama may believe that these seemingly wealthy American entrepreneurs and executives just putter around on golf courses and giggle at the poor. But the truth is that these creative, hard-working, responsible people are the economy’s collective crankshaft. They’re the ones that propel the American Dream — not government bureaucrats.

The Congressional Joint Economic Committee reported this month that small businesses — those firms that employ fewer than 250 people — historically hire three-quarters of U.S. workers. Even in this tepid economy, small companies added 35.5 million workers in 2009.

The Census Bureau discovered that small businesses employ just over half of all private-sector workers. They’ve created 64 percent of net new jobs since 1995. And they’ve funded 44 percent of America’s total private payroll.

Many of the folks who operate these job factories would be devastated if the Bush tax rates expired. According to the National Federation of Independent Business, about 75 percent of small business owners file their business’s income on their personal tax returns. While they may report more than $200,000 in income, much of that money is plowed back into their companies.

Somehow, these people are supposed to manage their enterprises cheerfully while Obama and Washington Democrats raid their bank accounts via punitive taxes. Rather than endure this onslaught, some of them will simply stop expanding their operations, creating new jobs, or functioning at all. Who needs such stagnation?

Obama doesn’t call these highly productive Americans “working people.” Instead, “the rich” should be soaked, both to finance federal programs like ObamaCare and to coerce them to act a bit more altruistically. As then-candidate Obama told Joe “the Plumber” Wurzelbacher in October 2008, “When you spread the wealth around, it’s good for everybody.”

But these same pesky “rich” people already “spread the wealth around.” The Tax Policy Center calculated that Americans who filed joint tax returns with adjusted gross incomes exceeding $250,000 paid 48 percent of all federal personal income taxes in 2009. Is that fair enough for Obama? How much more does he expect these citizens to cough up?

Worst of all, Obama’s anti-business laws and rhetoric send a dangerous signal to America’s young people. The potential of America’s youth will remain just that — potential — if today’s students dance to Washington’s daily anti-business drum beat. Its rhythms are as hackneyed as they are pernicious: People cannot succeed on their own. Business is dishonest. The prosperous are parasites. Only government can save us.

The entrepreneurial class that Obama demonizes has created America’s high standard of living and its unprecedented technological innovations. Washington relentlessly attacks these people and their success, upward mobility and self-reliance. While championing prosperity, they continue to vilify the already prosperous.

Without these entrepreneurs, we may become more equal — but it will be the equality of poverty, mediocrity and underachievement.

Mr. President: Where’s the hope in that?

Tommy Newberry is the author of “The War on Success: How the Obama Agenda Is Shattering the American Dream.”

NO: Small businesses need more customers, not another tax giveaway.

By Rick Poore

A good friend and fellow businessman once told me, “Give me more customers and I’ll be forced to buy equipment and hire people to meet demand. Give me a tax break without more customers and I’ll just go to Aruba.”

Ending the Bush tax cuts for the wealthiest taxpayers is the right thing to do for small businesses. I’ll say that again: It’s the right move for small business. Let me explain.

I consider myself an example of an average small business owner in Nebraska. I have 30 employees. My business does $2 million plus in annual sales. My personal income as the owner is less than $85,000 a year.

It’s a comfortable living, but ending the Bush-era cuts on the top two brackets won’t come close to impacting me. And it won’t impact the other small business owners I know, either.

The top brackets won’t kick in until your taxable income is over $200,000 per year for individuals and $250,000 per year for couples, and they’ll only apply to the portion of your income above those amounts, not below them.

Less than 3 percent of taxpayers reporting any business income (not limited to small business income) earn enough to break into the top two brackets.

But that’s not all. That 3 percent figure includes Wall Street hedge fund managers and K Street lobbyists whose income is reported as business income on their personal tax returns. Not exactly what you’d think of as small businesses, or our nation’s job creators.

Last time I checked, Wall Street types and their K Street friends had driven the economy into a ditch the size of the Grand Canyon and killed over 8 million jobs. Do they really deserve another tax giveaway to reward their efforts?

The idea that ending the Bush cuts for the top brackets will hamper small businesses’ ability to reinvest is a complete red herring. Any true small business that ends up with more than $250,000 net profit flowing through to the owner at the end of the year needs to hire a better accountant and rethink its business plan.

Let’s use me as an example. I gross a lot in sales, sure, but I’m busy reinvesting that money back into my business — buying equipment, promoting my business and hiring more workers.

The dollars I reinvest don’t pass through onto my personal tax return so I don’t care if that rate changes a little bit, and neither do the millions of other true small business owners in this country.

Despite all this, some politicians continue to recycle the tired old myth that a small change in the top brackets will hurt business owners’ ability to reinvest in our businesses. There are two possible explanations for this.

First, these politicians have never been close enough to a small business to learn how our taxes actually work. We’ll call that an accidental sin of ignorance. A simple cure is to get out and meet some small business owners in their home states and hear about our day-to-day operations.

Second, some politicians are playing fast and loose with the facts. They know better, but they just don’t care. That’s intellectual dishonesty — a different kind of sin. Not much I can do to help there.

The bottom line is small businesses don’t need another tax giveaway. What we need are policies that restore our customer base by getting people back to work in our communities and putting money in their pockets to spend in our businesses.

Ending the high-end tax cuts would free up close to $40 billion in 2011 and $700 billion over the next 10 years to invest in job creation and rebuild our customer base.

That’s what small businesses really need.

Rick Poore is owner of Design Wear, Inc., a custom screen-printing business with 30 employees in Lincoln, Neb.