Tuesday, July 10, 2012

Say What?

(Editorial cartoon by Mike Luckovich and published 7/10/12 in the Atlanta Journal-Constitution. Click on image to enlarge and then please return.)

I really must be getting old. Try as I might, I could not quite grasp the argument Mitt Romney was making in response to President Obama's push for the limitation of tax cuts to middle class couples making less than $250,000 per year.

Previewing the message that he will bring Tuesday to the swing state of Colorado, Mitt Romney told a conservative talk-radio host that President Obama’s tax cut extension proposal would “kill jobs” and harm the middle class.

“What the president is proposing is therefore a massive tax increase on job creators and on small business,” the unofficial Republican presidential nominee told Virginia-based conservative radio host John Fredericks in a taped interview that will air Tuesday. “Small businesses are overwhelmingly being taxed not at a corporate rate but at the individual tax rate. So successful small businesses will see their taxes go up dramatically, and that will kill jobs.


My understanding is that the tax cut being proposed was on personal income taxes, not on business taxes. That's just for starters. And I'm not so certain that small businesses which are not incorporated are taxed at the individual rate, but even if they are, those businesses also are entitled to deductions for the cost of doing business: the tax is on the net profits. It's hard to follow Mr. Romney's logic on this (assuming, of course, that there is some logic involved). Finally, this is not actually a new tax, but merely a partial extension of a tax cut imposed by George Bush as a temporary measure when the economy started to head south. The tax cuts were supposed to stimulate the economy and give businesses an incentive to stop laying off employees and to hire new ones. We've seen how well that worked.

What I find ironic is that the man who ran Bain Capital, a company which bought other companies, stripped them of their assets, and then laid off the employees or which shipped the jobs overseas, is making this argument. He didn't seem to have much concern for US job expansion back then, did he.

This is also the man who stashes a lot of his money in tax havens outside of the US so he doesn't have to pay any taxes on that money. He doesn't seem to have much concern about the federal deficit at all.

Like I said, I must be getting old.

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Anonymous Anonymous said...

Two comments - first business owners who run their business as a sole proprietor are tax as individuals. Second everybody seems to have lost sight of the fact that the increase in tax from the 35% tax bracket to the proposed (old)n tax bracket of 38% is a 3% tax increase not a 38% tax increase.

4:30 PM  
Anonymous Anonymous said...

Most truly small businesses (not the 1000-employee "small" type which are called that only for the benefit of defense contracts and the like) are structured so that the owner pays personal income tax on the profits. However, only about 3% to 4% of those companies make more than $250K a year in profits. And of those, only the amount above $250K is taxed at the higher, marginal rate. So even of the 3% to 4%, most will pay a very small additional amount in taxes, an amount lower than the paid during the Clinton, Bush I, Reagan, and previous administrations.

11:14 PM  

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