1. Credit for small businesses in the US is practically non-existent
2. Businesses are being forced to scramble for needed investments, making do with cash flow and working out of profits.
3. 75% of the "rich" that will see the Bush tax cuts go away are small businesses.
3. All net new jobs of the past two decades have come from small businesses and start-ups.
4. And yet as of now, when structural employment is over 10% Congress wants to reduce the availability of revenues to the very people we want to be hiring new workers, and who are cash-starved as it is.
5. It is not just that taxes will go from 35% to just under 40%. It is the increase in Medicare taxes coming down the pike, too.
6. Congress wants to take money from private hands, where it has the potential to increase productivity, and put it into government hands, where it will do nothing for growth of the economy. There is no multiplier for government spending.
7. Tax increases reduce potential GDP by a multiplier of at least 1 and maybe 3, depending on which study you want to cite.
This is not a democrat or republican issue, this is real life. Before we get seduced into class warfare by the pundit spin on the economy, consider the facts. As with healthcare, finance reform, national security and immigration, the conversation is the right one. What emerges from our national leadership is something altogether different.
I understand that taxes have to go up. I get it. But we would be better off having a discussion of where we want to tax dollars to come from before we risk hurting an economy that will barely be growing at 2% in the 4th quarter, and may be well below that.
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