thoroughly enjoyable debate

[Tossica]

You really have no idea about how business finances work, do you?

I think I do, what's your experience?

[Tossica]

I asked the CFO that very question just now btw and he said "We don't benefit from the current administrations tax breaks so it wouldn't affect us at all. The only benefit we have seen from any kind of financial "laws" is that we don't have to pay unemployment insurance for ourselves as business owners anymore and that's at the state level."

[Martrae]

No, you don't. If you did you'd know that taxes would come from the business not the owner's salaries. Which means they'd be more likely to delay ordering parts or office staples (or worse case...let someone go) than they would not buy a bigger house.

My experience with business finances started when I was 12 and I started helping my grandmother, who happens to run a highly successful business and has done for nearly 40 years, keep the books. She taught me quite a bit over the years I worked with her. There is also the work I did with the company comptroller while I worked inventory control. Filing tax forms and allocating money was also part of my job as well as working with AR and AP. I also did extensive research on my own when Kahar and I considered opening a business of our own a couple years ago.

[Tossica]

No, you don't. If you did you'd know that taxes would come from the business not the owner's salaries.

The owners salaries are based off of profits. Paying more taxes (which I've already established would NOT happen) would cut in to the businesses profits. They pay themselves a small base salary and do profit sharing amongst the 3 owners. If profits are lower, the ONLY things that change are how much the owners make and whether or not we can afford a new phone system, etc. Letting someone go is not an option as the business would not be able to function without each and every one of us and each owner would be willing to take a cut in pay if it meant the business would stay afloat.

[10sun]

Some quick facts:

The estimated 23.7 million small businesses in the United States:

* Have generated 60 to 80 percent of net new jobs annually over the last decade
* Employ 50 percent of the country’s private workforce
* Represent more than 97 percent of all the exporters of goods
* Represent more than 99.7 percent of all employers
* Generate a majority of the innovations that come from United States companies
* Account for more than 40 percent of the offline economy of the United States

As Tossica said those numbers are bullshit.
Note the number of small businesses. In 2002 there were only 23.3 million businesses. I am just going to use the 2002 Census figures. I am making the assumption that anything under 100 employees should be considered "Small business".

I don't feel like generating the 60-80% of all net new jobs figure. I cannot say one way or another if it is accurate or misleading.

In 2002, it was 73.2 million(big business) to 41.8 million(small business) for total employees. I have no doubt that the number has risen for small businesses, but whether or not that number is legitimate is another story. I think people are just wising up to the tax code because the disparity between Payroll is just incredible.

There were 5,083,750 businesses on record according to the Census information; of which, 4,980,165 were small businesses. That means 97.9% of all businesses are small. Representing 97% of all exporters isn't a difficult task.

99.7% of all employers is also misleading. It is just another way of saying that there are more small businesses than large. Not a big deal at all.

The rest of your figures are meaningless, not even deceptive.

How about a number that does have an impact on your average joe. How much are employees getting paid?

Average salary for someone who works someplace with less than 100 people? About $30,800 a year.
Average salary for someone who works someplace with 100 people or more? About $39,900 a year.

So those who work at a large business earn roughly 30% more than their small business counterpart on a strict salary basis. This does not include bonuses or other benefits including medical / dental / 401k etc.

-Adam

[Lyion]

We aren't talking individuals, we are talking business. When you go into corporate America, you have to take into account Unions, Government workers, and this will segue into why so many of these jobs are going overseas, and why some industries with overpaid underskilled workers, i.e., the auto one, are going into the can.

All your points have no frame of reference to this current debate on reversing taxes that help small business.

Martrae's points are facts, and certainly not meaningless.

[Martrae]

Oh well...if Adam doesn't agree with the number they MUST be wrong.

You've forgotten the rise in costs for things you purchase for you business, Toss. Tax, tax, tax and pretty soon you're looking at slim to no profits and if you think your employers are going to continue on their small base salary without making some cuts, you're dreaming.

Also, if you think any of the dems and most of the reps are going to do more than INCREASE the taxes on the EVIL RICHtm (redheaded stepkids) then you don't know your recent history.

[10sun]

We aren't talking individuals, we are talking business. When you go into corporate America, you have to take into account Unions, Government workers, and this will segue into why so many of these jobs are going overseas, and why some industries with overpaid underskilled workers, i.e., the auto one, are going into the can.

All your points have no frame of reference to this current debate on reversing taxes that help small business.

Martrae's points are facts, and certainly not meaningless.

* Generate a majority of the innovations that come from United States companies
Define innovation.
I take that to mean a patent because that is the only quantifiable measure of innovation.
Just because something is patented doesn't make it an innovation.

* Account for more than 40 percent of the offline economy of the United States
This does not state in what form it is 40 percent of the offline economy.
40% of all offline sales occur at small businesses? No.
Small businesses represent 40% of all offline retailers? Possibility. By no means indicative of volume.
For every $100 spent offline, $40 are spent at small businesses? Sure, if you include real estate (Real estate agents are not considered employees by the Census) & car dealerships.

Martrae's "facts" use deliberately misleading and vague terms, making them no more fact than a cloud is solid.

Martrae said:
Small businesses are a major driving force in our economy. If you tax them out of business the economy suffers far quicker than under 'normal' circumstances.

This is not true.

[10sun]

oh and to cite my primary source:

Table 2b @ http://www.census.gov/epcd/www/smallbus.html

[Martrae]

The Small Business Administration (SBA) has announced the top 10 reasons to love small business, what the SBA's Office of Advocacy calls "the heart of the American economy."

10. Small businesses make up more than 99.7% of all employers.

9. Small businesses create more than 50 percent of the nonfarm private gross domestic product (GDP).

8. Small patenting firms produce 13 to 14 times more patents per employee than large patenting firms.

7. The 22.9 million small businesses in the United States are located in virtually every neighborhood.

6. Small businesses employ about 50 percent of all private sector workers.

5. Home-based businesses account for 53 percent of all small businesses.

4. Small businesses make up 97 percent of exporters and produce 29 percent of all export value.

3. Small businesses with employees start-up at a rate of over 500,000 per year.

2. Four years after start-up, half of all small businesses with employees remain open.

1. The latest figures show that small businesses create 75 percent of the net new jobs in our economy.


That better?

[Martrae]

And perhaps this will help

http://usgovinfo.about.com/od/smallbusi ... drives.htm

[10sun]

9. Small businesses create more than 50 percent of the nonfarm private gross domestic product (GDP).

6. Small businesses employ about 50 percent of all private sector workers.

5. Home-based businesses account for 53 percent of all small businesses.

4. Small businesses produce 29 percent of all export value.

1. The latest figures show that small businesses create 75 percent of the net new jobs in our economy.

That better?

Of course.
However, there is still no evidence that eliminating tax breaks for small businesses will cause a true detriment to the American economy.

The problem remains that many of these small businesses are not worth the money they are receiving in subsidies. I may not be directly paying for them, but if the government has to make up the extra money someplace & not from the American small business, where is it coming from? Citizens paying taxes.
Germany has a similar problem with government tax benefits being exploited by the populace.
Uwe Boll is still around making shitty films because of these tax benefits.

Do you want your tax dollars to help finance American versions of Uwe Boll?
That last part isn't entirely accurate, but close!

Second post response:
That data is shifted from the original definition by defining Small Businesses as those with fewer than 500 employees.
Medium size business(those employing 100 to 499 employees) employ 16.8 million employees total.

[Arlos]

Going back to an earlier argument about deficit spending and Bush vs Clinton, may I post the following graphic:


Note the dramatic increase under Bush starting in 2000. Here's a graphic that makes it clearer:


Notice how during Clinton's entire term in office, with one minor short blip, the accumulation of new debt drops dramatically, completely reversing the trend that Reagan started and Bush Sr. continued. (Though, it did turn around in Bush Sr's last year in office, which I must give him credit for). Now, notice the El Capitan-like cliff face of debt increase starting in 2000 under Bush Jr. CONGRESS didn't change dramatically, just the Presidency did.

Now, as for Lyion's "Employment growth" statistic.


Funny, I see a rather dramatic dropoff in the employment rate post-2000.

Now, as for small business and taxes... How much does a small business spend providing health care to its employees, assuming it does so? I submit that even if taxes are raised precipitously, which I do not believe will happen, small business will come out AHEAD once we have some form of universal health care, because they will no longer have to PAY for it. Health care costs are what is REALLY eating small business' profits, and once relieved of that burden, they are in MUCH better shape, even if their tax rate was doubled.

Furthermore, what POSSIBLE reason is there to object to additional taxes on people like Hedge Fund Managers? The Democrats tried to reign in debt spending by offsetting the losses due to the AMT changes by increasing taxes on people like that that are literally making 10s of millions a year. Some of these yahoos are getting 50 million dollar bonuses while their companies are losing hundreds of millions. You think that suddenly someone will stop wanting to be a fund manager when due to a tax increase they now only take home 15 mil a year instead of 20? Bullshit.

Oh, and lastly, about the subprime bubble... Banks and lenders didn't used to be able to sell off debt portfolios of mortgages like they were bonds or something. That's pretty new, and it is a direct proximate cause for the shitheap we find ourselves in there, because the banks suddenly had a huge financial incentive to make the bad loans, because they could sell off the debt ownership, rake in money hand over fist, and not be as individually liable if things went bad with the loans. When did that rule change? Be willing to bet you it's been since 2000, which means a Republican Congress authorized it. Furthermore, where was the federal oversight that by law SHOULD have been watching over these institutions and preventing exactly this kind of thing from happening? Asleep at the wheel & gutted by the current "anything big business wants, it gets" administration, that's where.

The internet bubble was largely driven by the novelty of the media, and idiots investing tons of money in companies that frequently didn't even have a product, or any plan on how they were to become profitable. Literally, the Underwear Gnomes from South Park had a more realistic business plan than some of those internet companies, yet they got 10s of millions in funding from people who were clueless as to what they were pouring money into. I was here at ground zero for it, so I know exactly what was going on. When, after a few years, those companies had turned into bottomless money pits with still no plan or idea how they'd ever turn a profit, the investors finally wised up, stopped pouring good money after bad, and shitloads of "internet startups" went belly up, and people who'd bought their stocks based on hype lost their shirts. VERY different situation than the subprime bubble, which was only allowed to exist because of finance rules changes followed by a criminal lack of oversight.

-Arlos

[Yamori]

You guys crack me up, seriously. It's NOT the governments job to "help" the average citizen with a basic safety net, tax breaks, subsidized health care and education benefits but it IS their job to make sure that business owners and stock holders are getting rich? That's some seriously fucked up logic.

It's only fucked up logic when you base it on your own premises on the role of government. You believe the government exists to take from those that produce and give it to others, based on arbitrary decisions of politicians.

When you believe that the role of the government is to infringe on individuals as little as possible, it is no longer fucked up logic.

You're saying that the government is "helping" (as in, colluding with) businesses by reducing the amount of money they confiscate from their earnings. That the big 'favor' being offered is to withdraw an artificially made threat. You're seemingly implicitly saying that these businesses are stealing from people because they are KEEPING MORE OF THEIR OWN EARNINGS. I'd say THAT is pretty fucked up logic to see this as a transparent injustice.

I'd be curious to know if you've ever run your own business with multiple employees. You sure seem to think it's easy as hell.

[Yamori]

On the opposite side, I think it's not very accurate to say that the president has little effect on the economy.

Bush has spent us into oblivion - to the point that it's unlikely we can ever repay it. The massive increases have to be paid for somehow, and it's done through borrowing and large increases in the amount of printed money produced. The value of the dollar is going down partly because of that.

[Tikker]

how should the federal government be funded then?

what should the responsibility of the government be?

obviously, funding will be affected by responsibility

[Tossica]

You guys crack me up, seriously. It's NOT the governments job to "help" the average citizen with a basic safety net, tax breaks, subsidized health care and education benefits but it IS their job to make sure that business owners and stock holders are getting rich? That's some seriously fucked up logic.

It's only fucked up logic when you base it on your own premises on the role of government. You believe the government exists to take from those that produce and give it to others, based on arbitrary decisions of politicians.

First of all, don't tell me what I believe. Thanks.

I believe that as long as I HAVE to pay taxes anyways, I want the fucking money to be spent on things that benefit our country as a whole, NOT just those that can use their already existing wealth to influence government.

When you believe that the role of the government is to infringe on individuals as little as possible, it is no longer fucked up logic.

You may "believe" this all you want but it's a fantasy and you know it. There are TONS of laws I would like to see reversed that infringe on individual rights as citizens but that's not what the current discussion is about. We live in the United States and doing business here has it's advantages over doing business in other countries. If you want to do business here, come up with a strong business plan, work hard and be prepared to pay a percentage of your earnings to the government and you may succeed as many others have before you. That's a fact.

You're saying that the government is "helping" (as in, colluding with) businesses by reducing the amount of money they confiscate from their earnings. That the big 'favor' being offered is to withdraw an artificially made threat. You're seemingly implicitly saying that these businesses are stealing from people because they are KEEPING MORE OF THEIR OWN EARNINGS. I'd say THAT is pretty fucked up logic to see this as a transparent injustice.

No, what I'm saying is that the same people that condemn the existing federal programs that divert some of our tax dollars to citizens less fortunate than ourselves or provide basic health care and education for our population are the same people that applaud policies that allow what was at one time a strong middle class to be pushed further and further in to debt and closer to poverty by funneling cash straight to the top of the food chain.

I'd be curious to know if you've ever run your own business with multiple employees. You sure seem to think it's easy as hell.

Nope, but I've been self employed as a DJ for over 15 years and have spent several years as a 1099 contractor. Neither are easy to make money doing which is why DJing is a part time, leisurely profession for me and I've since taken a full time job with the company I was contracting with. I NEVER said it was easy. What I said was, if your business plan is weak, you will fail PERIOD