A lot of people will lose their jobs if Obama and the Democrats in Congress continue on their announced plan to pay for their excessive spending by raising taxes on small business owners. What the politicians are overlooking is that these same business owners, before they pay their taxes to the government, typically have had to borrow money from banks to pay for their buildings, equipment and even their employee payrolls. Most of the money they “make,” therefore, and that is showing up on their tax returns as “income,” actually goes to pay the bank back, often leaving relatively little left over for the business owner. If the government takes more of the business’ money in taxes up front, then there is less money left to pay the bank loan or to pay to the employees. This makes banks more reluctant to lend and stifles employee jobs and raises.
Obviously something has to give. The government will put the business owners in jail if they don’t pay their taxes, and the bank can take their buildings and equipment. The only place left for the business to get the additional funds needed to pay the additional government taxes is by laying off employees. Thus, the victims of higher government taxes are actually the employees of private businesses.
But, government employees shouldn’t get too smug either. Because as financial pressures mount on the business community, businesses close and people lose their homes; government will also have to downsize too. In other words, if you work for the government, you may be next.
Thus the best way to protect all jobs and get out of this recession is to lower taxes, not raise them. This will encourage business investment, create jobs and put people back to work.
