18 Small Business Tax Cuts—-Really?????

In Small Business Tax Cuts–Direct from Whitehouse.gov I provided an official list containing 17 of the 18 tax cuts that President Obama repeatedly cites in his claim of having cut small business taxes 18 times.

I haven’t yet uncovered the 18th tax cut. Bear in mind that these are cuts designed to stimulate our economy; we will discuss in subsequent articles the merits and limitations of several of the cuts that actually have meaning to some small businesses.  Meanwhile, cutting taxes 18 times for small businesses is given as proof of how hard our President is working on  behalf of those small businesses.  What more could he possibly do? Those cuts are touted by the President with pride and are accepted by the media without question as proof de rigueur of Presidential accomplishment. The numbers are trumpeted incessantly.  No one bothers to check or question the specific cuts and how useful they may or may not be; they just continue with the mantra  that “The President has cut taxes on small business 18 times.”  That small businesses have not responded to the 18 tax cuts with robust growth is taken as a matter of great puzzlement. Perhaps small businesses just need more time and we can expect robust growth to come soon. Perhaps not. Let’s take a closer look. To begin with, the oft cited claim is both incorrect and misleading. Small businesses have NOT had their taxes cut 18 times.  To be precise (at the risk of being accused of blatant prejudice), eighteen different changes that COULD affect some small businesses have been made to the tax code.  Although some of them actually result in decreased taxes for qualifying businesses, they are all called tax cuts. Regardless of how miniscule those changes have been or how few businesses qualify or how fleeting they are, they are counted.  Think not?  Then here is  “Tax Cut” #16: Limitations on Penalties for Errors in Tax Reporting That Disproportionately Affect Small Business So…….”Tax cut” #16 is a change in the code that levels the playing field penalty for small businesses when they make an  error on their tax returns. Wow!  Penalties for a mistake may still be Draconian, but they are no longer “disproportionate.”  To qualify for this tax “cut” you must make a mistake in filing your returns.  Presumably not every small business qualifies, although qualification is quite easy; my own returns form a stack of paper as high as a 9V battery. So far we have had documentation to establish that qualifying errors were by the IRS and not by us. Nevertheless, there apparently is ample opportunity for every small business to thrive based upon this particular tax “cut”. If that doesn’t warm your small business heart, you must not have a heart.  With a tax cut like that we know the government really has our back.

The President has worked so hard to help us small business owners with his 18 tax cuts that I suggest we show our gratitude by doing something for him in return.  Let’s not limit our actions to just running right out and expanding our businesses as a direct result of these cuts.  In a sprit of bipartisanship and good will, I suggest we propose additional ideas to help the President supercharge the economy. Let’s see if we can’t devise 100 additional tax cuts; the President and his minions can then claim to have cut small business taxes 118 times, which would be even more impressive than their current claims. Moreover, that should really help the economy! Bear in mind that we don’t want fluff that would just be used to pad the President’s resume. Ideas must rise to the very high standards set by the first 18 tax cuts. One note of caution–reducing the extensive documentation required to claim legitimate cell phone bills as an expense is an idea that will not work.  This tax cut idea has already been taken (Tax cut #13), so don’t even try to slip it by again.  We want those make-a-difference ideas like #16, ideas that really will kick start small businesses.  We want ideas with substance and impact, noteworthy ideas that have merit and will really help, ideas that can and should be counted.

To illustrate, I will start off with an idea for Tax Cut #19.  My idea is to cut small business taxes and stimulate the economy by sending each small business a free ink pen for use in filling out their tax returns.  Include an eraser.  Even though ink doesn’t erase well, Tax Cut #16 shows us that you really can’t do too much when cutting taxes and stimulating the economy. That’s my idea for a tax cut comparable to #16, and I await yours.

As an aside I can just imagine how my idea might proceed.  The free ink pen project would be called the Pen Ultimate Small Business Tax Cut Act. Debates would rage over whether it should be known as the Pen Ultimate Project or simply the Penultimate Project.  Should the ink be blue or black?  Red would be unwise–it might remind constituents of the current debt crisis, plus Washington’s use of red ink may put supplies in jeopardy.  The pens could be part of the stimulus package, and as such they could be manufactured in China. To power their plants the Chinese can use the coal we refuse to burn in this country where it can be scrubbed to largely eliminate pollution, but readily sell to the Chinese where the air quality is, well, actually, where the air quality isn’t. This apparently helps our planet minimize pollution. The pens could be green, a symbolic color, and we could loan massive quantities of money to green U.S. pen companies for production at three times the Chinese cost.  We could still buy from the Chinese. When the American companies failed, well, that would just be one of the taxpayer costs of supporting green companies. Even though the failing companies would have to fire all of their employees, those employees have already been counted under “jobs created”, so it wouldn’t be a total loss of anything but money.  When those people get rehired, they count again.  What a system! Counting only jobs created helps us evaluate economic recovery and is certainly not intended to obscure the fact that fewer people are now working than were in the work force at the start of the current administration. As long as we are dealing with public money and not with the evils of Bain Capital, political math does not require us to consider any negative impact of jobs lost.  But back to important tax cuts to  stimulate our economy.  When the debates are eventually complete, the Pen Ultimate Small Business Tax Cut Act would pass readily through the House of Representatives, where they would require either a modest charge for the pen or other spending cuts to offset any unmet expense with the new act.  Harry Reid would have none of the charging part and would bring it to the Senate floor only after renaming it The Benevolent Pen Ultimate Small Business Tax Cut Which Exemplifies Republican Callousness in Attempting to Deny Critical Business Equipment by Failure to Provide it For Free Act. The Senate Republicans would filibuster because of the slur, whereupon the press, Harry Reed, and the President would unanimously condemn them for being unwilling to act in a bipartisan manner and for blocking yet another attempt to stimulate the economy.  They would decry how the Republicans have a vendetta against small business and have sought to deny those businesses critical instrumentation. The President would then circumvent Congress entirely by using another Executive Order and appointing at least one new Pen czar to manage the project; the czar would not be vetted by our Legislative branch but would yield immense power and be able to establish whatever additional bureaucracy was deemed necessary. That bureaucracy would determine that small businesses could be evaluated for qualification with only a twelve page application, the mailing cost of which would be borne by the small business and would require two stamps.  The new czar could authorize the government to purchase the pens for only $5.00 each in bulk, those being the same pens available locally for fifty-nine cents but not certified as meeting rigorous government standards. And probably not green.

But I digress.  Your ideas do not have to anticipate Legislative consequences.  However, to pass White House scrutiny and be worthy of counting by the President they must meet the rigorous standards set by each of the first 18 and especially by #13 and #16.

***Gary A. Howie MSc, PhD*** is a business owner/rancher

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