Evan Bayh on why the well-to-do need tax breaks... [View All]

[Kurt_and_Hunter]

When asked whether he agreed that only 3% of small business owners would benefit from keeping the over $250K tax cut Evan Bayh replied, "But that 3% makes most of the hiring decisions."

Okay... but if they are real businesses (as opossed to solo day-traders with their whole family on a bogus payroll) they do not make any hiring decisions based on personal marginal tax rates.

Let's say I own a small business.

I clear over $250K/year... that is my take from the business. Pure profit after all salaries, rent, expenses, materials, advertising, junkets to Tahiti, etc..

Okay. So the question arises, "Does my business need to hire an additional employee?"

In Evan Bayh's world I make this decision based on my personal after-tax income.

What the fucking fuck? Nobody does that. Nobody in the world. What employees are paid out of after-tax personal income? The business deducts all employment costs... employment costs are paid out of pre-tax business revenue.

Here is the actual business view of business:

I am going to clear $300K this year from my small business. Should I hire another employee at $35K/year?

a) If that hiring decision will return MORE than $35K to my company then I should hire the person.

b) If that hiring decision will return LESS than $35K to my company then I should NOT hire the person.

This is business. Employees are not consumables, they are a means to making money. Hiring an employee does not "cost" a business anything because the employee is worth more than the cost of her compensation. Unless it is an unwise hire. When small businesses have to let someone go it is because the business is not making enough money. First, it's odd that a small business that is not making enough money manages to pay the owner over $250K/year. Second, do we have some reason to suppose that tax cuts on personal income cause the largest small-business owners to hire or retain unprofitable employees as an act of charity?

Here is how it works in Evan Bayh's world:

I am going to clear $300K this year from my small business. Should I hire another employee at $35K/year?

Well, that depends on my personal income. Let's see how much money I have after taxes and if I'm feeling flush I will hire somebody for the Hell of it because I'm so rich... even if that decision will lose money for my business.

On the other hand, if taxes on my personal income go up by $5,000 then obviously my business will not hire needed employees that would cause my business to make me more profits... because I hate money or something.

Evan Bayh, you fucking idiot... in the largest 3% of small businesses the employees are paid by businesses, not business owners. And businesses hire people based on whether they need to hire people in order to make more money, not based on how much money the owner can afford to blow on un-needed employees.

The pro-business community is, in my experience, marked by a singular incomprehension of basic principles of business. Are they that dumb, or just working an unstated agenda? (Probably a mix of the two. There are "useful idiots" in every movement.)