I’m one of those “job creators” members of Congress profess to admire so much. Thirty-two years ago, my partner and I started a small business with $300 worth of old records and a booth at the local farmers market. We’re now the biggest independent music store in St. Louis and employ 22 people. Our annual revenue is around $2 million. We’re a classic American success story.
Our incomes are typical for small business owners, which means we’re not in the top tax brackets. We’ve always been at or below the 25 percent tax bracket. So we’re trying to figure out how a new Congressional tax proposal is supposed to help small businesses like ours create jobs.
The proposal would cut top individual and corporate tax rates from 35 percent to 25 percent. In addition, it would reward U.S. multinational corporations that have gamed the system with a 5.25 percent tax rate on U.S. profits they have disguised as “foreign” earnings. All this will be great for gigantic multinational corporations, Wall Street and the fat cats who attend those $1,000-a-plate and up political fundraisers. It will be great for the corporate lobbyists gaming our political system every day.
It won’t help small business, and it won’t help America.
This proposal would give massive new tax cuts to America’s largest corporations and wealthiest families and comes as we learn from a Congressional Budget Office report that after-tax inflation-adjusted incomes for the richest 1 percent of Americans skyrocketed 275 percent between 1979 and 2007.
Tax-cut advocates want us to believe that cutting the top rate to 25 percent benefits America’s small business owners. Most small business owners wouldn’t see a penny of tax cuts under this proposal.
And, anyone who thinks lowering my tax rate would affect hiring knows diddlysquat about running a business. I hire more workers if I think I’ll do more business. The costs of finding, hiring and paying new employees are business expenses. They’re deducted up-front from taxable income. Any business paying taxes on these expenses needs to fire their accountant.
The biggest challenge facing my business isn’t the taxes we pay. It’s the decline in customer demand and the continued hollowing out of our middle class, our infrastructure and our economy. It breaks my heart when my customers sell record collections built over a lifetime, to pay their rent, heating bills or medical expenses.
We’ve tried trickle-down tax cuts to create jobs. How’d that work out? Tax-Cutter-in-Chief, George W. Bush, had the worst job creation record since 1939. What trickled down were economic meltdown, foreclosures, unemployment, budget cuts and business closures.
When Congress proposes stimulating the economy with more tax cuts for those who are far ahead of the rest of us, they do nothing to help my customers or my business. When the wealthy get more tax cuts, it transfers the burden of paying for government services to businesses like mine and to my customers, already living paycheck to paycheck.
If members of Congress want to help small business, they should choose policies that actually create jobs. St. Louis, like many cities, laid off teachers, first responders and construction workers – the people who spend money locally and who we need for a healthy economy. The last thing we need is more cutbacks to pay for more tax cuts at the top.
Job creation today and a brighter future for our kids and grandkids lies in better education, 21st Century infrastructure, universal broadband and renewable energy. How do the advocates of more tax cuts for the affluent expect to compete with emerging economic superpowers if we don’t invest in our nation’s future? Where do they expect money for that investment to come from, if not from those who have profited most from the investment our parents and grandparents made to build the nation they handed us?
Trickle-down economics has been a miserable failure. It delivered economic ruin for many and riches for a few. It hasn’t brought shared prosperity, but driven us further apart. It increased the economic and political power of Wall Street and Big Business over Main Street and small business.
Trickle-down economics is a broken record. It’s time to let it go.
Prince is managing partner of Vintage Vinyl, an independent music store in St. Louis. He is also a member of Business for Shared Prosperity, a national network of forward-thinking business owners and executives. A version of this op-ed previously appeared in The Hill.Posted - Copyright © 2022 Eastern Group Publications, Inc.