(Neal Asbury is chief executive of The Legacy Companies, author of “Conscientious Equity” and hosts the nationally syndicated talk radio show “Truth for America.”The opinions expressed are his own.)
The two things to understand about our economy are American entrepreneurs and small-business owners create wealth where wealth doesn’t exist. They expand the wealth pool of all Americans, not just themselves.
By expanding America’s wealth pool, they increase America’s tax base.
By creating policies that get our best-producing businesses feeling confident about the future, we solve all sorts of problems, especially job creation and the containment of our destabilizing deficits.
The second thing we need to understand is Americans are longing to feel good again. We want our mojo back. We won’t feel good again until we are economically secure. We won’t be economically secure until we are all working.
Yet, there are those that are fixated on a different path for small businesses: taxation as self-flagellation. They believe if we continuously demand businesses and entrepreneurs to flog themselves with more taxes and excessive regulations, this will lead to some kind of repentance for their success, letting them attain economic and social purity.
This self-punishment of our small businesses doesn’t make us stronger; it makes us weaker.
Sadly, it is the failure to comprehend this by those in power that will ensure job creation in America was something that happened once upon a time. There has never been such a dysfunctional relationship between the U.S. government and our businesses.
President Barack Obama finally seems to understand his political legacy lies in the hands of America’s small businesses. If they continue to suffer and don’t begin to hire, the president’s coin in 2012 will be greatly devalued. There is no road to the White House without job creation and there is no job creation without a vibrant small-business community.
Small businesses during the past decade have generated over 70 percent of new jobs. Their health is essential to our economic recovery.
Unfortunately for the American people, the only thing accomplished in the lame-duck session of Congress is prolonged uncertainty and fear which are the antithesis of confidence and growth. The temporary extension of the tax cuts doesn’t give our entrepreneurs and small businesses any reason to invest.
If the Democrats win in 2012 and the tax cuts are eventually scrapped altogether, or even if they are made permanent for those making below $200,000, it will be devastating.
The result will be a massive tax increase on tens of thousands of our most productive small businesses who are taxed on personal income rates.
Although on paper these businesses may show seemingly healthy profits, these profits are based on accrual accounting. A tax event occurs upon invoicing, not when cash is received, which could be several weeks later. A small business on paper could be making $500,000 but doesn’t have two nickels in the bank as their financial resources are tied up in inventory, receivables, work in process, technology, machinery and countless other things.
This means they will either need to borrow money to pay taxes, assuming they can find a bank willing to lend them, or they will need to shrink their business to free up capital to send to the IRS. Both choices are job killers.
Obama will try and make the case that he supports small business, but you can be sure that this rhetoric won’t match his actions. It’s only a matter of time before his progressive base moves him back toward permanently scrapping the tax cuts. So while he says he supports small business, he will be vigorously campaigning against them.
Our small businesses and entrepreneurs want to get back into the game. They understand we won’t fix our problems in a day, a week, a month or even a year. However we can make great progress with just one statement from our president.
He needs to stand at the podium and say with passion and conviction these simple words: “I get it. We cannot grow our economy while operating in a state of fear and uncertainty over taxes, regulations and excessive government. From this day forward I will work to reduce these job-killing, economy-busting impediments.”
If Obama is unwilling to say these words, then for the sake of our country, we need a president who will.
It’s time for the flogging of small business with taxes to stop, and to give them the stability, certainty and relief they need to create jobs.
Let’s not beat ourselves up, let’s beat out our global competitors with a robust economy that restores our competitive edge.
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