Issue 265 Don't tax small business Febuary 5, 2014

In America, small businesses make up approximately 70% of the job creators in the country. Usually a person’s first job is from a small business and from their experience there, it aids them in learning responsibility, integrity and gives them the job skills needed to move up in life. However, small businesses are suppressed in America. What I mean by this is the regulations and the business taxes that prevent the small businesses from expanding into larger businesses which from my perspective are made to secure the position of the larger big businesses by insulating them from competition. As such I want to give the small business an edge by not taxing there income.

How it would work: To define a small business you can do one of two things. You can either define a small business by its income or you can define it by the number of employees. The income type is progressive, but it inherently makes the tax free idea unstable for if a business gains over a certain amount of money it will then be taxed. As such, it hinders growth of businesses. Defining a small business by the number of employees is much easier and simpler. It is a regressive type of tax free system. In this case it allows the business to earn as much money as they want without fear of being forced to pay taxes. As such, for the purposes of not taxing a small business, it will be any business that employs 50 people or less (excluding the owner(s) of that business). There is precedent for this with respect to Obama care that says that if a business has under 50 employees they are exempt from providing health care to their workers, and in Social Security back when it first started that exempted businesses under 30 employees from having to pay the business portion of the Social Security tax. As such, any business under 50 employees will not be taxed.

Expansion: If this is successful, and the small businesses begin to grow with respect to economic growth, then we can redefine a small business to any business that employs 100 people or less. The reason for this later redefinition is because there is one flaw that has to be addressed in this tax free idea for small businesses with that flaw being the lack of hiring new workers. You see, business owners are smart (obviously because they are running a successful business).  A business owner will not want to hire that 51st person if it meant having to pay taxes unless there was a way for that owner to break even with respect to how much they were making prior to hiring the individual and of course not loose the ability to make money. However, limiting it to 50 people is an inhibitor as we have seen under Obama care where businesses have cut back working ours and employees just to avoid the mandates in the law. So the only solution is the expansion to 100 people once the government has adjusted to the lost revenue that they would have gotten if they continued to tax these businesses. So this solves the basic problem.

Defining a worker: The change will make no distinction between full time and part time workers. Reason being is that current market trends have businesses cutting back workers hours so they do not reach the governments standards of a full time worker. Also, some businesses define full time hours as 30 hours or over as opposed to the 40 hours as mandated by government. As such, full time and part time is subjective based on economic trends and government influences. So saying strictly 50 (100 if the expansion idea is acceptable) workers or less makes more sense. Now we have to decide how long a person has to be working at a business to be a worker at a business. For our purposes the employee must have been working for a full six months out of the year to be considered an actual employee. Reason I define it this way is so to make it flexible for business owners to still hire seasonal workers without fear of taxation. Also, a new worker has to go through a sort of probation, so six months encompasses that time period. I do not specify the number of hours worked as this may cause businesses to suppress their workers hours more than what is happening right now in the economy. So a person being an employee can be working an hour a week and be considered an employee. It is almost a form of negative reinforcement that allows business to maximize hours of the individual worker without fear of additional taxation.

Conclusion: I don't want small businesses taxed in order to give these small businesses a chance to grow and expand. It gives small businesses a better chance at becoming a bigger better business via innovation and service. Let us face it, innovation does not come always from the top and thus by letting small businesses earn more they can thus compete. I hope that one day all small businesses will go completely untaxed so as to secure a better future for new business growth, a place for people to access new jobs and of course grow our economy. I will look for any excuse to not tax a person or a business directly through an income tax, and this is one of those situations that give's just the right amount of reason to do just that.