Untangling a little of last night's BullMitt

[Jeff In Milwaukee]

And the reason is because small business pays that individual rate; 54 percent of America’s workers work in businesses that are taxed not at the corporate tax rate, but at the individual tax rate….97 percent of the businesses are not — not taxed at the 35 percent tax rate, they’re taxed at a lower rate. But those businesses that are in the last 3 percent of businesses happen to employ half — half of all the people who work in small business. ~ Mittens, babbling incoherently last night...

For starters, "small business" does not pay the individual tax rate. Individuals do. The source of Mr. Romney's confusion is that many small business owners are sole proprietors, and so net profit from their business passes through tax-free from the business to their person income tax return. And the majority of sole proprietors are self-employed individuals who have no employees (i.e., they are not Mr. Romney's beloved "job creators&quot . They are people like self-employed consultants, attorneys, physicians and others whose ability and willingness to create jobs is not effected in the least by fluctuations in the tax code.

But even that makes no sense in the real world of business. Let's say that I'm a sole proprietor trying to decide whether it makes sense to hire someone part time to do some routine typing and filing around the office. Barack Obama is going to tax my net profits above $250,000 at a high rate, and so hiring someone will increase my costs, which lowers both my net profits and my tax liability. But Mitt Romney is going to cut my tax rates so that I get to keep MORE of my net profits after tax.

Romney is actually giving me a financial incentive to NOT HIRE someone because my net profits are getting taxed less. Obama is giving me an incentive to hire someone because, if I'm going to get taxed at a higher rate, I may as well use my income to get something that I want (typing and filing) instead of just paying more in taxes. Lower taxes on net incomes is a disincentive to businesses to make investments.

Now bear in mind, only a damned fool makes business decisions SOLELY on the basis of the tax implications.

[joycejnr]

1. Of course...

...it's elementary. The continuing surprise is that the investor class is blind to everything except taxation. Come out for a reduction/elimination of capital gains and killing babies, you've got their vote.

I know some of them are stupid rather than vicious, but God, I hate Conservatives.

[Jeff In Milwaukee]

2. Huge difference between Small Businesses and the "Investor Class"

One is providing useful products and services (and creating jobs), the others are just mooching off the rest of us.