Treasury Secretary Tim Geithner told the House Small Business Committee on Wednesday that the administration believes taxes on small business must increase so that the overall size of government programs does not have to shrink.
If The Democrats are successful in passing the “new” plan to spur the economy, Georgia small businesses, as well as small business across the country will be pushed to failure. As a small business owner, I can attest to the fact that the majority of small businesses have had to make adjustments to stay in operation. Those adjustments include cutting staff, reducing cost of materials and maintaining or cutting cost of product. Any additional increase in expenses will only lead to more business failures as well as more job loss. With the economic recovery clearly slowing, now is not the time to raise taxes.
While the bailouts confirmed that Democrats believe in the “too big to fail” concept, the reality is that if a business is operated in such a manner that it cannot turn a profit, that business should fail. Without the fear of failure, there is no motivation to improve the operation of the business. In business, it is that very fear of failure that leads to innovation and better business models which leads to better options for consumers. In the end, it is the consumer that determines the success or failure of a business.
Geithner justified the tax increase in part by pointing out that our deficits are 10 percent of GDP, larger than at any time since the second World War, and because of the deep hole we are in revenues must be increased. The Democrats’ new plan to spur job growth seems very similar to past plans — increase taxes on small businesses, corporations and those who earn $250,000 or more without addressing spending in any significant way.
Geithner is using the very fact the deficit has grown by close to $1 trillion in the first two years of Obama’s administration due to continued spending as the justification for higher taxes. Geithner’s comments indicate clearly the Democrats do not see spending as a problem — they see it as a revenue issue.
The problem with this approach is that no matter how much revenue is generated, it will never be enough to cover the cost of the never ending ideas for new social programs coming out of the Democratically controlled Senate. The fact Geithner actually said the administration does not want to shrink government programs makes it crystal clear what direction they wish to go-higher taxes and continued out of control spending.
Geithner conceded that small businesses account for 67 percent of new jobs but believes that tax hikes will not harm small business and would actually be good for job growth.
The philosophy of the current administration reminds me of a statement a close friend made to me many years ago while discussing the reason they were filling for bankruptcy.
My friend told me that the reason she was having to file for bankruptcy wasn’t because she spent above her means (which was the cause I had suggested led to her situation), rather it was only because she didn’t earn enough. That comment has stayed with me and that philosophy is evident in the Democratic plans to jump start the economy.
As I told my dear friend then, continued spending above your means will always lead to financial disaster no matter what revenues are generated because it will never match the wants — spending must be controlled to be fiscally sound. Our nation’s fiscal situation now is due to out of control spending-not a lack of revenue.
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