Raising taxes on wage earners and small businesses seems to be the tune most opponents of a free market system like to sing as of late. A tune that the typical taxpayer doesn’t care to hear. Members of the General Assembly have recently proposed a tax hike that would affect many people and businesses. And this tax increase comes at a time when North Carolina is 47th in the nation in unemployment, at a rate of 9.4 percent.
H1166, “Temporarily Raise Income Tax on Millionaires,” sponsored by Reps. Paul Luebke (D-Durham), Frank McGuirt (D-Union), Larry Hall (D-Durham), and Pricey Harrison (D-Guilford), raises the top marginal income tax rate on individuals making $600,000 or more and married couples filing jointly earning $1 million or more from 7.75 percent to 8.5 percent. The new rates would be effective in 2012 and 2013.
This income tax increase is a clear attack on those who earn more, singling them out simply because their income, which most work extremely hard for, is higher than someone else’s. And it’s important to recall that most North Carolina businesses file their business earnings within these income tax brackets. Such tax increases will have a profound effect on the health and viability of many smaller businesses.
Because business owners expect a certain rate of return on their time, money and effort, a lower rate of return courtesy of a higher tax rate will discourage economic growth. On the margins, businesses will decide not to expand, or potential entrepreneurs will hold off on starting a new company.
Such a tax increase will provide a negative incentive on businesses at a time when North Carolinians desperately need more business investment. North Carolinians are still feeling the burden of this recession, which is why H1166 is the “Bad Bill of the Week.”
I did workers compensation audits for a number of years, and audited all kinds of small businesses from NC to Washington DC. Though I knew nothing about the quality of the employees whose wages I was auditing, 90% of the time I was always left with one dominant perception. These folks who run these companies make a lot of money and pay their employees pretty poorly. I don’t believe for a minute that three-quarters of one percent in higher taxes is going to run anyone out of business. I pay a higher marginal rate than those who earn less than I do, so why will it create a crisis situation to add a very slightly higher rate to the tax structure for those who are fortunate enough to earn in excess of $600K. If I were earning at that level I’d feel like a spoiled ass for complaining. Bear in mind that most of our legislators are probably earning at those levels, and that’s why they are against it. My grandfather always said you don’t go to a brick mason to buy bread. If you need money, go to folks who have money.
I was one of those small businesses that you audited.
Just for the record, I took a huge risk and mortgaged the family farm to get started in business. I worked 16 hour days 7 days a week for 10 years to get it paid back with one vacation during that time and then continued those kind of hours to build me a nest egg so I could have some financial security. Folks like you have no idea of the sacrifices I and people like me make to have some security and once we finally get there, you don’t understand that no one will tell us we have to do this or that. To hire more employees, to give raises, to invest in enlarging a business must come because we have some assurance that government won’t pull the rug from under us by passing some crap like Obamacare, more EPA and other type regulations, or kill us with taxes. Government is currently stifling business growth and until it and all the liberals wake up and realize that, I and millions like me, will just sit on our money.
The problem here is that you look at some people earning in excess of $600K to be fortunate. I’m sure that people like Ms. Peggy don’t necessarily consider themselves fortunate in some respects. She and many other small business owners have worked very very hard to get to the point where they are and have earned that money. It’s not just a stroke of luck that a business survives. There is a lot more that plays into that the success equation. And in response to that hard work, the government should not justify taking away more of their own money just because it is a significant amount of money.
Cheers to Peggy Boose! Since my company is an S corp, all the business income flows to our personal tax return. A net profit on the business does not translate to money in the bank, and taxes take a big share of available cash every year. The risks in small business are significant-an individual makes a mistake, they may lose their job, a small business owner can lose house, years of equity because most small business owners are personally liable for their business debt. I went many weeks with paychecks in the drawer because the funds weren’t always there for me to take a paycheck. As the largest employer in my county, don’t keep asking for more when state workers have better retirement and health plans than the vast majority of small business employers and employees.
Thanks Peggy you speak for many Carolina Small Business Professionals. The statist bureaucrats will need a bit o’ tar and feather soon!
Great post Peggy! It’s easy for legislators to take, take, take, considering all these morons do all day is sit on their azzes, dream up these ridiculous bills, and vote on them. Nothing in government produces a profit, yet they are free to increase wages, promise benefits, provide job security on the tax payers back. It’s time to privatize most government agencies, get rid of all of these useless wasteful positions, and make these “employees” work for a living and be responsible for the own future instead of us.