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Class Warfare and Taxes

We've got a little class warfare going on among our Readers Who Comment today as they contemplate what President Obama's stated tax policies might mean for small businesses.

Reporters Lori Montgomery and V. Dion Haynes tell the story of a small business owner who makes more than $500,000 annually and whose taxes could rise by 19 percent if Obama's proposals are enacted.

Some readers ask, "What's wrong with that?" Others say small business owners are already paying their fair share. There is the inevitable proposal from one reader that the nation go to a flat tax -- everybody pays the same rate. Several suggest that the Post has lost its journalistic bearings. It is indeed a taxing issue.

We'll start with dre7861, who wrote, "This is exactly where the tax burden needs to lie - with the wealthy and businesses. For too long these two classes have paid less than their share and on top of that they have all kinds of tax loop-holes specially written into the tax code that makes their 'burden' even lighter. To try to fund the US Government of the backs of the middle class and the poor is unfair...."

But nonlocal1 said, "...As another small business owner who has been in and out of that class, I assure you Obama and his clan are dead wrong. The americans who strive to be like the family in this story are the ones who make American great. Without Obama's onerous tax increases, they already pay far more than their fair share of taxes..."

Pebble1776 wrote, "The idea of businesses cutting employees if their taxes go up is a red herring. Businesses are running close to the bone. They are not carrying extra employees. If they make cuts it will affect their operations and just cost them money."

EarlC said, "...The individual earnings which are generated by the businesses are taxed on the individual basis. However, the net profits are taxed at a different rate. It is the profits that will possibly see the tax increases... One thing is sure, the middleclass wage earner has been paying more than its fair share of the tax burden in this country a long time."

wassavi wrote, "...I don't like the policies and I don't like where the money is going, but an extra $25k to the government from $500k in annual earnings is, conceptually, fine by me."

vernyuy said, "...This is a glaring hit piece. for someone who makes 500,000 in profit yearly, paying 143,000 in taxes, is not that much bigger than 120,000. She still goes home with 350,000. it is ludricrous to pose as if this would cripple the business community."

MBP1 wrote, "The tax burden should be borne proportionately by all. One flat rate for everyone applied to net income. No exclusions. Entitlement spending will continue to grow uncontrollably as long as nontaxpayers can vote for spending while bearing no responsibility for payment... Democracy can't continue to exist after the majority discovers that it has the keys to a treasury funded by the minority..."

mharwick said, "Raising taxes on small businesses will do just the opposite of what is will reduce revenue by reducing employment and business spending. Anyone who ever operated a business large or small knows that. Our President has never operated any business large or small of any kind."

buckdharma wrote, "The point of a lot of the commenters is that rich people suck, and any tax increase on them is a fair tax increase."

ethanquern said, "...Obama merely wants to overturn a monstrous decision by the Bush Administration to shift the tax burden to the middle class and restore tax rates to the wealthy they had before. Their whining deserves a minuet from an orchestra of the world's tiniest violins... Shame on the Washington Post for this article!"

muggzzi wrote, "Your headline should read, '2-3% of Small Business Brace for Tax Battle.' [In both print and online it said Small Businesses Brace for Tax Battle] Why do you start your "news" piece with a "point of view" title - and then ignore the 97% of businesses?... Poor journalism at the WP - perhaps due to budget cuts?"

cathy810 said, "...Class warfare is always ugly, not only are most of the commentors here perpetrating it, they are being duped in the process focusing on a pittance and ignoring the real culprits-- our own government-- left and right."

TwoEvils wrote, "Typical Republicans. Care more about the 3%-7% who are making more than enough money to live on comfortably AND save for retirement, and to heck with the 97%-93% of small businesses who could really use a tax break. This article is disingenuous, and Johnson is anything but a sympathetic figure."

markmoy said, "The problem rich Americans are facing today is quite simple - they were simply used to not paying their fair share! For a democracy to work it's essential that everyone has the feeling that their situation is improving. This has not been the case for the past couple of decades and through the election of our new President, a majority of Americans have clearly indicated that it is time for change!"

We'll close with this exchange:

RoboFlop wrote, "Brilliant, just brilliant. Let's revive the economy by providing a dis-incentive to making a profit. Let's also take as much money as we can from the people who INVEST to stimulate the economy... Liberals will spend an infinite amount of money, as long as they're convinced it's not theirs."

To which apissedant replied, "Roboflop, Apparently you don't get it. INCOME taxes tax PROFITS. No rational person reduces their ability to generate disposable income in order to avoid taxes. The only reason a business would cutback would be to increase efficiency in order to maximize profits. That is a rational response that occurs whether taxes are lowered or raised."

All comments on this article are here.

By Doug Feaver  |  April 27, 2009; 7:38 AM ET
Categories:  Obama , Taxes  | Tags: Obama, Taxes  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati   Google Buzz   Previous: Torture, Cheney, and Revenge
Next: The Specter of Political Change


It's all relative. Some guy living in Mexico, making $8,000 a year would say that anyone making $50,000. a year shouldn't complain about anything and some guy living in Africa making $1,000. a year would say the guy in Mexico is rich.

Posted by: thebink | May 2, 2009 7:43 AM | Report abuse

hdc77494 posts statistics such as the top 10% paying 60% of all income taxes and the top 1% paying 26% of all income taxes. this is taken as evidence that the rich already pay more than their fair share.

There are other factors that need to be considered as well. One is that while income taxes are progressive, other taxes like Social Security are regressive. This tends to flatten out the total tax bill somewhat.

Another is that while the top 10% in income pay 60% of all income taxes, they also own about 71% of the wealth. The top 1% may pay 26% of the income taxes, but they own about 34% of the wealth. A case can be made that wealth is more important than income, and from this viewpoint the rich are paying less than their fair share.

Posted by: jimwalters1 | May 1, 2009 12:15 PM | Report abuse

grant5 is right. Those with incomes over $500,000 won't suffer from a 3% tax increase. The fantasy is they'd invest 100% of that pittance in America, and it'd trickle-down, but in reality, more and more of their money has been tracked leaving America through investments funding globalization. In contrast, the extra money reaped by middle and lower income earners from tax cuts, invariably is recirculated into America, stimulating American business.

Posted by: jhbyer | April 30, 2009 4:47 PM | Report abuse

I have to agree with the last commenter quoted, apissedant. Money isn't just being taken from businesses, it's *profit* that's being taxed at a slightly higher rate. The main article is about a woman with business profits of over $500,000. Her tax bill might go up by $13,000. Really, that's pretty insignificant. I don't get why people are outraged that the tax rate on the wealthiest Americans are going from 36% to 39%. If everyone could pay the same tax rate (a flat tax), that would be great, but the reality is that someone making $500,000/year has a lot more disposable income than someone making $30,000/year. The revenue to run the government has got to come from somewhere.

Posted by: grant5 | April 29, 2009 1:09 AM | Report abuse

The top 10% in income in the US, those making more than $92,000 a year, pay 60% of ALL income taxes. How can anyone say they don't pay their fair share? Let's take a lawyer in New York City. He has a paralegal or two, he might even have a secretary and an IT guy. He makes $250K. Under Obama's tax policy and the new higher New York taxes, he will pay 60% in income taxes for every dollar above 250K. If you were to be able to keep 40 cents on the dollar for keeping an extra client or two, at what point would you decide a weekend with your family is more important than the extra billing you can do? And if you're not working nights and weekends, maybe you don't need to keep as many support staff. How about the guy with a few retail stores making the same amount? If he were to "invest" $250K or so to open a new location, he might make another 50-75K a year and hire 5 people to run the new location. After crunching the numbers, he realizes he's only going to make an extra $30K a year after taxes, so he decides not to risk his capital on a new location. Those of you who think tax policy doesn't affect business investment and job creation are delusional. Look at Halliburton. After being hounded in the press and run over by the IRS, they simply moved their headquarters to another country, friendlier to business. Result, NO income tax revenue to the IRS, and hundreds fewer US jobs. In New York City according to Mayor Bloomberg, the 40,000 "richest" New Yorkers pay more than half the budget to operate a city of 8 million. The other 7.5 million are paying less than half. New Jersey is actually worse. And you wonder why all the job and income growth is in low tax states in the south. People vote on taxes with their feet. When Reagan reduced income tax rates, economic activity accelerated so fast that within two years, income tax revenues were considerably higher thsn before even with much lower rates. The top 1% are paying 26% of all income taxes, on 18% of the income. The bottom 50% in income (below 33K) pay zero income taxes, and got $44 billion in "tax credits" last year. What's fair?

Posted by: hdc77494 | April 28, 2009 11:53 PM | Report abuse

Looks like the Corporate Welfare Program that was the centerpiece of the Bush Misadministration is about to undergo a "realignment with reality." About time the terminally greedy paid their fair share.

Posted by: Bushwhacked1 | April 27, 2009 12:20 PM | Report abuse

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