"Undermining my electoral viability since 2001."

In Which I Personally Respond To Republican Legislative Leaders

I am a small business owner, and (so far) a successful one at that. I'm rather proud of that fact. I look forward to the day when my prosperity is cemented and I can be a new kind of class traitor.

Anyway, the entrepreneur tip is what I'm on right now, and I heard this on NPR and it got me mad enough to yell at the radio. I want to give a big, personal "I Lived Through 9/11 And You Didn't" Scranton-style dick-punch to both John Bohner and Mitch McConnel — and really anyone parroting the GOP party line — for turning people like me ("small businesses") into some GOP hump-fetish to defend the notion that we really need now are tax cuts for the top bracket of earners, those pocketing more than $250k a year.

Let's be clear. It is not many small businesses, or even good ones, that will be affected by these cuts. And those that are, that means the owners are making $250,000 or more, which regardless of your perception, makes you a wealthy individual here in Estados Unidos. Count your blessings. I do.

I'll break it down for you in bare brass tack terms. You only pay taxes on profits, not revenue. This is basic accounting, which I know they don't teach in the Senate, but it's something you learn if you stay in business more than a year: gross is not net, and you need to learn to tell the difference. A small business with six or ten employees may turn over around a million dollars in a year, but most of that is spent before year end.

This is how you roll in real life as you stack that cheese. Here's what I know:

  • My business will easily do seven figures a year in total revenue for 2010, but most of that goes out the door to employees, contractors, rent, servers, etc, as it should. Our incentive as an LLC is to show not much in cash profit on the books, and we don't: we give bonuses, invest and spend our money on getting bigger.
  • Small businesspeople who are proprietors (meaning they work instead of just being sit-back owners) pay themselves. I get a paycheck and a bit of profit sharing at year-end. That salary plus profit is my income, and if one is are pulling a quarter mil like that (I'm not even close) you are not doing very badly.
  • Even if you play it fast and loose with an S-Corp, and you want to try and take most of your money as profit to shave a few points off the taxman (which is a recipe for an audit anyway) you're still pulling down a quarter million dollars to your bank account before you are in the top bracket. Most people are just not there.
  • Real producers, for all the Ayn Rand fanboys out there, are interested in growing their businesses, not cutting themselves big checks. We re-invest almost all our margins into growth — new hires, talent development, expansion into new ventures, etc — rather than padding our personal accounts. Why? Because we care about what we do, see a future in it, and care more about that than cash and hijinks.
  • On that front, in some ways the current tax code is in fact prohibitive to small business growth, but it has nothing to do with personal income margins. At the moment it's really hard to build up a cash buffer or "war chest" because the G-man will take a lot of your company profits whether you leave them in the business or take them home. It would be great if there were a shelter that helped new enterprises build up cash reserves (not personal income, but company money) up to a couple million bucks or so; might turn a whole new species of new entrepreneurs loose.

So yeah, there's a lot more wonk-rant where that came from. I am ready to throw down with anybody who tries to claim "capitalism" in defense of their BS aristocracy. In the same way I felt strongly I was "more Burning Man than Burning Man," I also intuit that I know more about the actual mechanics of building a successful enterprise that gives real people jobs and health care than most of our national leaders. They can't even (or rather, don't want to) do the math to know what they g-d talking about.

Seriously, do the math (really, read that post and contemplate the entitlement complex). Wannabees in the top bracket should be putting their cash to work, not buying luxury goods. That will be what helps the economy, and in the long run what gets them to true wealth.

Update: and it goes on like this! Here's a hedge-funder who says bringing on a new employee at $50k would cost him $90k. That's completely fracking ludicrous, even if he "pays the full freight on health care." Do not let this man manage your money.

Here's how it works in the real world:

As an employer, you pay 7.65% of all wages for FICA (social security), plus few percent more in unemployment and state taxes, which vary but not that much. On our projection sheets, we round this to 12% and it's generally accurate for figuring out if something is a good idea or not. Unless NYC has some crazy 70% "hedge fund employee tax", there's no way you get anywhere near a $50k salary to a $90k cost based on taxes.

But what about for health care? Well, we pay 100% of everyone's individual insurance in my company, the "full freight." It's not cheap, but it's the right thing to do. But even if someone has a family of four, and you still pay for all of that (which is not standard, most firms split family costs with employees), the average family insurance policy — without any group rate — is around $14k. That's highway robbery (which is why we need that reform), but it is nowhere near getting you from $50 to $90k.

You're looking at about $6k in taxes, and at most another $14k in health care. That'd be 70, not 90k. A margin of error of about 25%. I guess that's why these Wall Street people can't seem to turn a profit. Ask Summers how that Harvard Endowment is doing while you're at it...

But and yet this is what this douche says in his moment of national television, addressing the President. Is he stupid? Maybe, but more likely it's because this is what he wants to believe, or maybe wants other people to believe, and more importantly nobody will ever call him on it — there is no check or balance — because apparently journalists and politicians can't bother to find anyone who will talk honestly about what it actually means to employ people.

Slavoy was right: capitalism is dead. It's all a battle over what kind of socialism we want.

Updated Again: Ben Stein is also lying, grossly out of touch, or unable to do simple arithmetic.

New thought: modern Republicans display less entrepreneurial acumen and fiscal sense than your average (note, average) drug dealer.