There's No Pony in this Pile for Small Businesses

Commentary by Ron Miller

There's an old saying that "stuff flows downhill" - or words to that effect! There's no better description I can think of for this barely half-baked notion that a four-figure tax credit per new employee is going to set off this explosion of small business hiring. That "stuff" started in Washington and is flowing downhill to Annapolis, and it doesn't smell any sweeter.

Since neither Barack Obama nor Martin O'Malley has ever run a business, perhaps they can be forgiven for their ignorance, except they're in charge. If they don't know anything about business, they should hire people that actually ran a business once or twice in their lives rather than the academicians, Wall Street financiers or ideological cronies that staff their advisory councils. As I've recounted in this space before, there's not a lot of people surrounding the President who have actually experienced starting and running a company, managing profit and loss, or meeting a payroll.

As I've also recounted in this space, O'Malley is at the helm of arguably the most anti-business state in the nation, a state where one of its legislators, Senator Verna L. Jones Rodwell, criticized Maryland businesses, and the producers and innovators who own them, because "the large corporations are not willing to share…the richest among us are not willing to share." Yep, that's why people take enormous risks, work long hours away from their families, make tremendous personal sacrifices, and devote their lives to turning their dreams into reality, things that lesser men and women will not do - so they can "share."

It's not like Maryland businesses get much of an opportunity to "share." An 8.25 percent corporate tax rate and a "millionaire's tax" negates the need for sharing because it's already being confiscated. The free spenders in Annapolis are more than happy to take the earnings generated by the blood, toil, tears and sweat of others, yet they still manage to botch the budget to the tune of multi-billion dollar deficits every year.

Meanwhile, across the river in Virginia, their House of Delegates is considering a bill to repeal their corporate tax altogether. They have no "millionaire's tax" and everyone making over $17,000 is taxed at the same rate, making it essentially a flat tax. Is it any wonder Virginia consistently ranks at or near the top for business-friendliness, and Maryland near the bottom?

After pounding small businesses and their customers into submission with record tax increases, and implementing burdensome paperwork requirements that cost small business owners about $50 an hour in lost productivity, O'Malley wants to throw them a bone with what started out as a $3,000 tax credit and is now a whopping $5,000! I'm sure small business owners all over Maryland are bowing down in gratitude at this very moment in recognition of such generosity.

Either he thinks we're rubes who can't do the math and figure out his measly tax credit won't cover the cost of a new employee for longer than two months at best, or he's truly clueless when it comes to basic economics.

Since he wasn't paying attention in class - too busy trying to impress the girls with his guitar licks, I suppose - we'll go over it one more time.

Businesses exist to create wealth, which benefits the business owner, the business owner's family, the employees of the business and their families, and the communities in which they purchase other goods and services, contribute to charitable causes, save and pay down debt to secure their futures, invest their wealth to create more wealth and, yes, pay taxes. It's the most effective economic system in world history and the most realistic because it taps into the innate human drive to create and achieve.

Businesses create wealth by selling their goods and services to the general public. How well they do - in other words, how much demand they generate for their products - determines how much they have to produce and that, in turn, determines how many people they must hire to meet their production goals and keep up with the demand. When business is good, everyone wins - the consumers who get value for their money, the workers who earn a decent wage, and the employers who put more money into the business so it can grow, and the community along with it.

When people aren't buying because they lack the means or the confidence to do so, businesses aren't selling and they can't keep people on the job when there's no demand. A small tax credit placed in the hands of the small business owner isn't going to make consumers buy more, and that is what has to happen for the job market to be revived.

The question they ought to be asking on Capitol Hill and at the State House is, "How do we put more money in people's pockets so they'll go out and spend again, giving businesses a reason to hire?"

Another young Democratic President, John F. Kennedy, understood this was the question that needed to be answered, and he addressed it by cutting taxes and giving people back their money, rather than doling out small tax credits as if the money belonged to the government and not the people. I was astonished by the number of public statements President Kennedy made equating tax cuts to job growth, economic revival, and greater tax revenue for the government.
"In short, it is a paradoxical truth that ... the soundest way to raise the revenues in the long run is to cut the rates now. The experience of a number of European countries and Japan have borne this out. This country's own experience with tax reduction in 1954 has borne this out. And the reason is that only full employment can balance the budget, and tax reduction can pave the way to that employment. The purpose of cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus."
In a 1962 radio and television report on the state of the national economy, President Kennedy described the legislation he planned to introduce:
"It will include an across-the-board, top-to-bottom cut in both corporate and personal income taxes. It will include long-needed tax reform that logic and equity demand ... The billions of dollars this bill will place in the hands of the consumer and our businessmen will have both immediate and permanent benefits to our economy. Every dollar released from taxation that is spent or invested will help create a new job and a new salary. And these new jobs and new salaries can create other jobs and other salaries and more customers and more growth for an expanding American economy."
When was the last time you heard a Democrat describe tax cuts with the words "logic" and "equity"? Not in Maryland - not in a long time.

Senate president Mike Miller thinks it's politically courageous to raise taxes, and mocks those of us committed to keeping more money in the private economy where it can grow and do the most good for the most people. He'd rather keep the money in the public treasury where it's subject to mismanagement, waste, being used to buy one's re-election and who knows what else.

Governor O'Malley and his cohorts can get serious and cut taxes for small businesses and their customers, or they can insult our entrepreneurs' intelligence with tax credits and stink up the Maryland economy even more than they already have.

Ron Miller, of Huntingtown, is a military veteran, conservative writer and activist, former and current candidate for the District 27 Maryland Senate seat, communications director for the Calvert County Republican Party, and executive director of Regular Folks United, Inc., a 501(c)3 nonprofit organization.  Ron is a regular contributor to, American Thinker, and You can also follow Ron on his website, as well as Twitter and Facebook.

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