1. Why do some people have effective tax rates that are less than other people's?
2. What is the good of tax breaks to generate business if the price that is paid comes out of the customers' discretionary income?
I was rather discouraged to read that Mitt Romney's effective tax rate is around 14%. I tell you quite honestly, it makes me feel that my work is less valuable than his work; that somehow I am less valuable than he is. Now, certainly, I don't circulate as much money in the world, perhaps my circle of influence is not as large as his, but it seems to me that the principle of these United States is a certain level of equality, of fairness, of inherent VALUE in every single person.
And yet, I think back to the civil rights era, the pictures of people with signs, "I am a Man." Have we made progress?
I am a person. I am a small business. I am a creator, even of jobs if you count our part-timers. I matter. I will even go so far to say that for some people, I matter MORE than Mitt Romney. So there.
The first year that we started our business, my effective tax rate was over twice that of Mr. Romney's. Honestly? I cried. A lot, that year. I cried on the phone to the IRS when setting up a payment plan; I cried at night wondering how I would meet those payments and pay the mortgage. I cried trying to come up with some possible part time night job like grocery store stocker.
That tax rate was much higher than it had ever been in all my years working for someone else, following someone else's rules, subsuming my own creativity and intiative to the will of someone else. It was much higher than when I wasn't paying thousands of dollars in sales taxes because I was selling stuff. And then, when I took a risk, steeled my nerves and became a small business owner (something which is talked about as if it is valuable and important to the progress of our nation), paid sales taxes, paid unemployment taxes, paid income taxes, I was met with hurdles.
Now, I am not begrudging the amount of taxes that I pay. Let me be clear about that. I will say that the amount of paperwork involved in paying taxes is irritating. I don't mind the actual paying of taxes; it just would be a lot less painful if I didn't have to spend hours dealing with the paperwork, if there was some coordinated and centralized form-filing-out department so that I don't have to reconfirm how many employees I have when that should be self-evident in the amount of taxes that I pay. I came to realize that while our politicians and media talk about the value of small businesses, the things they were talking about were for businesses much larger than mine. Structurally, it seems that part of our system doesn't care at all about me as a small business. Will never care about me at all unless my business is big enough to afford me the kind of profits that will allow me to contribute hundreds of thousands of dollars to lobbyists or campaigns. That's discouraging.
And when there starts to be a conversation about tax breaks and incentives for small businesses, it really seems as if I am once again not even at the table. If I WAS at the table, I would say that a couple hundred dollars of tax breaks (because, for us as a small business, that's about all it works out to per year) is NOTHING compared to what my customers spend at our store, or what our customers could spend at our store. All the tax breaks in the world are not going to help me if my customers are not in a better position to buy things. Maybe these huge corporations don't depend on their customers the way I do, I don't know, all I know is that this talk of tax breaks is almost meaningless to me as a small business, particularly when it is accompanied by lowered discretionary income of my customers.
It has been an eye-opener. That's for sure. Now, on a daily basis, my value is affirmed by my customers, and by my own sense of satisfaction. It is affirmed on the small local scale at which I feel that I have value and influence and power. And that's fine. But overwhelmingly it means that my loyalty is to my customers, and to seeing that their quality of life is not threatened by tax breaks which are supposedly good for business but which leave schools and communities struggling. In all honesty, I don't even understand how that scenario IS good for business.
I am happy to pay taxes for the many benefits that I reap. But I am less happy about those who would pay less and yet reap the same benefits, who would somehow deny the way that they owe their wealth to society at large. And I do not think I am unreasonable to begrudge someone a smaller effective tax rate just because... .what? they have enough money to pay someone else to find all the loopholes? they make their money from moving other money around not from talking to customers all day long?
Now, I realize that I am no expert in matters of taxes and national budgets, but I fail to see why the work that I do is somehow less important than the "work" of earning interest on investments. WHY are capital gains taxed at a lower rate? Is laying concrete and roadways, helping customers, selling goods or services - does that build this nation less than earning capital gains? Because, according to tax code, certain work is more valuable/less taxable than other work which is taxed at a higher rate - by implication, I would say that the higher rate of taxation means that such work is of less value. Really? Is that the kind of country we want?