Is the Republican rhetoric about tax cuts for small businesses misplaced?

A blog post in The New York Times’ Economix blog caught my attention. It argues that young firms, not small businesses, are responsible for job growth. The problem is that entrepreneurship, according to the post, has been on the decline, even before the last recession of 2007.

If this is the case, why target tax cuts to existing small businesses? Are small businesses simply going to pocket the tax savings as extra income to their sole proprietors or shareholders?

About Alton Drew

Alton Drew brings a straight forward and insightful brand of political market intelligence. Alton Drew graduated from the Florida State University with a Bachelor of Science in economics and political science (1984); a Master of Public Administration (1993); and a Juris Doctor (1999). You can also follow Alton Drew on Twitter @altondrew.
This entry was posted in Economy, Political Economy, Republicans, taxes and tagged , , , . Bookmark the permalink.

One Response to Is the Republican rhetoric about tax cuts for small businesses misplaced?

  1. Kenneth J. Ciszewski says:

    I thought the blog said that many more small businesses had failed, and also that new small businesses were not being created, which is not necessarily the same as saying that young businesses are the most job creating.

    In my experience, new businesses tend to start on a shoestring, and can’t afford to hire much unless a real glut of work is booked and the revenue is there to pay workers. It’s my understanding that bank loans and venture capital have been scarce in recent times, which helps neither business formation nor hiring.

    As for the “let’s help small business” mantra of the GOP, while I’m personally not a big fan of “business welfare”, I understand how hard it is get and keep small business going (I’ve worked for a couple of small businesses in my career)–it’s brutal! I’m in favor of targeted tax breaks–hire a person for two years, get a tax break, or something like that. Hire someone who’s been unemployed, get a tax break (I think they do something like that now). But blanket giveaways of tax breaks that don’t actually help create jobs are not something I favor. We’ve given business at many levels all kinds of tax breaks, and mostly what happens is they pocket and walk off with the money.

    Frankly, with our current deficit, we need the tax revenue. Businesses need to understand that the stable business environment in this country is highly supportive of them and is an important, though often overlooked aspect of their success, and that the taxes they pay help create that environment. They should try doing business in Baghdad, Iraq, if they don’t believe that–it might open their eyes, at least for a moment.

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