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The War On Capitalism (Two Minutes to Read)

7/20/2012

 

President Obama gave a speech recently that pretty much said entrepreneurs wouldn’t exist without people. Having been one myself I can tell you that jobs wouldn’t have existed if some friends and I hadn’t taken a huge risk (including the possibility of losing our homes) to pursue a dream and start our own business. 

Did we need people to accomplish our dream definitely but the fact is the jobs came before the people not the other way around; kind of like which came first the chicken or the egg. In this case it’s very clear we had to create the need for jobs before we could hire people to fill them. 

Obama consistently puts out a message that business executives are evil. He says he wants to create jobs but time and time again he trashes corporate America. There are a lot of problems with doing this and one is that a majority of companies that provide jobs aren’t part of corporate America; instead they are classified as small businesses with many of them having less than 50 employees. These small business owners aren’t evil. There are over 27 million of these companies in the U.S. and they account for over half of the jobs. 

The problem is that President Obama keeps saying things that undermines small businesses; basically putting them in the same boat with the G.E.’s and Proctor and Gamble’s of the world when they’re an entirely different business model. Small businesses are growing not downsizing;
they are the ones we really need for our economic survival. 
 
When Obama says he’s going to tax people with earned income of $250,000 on up he directly affects most of these small businesses. The reason for this is that small businesses are often S-Corps meaning the profits are treated as income/salary just like their employees deal with. So whatever tax bracket the business owner is under on a personal basis is applied to their business income. 

Large companies are C-Corps; meaning the company is the taxed entity not the owners of the company. Corporations are under very different rules from a tax perspective and are under very strict guidelines in reference to stockholder protections. They have a Board of Directors to oversee various aspects of how the company is being run. The bottom line is they operate nothing like a small business. The excutives in a major corporation can make millions in bonuses/stock options even though their salaries are generally around $750,000. Small business owners are more inclined to make around $150,000 with no bonuses or options. With the above in mind, many small business owners would fall into President Obama’s $250,000 increased income tax because that is the profit received not the amount the owner actually receives.

Most small business owners use their own formula for distributing profits as they aren’t federally regulated like large corporations. Let me give you an example of what our company does (I’m now retired from there). First of all we take 10% of our income before taxes and give it to charities. Next the five business owners paid their taxes which averaged around 40% of company profits. Then we’d give 20% of our profits to all of our employees in profit sharing (we gave them a 401k program as well). Lastly, we’d take the remaining 30% and reinvest in the company which always included adding more jobs because of our growth. We contributed to the country's gross domestic product the government takes away from it.
 
Any dollar taken away from our company and given to the government takes away from every area I mentioned above. Less charity, less profit sharing for our employees, less new jobs, etc. There is no way the government could do a better job with our money then how we were using
it. We grow jobs, they don’t. We spent efficiently, they don’t. We didn’t have corruption, they do. We efficiently spread the wealth within our own communities, they spread it where the votes are. This is why Republicans are fighting so hard to stop President Obama. The president tries to make it seem like Republicans are fighting for the rich when it isn’t true; they’re fighting for our economic survival. I don't think a lot of people get it but it would be ignorant of Republicans to support the rich because they are a very small voting base. Creating class warfare is just an unfair strategy by the Democrats. I find dividing Americans like this to be appalling.  

I always knew President Obama had a socialist streak which only makes since because of his background. Not only are there a large amount of black Americans with a mindset of entitlement and shared wealth, President Obama was also an academia so he didn’t work in the business world. Many people in the academic community have a different vision of how things should work; what they need is time in the “real world” so they aren't as naive. While giving presentations at various universities I always ended up having college students come up to me afterwards saying they wish their professors had real world experiences to share. 

President Obama hasn’t hid very well (maybe he’s not trying), that he believes in Socialism which in Karl Marx’s view was a natural progression from Capitalism. I don’t think he consciously ran for office to tear our country apart, I think he had these ideological views that he and his friends discussed over the years as to how to run the country. Then when he got into office he realized he was way over his head. Not surprising since he was a community organizer before jumping into trying to be a country organizer. This is why he’s still doing so many things President Bush did even though he said he wouldn’t. Once he got into office he finally faced the real world and his ideology wasn’t the solution. It would be the same for most of us, we sit around talking about how messed up things are yet most of our ideas for fixing them probably wouldn't be realistic when confronted with the big picture.  

I’m sure that most democrats don’t care about living in a socialist society but they’re naïve to the negative impact it will have on our nation because economic growth always takes a significant hit as well as job loss in this type of society. Socialist societies are filled with citizens with entitlement
mentalities and as we’ve seen many are now going bankrupt. Has socialism ever led to a successful society? The answer is no.

Steve
7/22/2012 02:36:48 am

Probably because of the limited sound bytes Republicans aren't communicating well what they're trying to do. If they would use your simple explanation, voters who are on the fence would surely vote Republican. I copied your blog and emailed it to friends and family so they get the big picture. Thanks so much for doing what you do.


Comments are closed.

    Author: John Mann

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