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Virtually no economists believe that passing a tax increase in a struggling economy is a good idea — but somehow President Obama and congressional Democrats believe they can limit the damage by supposedly only taxing those who can “afford” it.
But who are those “wealthiest Americans”? Illinois businessman Wilson F. Hunt Jr. recently passed on to me the details of how his small business, which he owns with his wife, will be ensnared in this scheme to soak the rich.
Because his company elects to pay taxes as a Sub-chapter S Corporation, all the company’s profits are reported on the couple’s individual income tax returns as the sole shareholders in the company. They paid almost $1.1 million in taxes in 2010, yet the couple paid themselves only a combined salary of $189,000.
The rest of the income was put into retained earnings, which the company could then use to expand its business the following year.
Hunt explains it this way: “In order to earn a salary of $189,000 and continue growing our business last year, we had to pledge our house and most of our personal assets to a bank as collateral on a business loan. If the business were to fail, we could lose our home and life savings.” Yet the Democrats vilify people like him as the rich out to cheat the middle class.
As Hunt points out, if he gets to keep more of the income his company has earned instead of paying higher taxes, he’ll “create additional jobs and tax revenue next year with about a million dollars in the private sector, ‘shovel-ready stimulus spending’ on new computer hardware and software, professional services for installation, plus carpenters, electricians and plumbers to construct offices and a new parking lot.”
We shouldn’t envy people like Hunt; we should thank them for helping build an economy that makes us all better off. But don’t try to convince Democratic politicians — they’re too busy stoking class resentment to appreciate that some of those “millionaires” are the ones out there actually creating jobs.
Greedy Democrats want more money from people like Hunt to spend on vote buying schemes that do nothing to address the debt crisis they have crated under Obama. They hope to prey on the ignorance of voters who buy into this scheme.
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