By Rebekah Rast — “If you’ve got a business, you didn’t build that. Somebody else made that happen.” These words spoken by the president have received a lot of attention lately.
For many, this statement perfectly aligns with actions taken towards small businesses these past three years, whether through the tax code or Obamacare. It comes across as a stark justification to take people’s hard-earned wealth.
Unfortunately for the president, no matter how he attempts to retract his words or change the context of his speech, actions speech much louder than words. And President Obama’s actions since being in the White House don’t exactly scream free market supporter or personal prosperity enthusiast.
U.S. House Majority Whip Kevin McCarthy (R-Calif.) released a video detailing the story of Arnold Kaufman, president of Woodhill Supply, Inc. in Cleveland, Ohio. His business, started by his father, has been successful for more than 50 years.
While telling his story, Kaufman says the first year of the recession wasn’t so bad. “It was the middle couple years that were a problem,” he says. “I bet it’s been three years since I hired a new employee.”
This is a prosperous business with three different locales in Ohio, and he hasn’t been able to hire for three years.
Why?
It’s simple. Kaufman, like so many other business owners already know, explains that if a business doesn’t make a profit, it doesn’t grow.
“Everybody acknowledges that a company has to be profitable to stay in business,” Kaufman says. If you raise taxes, “that tax money comes from the business, there’s no other way to get it. And either you pay taxes with it or you use it to expand the business.”
Today’s businesses are in limbo, not sure what taxes will be required of them this coming year as taxes are scheduled to go up at the end of the year unless Congress acts.
The president would like to see taxes increase to their pre-2001 levels for those making more than $250,000 a year. A report released by Ernst and Young found that if “the president’s tax proposal goes into effect the economic output in the ‘long-run’ will fall by 1.3 percent — or $200 billion, and employment will decrease by 0.5 percent — or 710,000 jobs.”
In response to this study, Fox News reports on a statement by Independent Community Bankers of America (ICBA) President and CEO Cam Fine saying, “This study shows that raising taxes next year will have a devastating impact on small businesses.”
Many small businesses are set up as S Corporations, which Kaufman explains is a business organized in such a way that profits flow to the tax returns of the stockholders.
Fine explains that businesses, like Kaufman’s, that are set up as S corporations, “would face a nearly 10 percent tax hike — limiting growth and threatening our nation’s economy,” should the president’s tax plan prevail.
For Kaufman, that might mean many more years of not hiring any additional employees.
But his business is not alone. Small and large corporations alike are struggling to stay afloat in this unfriendly tax environment. And Americans are feeling the repercussions.
Writing for blog NetRightDaily.com, Rick Manning, communications director for Americans for Limited Government (ALG), explains:
“The commonly reported unemployment rate of 8.2 percent is a fraction of those who are in the labor force but are stuck in part time jobs because there are not any full time ones available. Note this rate does not include those who have left the workforce. In June 2012, there were 14.9 percent of the civilian labor force in this category, or 23.1 million people.”
Business owners are frustrated as well as Americans who would like to be hired. But for now, the words and actions from the president point to a different goal for Americans and their small businesses: a complete dependency on the government.
Despite the president’s claims, the government does not create jobs or build businesses.
However, he has a large role in setting the environment where a business will succeed or fail. Yet, for some reason the president isn’t taking the credit for a weakening economy, hurting businesses and struggling workforce.
Rebekah Rast is a contributing editor to Americans for Limited Government (ALG) and NetRightDaily.com. You can follow her on twitter at @RebekahRast.
