Small businesses and taxes, seeking truth | Arkansas Blog

Friday, December 9, 2011

Small businesses and taxes, seeking truth

Posted By on Fri, Dec 9, 2011 at 10:00 AM

Do small businesses really make expansion decisions based on tax rates?

Good report here, an admiring review of NPR reporting on the subject.

They asked the Republicans for names of small business people they could interview that would confirm what they say. How many did they get? Zero. They also asked some of the lobbying groups that say the same thing. Again, no introductions. So they went online and looked for some small business people to interview, and got the same answer over and over. They played the interviews. It was inspiring! They're trying to win, in business, not win in taxes. When they have a chance to grow — they grow, and they don't worry about whether they'll pay more or less taxes. A couple of them said taxes are too low and they worry about the country, and they would happily pay more.

That's what I love about business people. It's an art and a sport. It's best played by creative people, not bean counters, and certainly not politicians.

Remember this the next time U.S. Rep. Tim Griffin dusts off this cherished fiction from the Republican message factory. For what it's worth, over my 20 years as investor in a small business I can add that not a single one of our expansion (or contraction) decisions was a product of U.S. tax rates.

You can write this story much larger. It's the same with the impact of marginal tax rates on major industrial decisions. Businesses make them based on workforce, raw materials, transportation, energy issues, location relevant to market and a host of other issues, not marginal tax rates. Particularly in Arkansas where a loose law allows national corporations to lay off profits in one location against expenses in another location as a tax dodge.

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