by John Hawkins | August 9, 2010 12:03 pm
This column by small business owner Michael Fleischer is absolutely extraordinary because it gives people who’ve never worked for themselves a window into the world of the small business owner. These are the people who are endlessly vilified by the Left despite the fact that they create most of the jobs in our country.
They’re called greedy for wanting to be rewarded for their hard work. They’re called selfish for not giving more to their employees. But, few people ever take a look at how much the government takes from those very same employees. Democrats certainly never consider how much better off the overwhelming majority of people in this country would be if the government was much smaller and people could keep more of the money they’ve earned. Just take a look at the numbers Fleischer presents (It’s worth reading the whole column to see the numbers broken down).
With unemployment just under 10% and companies sitting on their cash, you would think that sooner or later job growth would take off. I think it’s going to be later–much later. Here’s why.
Meet Sally (not her real name; details changed to preserve privacy). Sally is a terrific employee, and she happens to be the median person in terms of base pay among the 83 people at my little company in New Jersey, where we provide audio systems for use in educational, commercial and industrial settings. She’s been with us for over 15 years. She’s a high school graduate with some specialized training. She makes $59,000 a year–on paper. In reality, she makes only $44,000 a year because $15,000 is taken from her thanks to various deductions and taxes, all of which form the steep, sad slope between gross and net pay.
…When you add it all up, it costs $74,000 to put $44,000 in Sally’s pocket and to give her $12,000 in benefits. Bottom line: Governments impose a 33% surtax on Sally’s job each year.
Because my company has been conscripted by the government and forced to serve as a tax collector, we have lost control of a big chunk of our cost structure. Tax increases, whether cloaked as changes in unemployment or disability insurance, Medicare increases or in any other form can dramatically alter our financial situation. With government spending and deficits growing as fast as they have been, you know that more tax increases are coming–for my company, and even for Sally too.
Companies have also been pressed into serving as providers of health insurance. In a saner world, health insurance would be something that individuals buy for themselves and their families, just as they do with auto insurance. Now, adding to the insanity, there is ObamaCare.
Every year, we negotiate a renewal to our health coverage. This year, our provider demanded a 28% increase in premiums–for a lesser plan. This is in part a tax increase that the federal government has co-opted insurance providers to collect. We had never faced an increase anywhere near this large; in each of the last two years, the increase was under 10%.
To offset tax increases and steepening rises in health-insurance premiums, my company needs sustainably higher profits and sales–something unlikely in this “summer of recovery.” We can’t pass the additional costs onto our customers, because the market is too tight and we’d lose sales. Only governments can raise prices repeatedly and pretend there will be no consequences.
…A life in business is filled with uncertainties, but I can be quite sure that every time I hire someone my obligations to the government go up. From where I sit, the government’s message is unmistakable: Creating a new job carries a punishing price.
Few of the pampered members of Congress have ever run a business. They’re not risking their own money. In most cases, they’re not constrained in any meaningful sense by a budget or even by the rules they force other people to live by. They’re overstaffed, overbudgeted, and only in rare cases, when they get caught with their hands in the cookie jars, do they have to pay any sort of price for making mistakes. So, the world that small business owners live in is something they don’t truly comprehend because it’s completely outside of their reality.
That’s how we end up with the government imposing a 33% surtax on a job even as liberals condemn the people providing that job. It’s like a tick condemning a dog for not providing him with enough blood.
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