The Geithner plan’s assault on small business
In addition to billions in new “stimulus” spending that our country can’t afford, the Geithner plan also contains billions in tax increases on small and family-owned businesses while protecting the tax preferences of wealthy, multinational corporations. In short, the Geithner plan benefits Costco at the expense of the locally owned corner store. Small businesses already struggle to compete with big businesses that enjoy the luxury of a tax code filled with corporate loopholes. The Geithner tax policy, if implemented, will further devastate our local communities and ultimately the middle class. …
What if we made it harder to succeed? Harder to innovate? Americans have always optimistically believed that future generations will be better off than generations past — what if suddenly that was no longer true? That’s what the Geithner plan means for America. Big business forever replaces Kevin O’s and the corner store and the local lumber yard. It’s not just about the homogenization of the American landscape and the loss of community identity — small businesses create seven of every 10 new jobs and they employ just over half of the country’s private sector workforce. They are the job-creation engines of America and are the key to our economic recovery. These people aren’t wealthy Wall Street executives; they’re the people getting America back to work. So why does the former president of the Federal Reserve Bank of New York, who arranged the rescue and sale of Bear Stearns and helped engineer the $700 billion Wall Street bailout, want to make small businesses less competitive against multinational corporations?
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Geithner, in all ways, is very symbolic about the stupid land AmeriKa now is.
Schadenfreude on December 5, 2012 at 11:25 AM
Small business is a threat to a free society…you can control large businesses with taxes and other incentives, but small business is fragmented and can’t be controlled.
The Pharm’s are a good example, herded into a meeting with the president about ObamaCare, they were forced to concede…the restrictions placed on them would be impossible to overcome. Auto is another example.
Small business has to be taken out, destroyed for a socialist society to exist.
right2bright on December 5, 2012 at 11:25 AM
THIS THIS THIS
More, please! Make Tim Geithner the poster child for this debacle.
rockmom on December 5, 2012 at 11:29 AM
Small business owners are less likely to give to DemocRATs, and Turbo Tax Timmy is a product of the liberal side of Wall Street.
Steve Eggleston on December 5, 2012 at 11:31 AM
Small businesses are inefficient, but innovative. Big business is typically efficient, but as a culture becomes ingrained into the big business, it loses the innovation it once had.
Both businesses are needed though. They each have their own benefits and detriments. If we all relied on nothing but small businesses our cars would all be different, but extremely expensive. If we all relied on nothing but big business, then everything would be the same, cheap but innovation would stagnate.
I think all businesses should be taxed at the same rate. 0% period, because businesses pass those taxes onto customers. Then small businesses would use the business tax code, which would be nothing.
astonerii on December 5, 2012 at 11:31 AM
Amen.
Steve Eggleston on December 5, 2012 at 11:31 AM
There is only one reason to push for higher taxes on those making $200,000 or more … to kill off small business.
darwin on December 5, 2012 at 11:39 AM
Contrast this with:
Galt2009 on December 5, 2012 at 11:40 AM
No, that is totally wrong…small business that are successful are extremely efficient, what I think you mean is that they may have higher costs associated, but that is not entirely true.
Large business is also “innovative”, 3M, Apple, Samsung, Phillips, good grief, all leaders in innovative tech and ideas.
Certain industries, because of the high overhead and manufacturing costs (like auto’s) need a large business, but most other “small” businesses, in an ideal climate, are at a rung on the ladder, and they want to move from small–to medium– to large…it’s a progression most entrepreneurs want to make.
What stops them,now, is regulations that make them inefficient, and stifles creativity.
So in summation, your post is generally wrong…small business is efficient, and large business provides the catalyst for many creative and innovative ideas and products.
Small business is there, to become bigger, that is their goal…and a goal that this administration is bent on destroying.
If they don’t become bigger/larger, than whatever innovation and efficiencies are lost…a large business can overcome gov. regulations better.
right2bright on December 5, 2012 at 11:57 AM
It’s how fascists roll.
Rae on December 5, 2012 at 12:10 PM
None of these idiots in the Federal Government have been in business for themselves. They’ve just been in the business of influence peddling. There is no tax on that.
SC.Charlie on December 5, 2012 at 12:17 PM
Small businesses are inefficient. Proof? Cost of buying anything from them. They do not benefit from economy of scale. You can argue all you want, but the fact remains that they are not efficient, if they were, the would compete on price. Most compete outside of cost and work to sell to niche groups and provide special services and options that large retail business does not. Plenty of inefficient companies run for generations and never worry about being driven from the marketplace. Ferrari and Lamborghini for example. They are extraordinarily inefficient, but they offer their could care less what the cost is customers something they cannot get elsewhere. But if we relied on companies like them to provide our cars, wait times for buying vehicles would be generations in advance.
Large businesses are innovative. But on a person to person employed comparison, they lose out to small business on innovation on almost every level. That is why the big businesses are always on the prowl to buy the small companies and their innovations up. Think early Microsoft here. The only level this is not true would be where the cost of capital equipment for experimentation comes into effect. The problem is, that most large companies get a culture of their own, and they stagnate. They cannot get out of their current box. I have worked at several. They have so many design requirements for creating a new product that you cannot break through with anything really innovative.
As for growing. Of course growth is part of the small and large business plan. Not all. Some people are perfectly happy with a set size they enjoy and do it as a hobby that pays the bills. But in order to grow, the small business typically does a restructuring that improves certain efficiencies which allows them to expand. Some try and go the brute force of money way, and they typically end up as a part of history.
Small business is inefficient and innovative. Large business is efficient but stagnate. Are there exceptions? Yes. It is not a law of nature, just a reference point that is shown throughout our history and economy at many levels.
astonerii on December 5, 2012 at 12:25 PM
What ever happened to “Small is Beautiful?”
“Whenever something is wrong, something is too big.”
~ Leopold Kohr
Nassim Taleb:
Rae on December 5, 2012 at 12:32 PM
Medicaid and Medicare are huge, along with most other government programs are bloated and rife with fraud. If anything that needs to be downsized, it is government, both on the state and federal level.
SC.Charlie on December 5, 2012 at 12:44 PM
Efficiency is not always indicated by price, and scale does not equate to efficiency.
Small business is more innovative and generally more nimble to respond to the market demand, but doesn’t always have access to the resources needed to create a competitive efficiency or a marketing campaign.
Apples and oranges, pros and cons, but your point is heard.
That said, Tim Geithner and his boss are atrocious for business.
Canada, anyone?
beatcanvas on December 5, 2012 at 12:45 PM
Interesting take. There are limits to economy of scale. I talked about one of them. When it gets to a certain size, it creates its own culture. That culture puts it in a box, and getting outside that box is hard. Group think sets in.
Small is not efficient. The cost of the equipment to create a product a few items ends up driving the price. If that same machine created 100 times as many items, the the driver of the price would be raw material and labor. It is why i do not do many things in my home and hire others to do them for me. By the time I buy the equipment for a couple uses, I already have paid three times the cost of hiring a small business person.
A small company might be able to build 100 of an item a month. Then sell it for 100 units of money. Efficiency = .01. A large company with a broader base can make 1000 of the same item and sell for 75 units of money. Efficiency = .0133. Far more wealth created with a 30% efficiency increase. As an example.
This does not take into account that the small business might offer the customer more than just an item that makes the higher price more appetizing to niche buyers. That is why a small business is small. A larger company could not offer that cost plus benefit.
I like both small and big business. They each serve a role.
astonerii on December 5, 2012 at 12:46 PM
concur. Government creates no wealth. It is the single least efficient player on the field. Their role should be left to military and courts!
astonerii on December 5, 2012 at 12:48 PM
Well said. Big businesses can take advantage of some economies of scale, but I don’t think that can be generalized to describe them as more efficient overall. In fact, small businesses by their nature are forced to be more efficient than big businesses. And where a big business can gain economy of scale, a small business can often leverage products or services from a big business to take advantage of that economy of scale.
There are some things where a small business can’t compete with a bigger business, such as marketing. But one of the biggest problems that a small business has in competing with a bigger business is that the bigger business can afford to do more lobbying for government favors and convenient regulatory loopholes.
tom on December 5, 2012 at 2:03 PM