Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Tax Increases Hurt Job Creation There May Be Reasons to Raise Taxes, but Don't Kid Yourself

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Tax Increases Hurt Job Creation There May Be Reasons to Raise Taxes, but Don't Kid Yourself

Article excerpt

Take it from me -- a small business owner and "job creator."

-- From the Dec. 4 PG Perspectives piece by Cynthia Barber Gale titled "Tax Cuts Don't Create Jobs."

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I've owned a money management company since 1995. Some politicians call me a "job creator." They say that unless we extend the Bush tax cuts for the richest 2 percent of Americans, small businesses like mine will be hurt. They're right.

I've never had a problem with the term "job creator." Obviously no sensible businessperson (unlike some politicians) wakes up and says: "I think I'll create some jobs today." Job creation doesn't work this way, in a vacuum.

Business owners create jobs when they can profitably meet demand for goods and services. Jobs are not an end in themselves, but a means of creating value for customers, which in turn creates profit for business. If there is no profit, there is no job. So I create jobs for my employees because I want to earn a profit. Simple enough.

Because I deduct employee costs from my taxable income, any increase in labor costs must be offset elsewhere if I'm going to maintain my income. Similarly, any increase in income taxes must also be offset. If I expect my after-tax income to fall by 6 to 8 percentage points as a result of a coming tax increase, I'm going to try to find ways to either grow my sales by an offsetting amount, or cut my expenses.

Given that the economy remains in a half-baked, deflationary recovery supported largely by federal borrowing and money printing, the prospect of higher revenues is iffy at best. So with the fiscal cliff looming, I'm going to husband my cash and keep new expenditures to a minimum. If we go over the cliff, I'll adjust accordingly.

I'm not the only person thinking this way. Numerous economic surveys over the past six months show increased pessimism on the part of business owners, managers and consumers. …

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