Obama Economics and Job Losses
The Wrong Prescription for Helping Small Business and Employers
Oct 14, 2008
Obama, never having been an entrepreneur, seems not to understand the importance of small business in the United States. Their contribution to the economic health of the country cannot be over stated. According to the Urban-Brookings Tax Policy Center, several hundred thousand small business owners have incomes high enough to be hit by Obama proposed tax hikes on income. The result would be substantial job losses.
Small Businesses Importance
According to the U.S. Small Business Administration (SBA) the importance of small business cannot be underestimated. Small firms:
- Represent 99.7 percent of all employer firms.
- Employ about half of all private sector jobs.
- Pay nearly 45 percent of total U.S. private payroll.
- Have generated 60 to 80 percent of net new jobs annually over the last decade.
- Hire 40 percent of high tech workers (such as scientists, engineers and computer workers.)
- Are 52 percent home-based and 2 percent franchises.
- Made up 97.3 percent of all identified exporters and produced 28.9% of the known export value in FY 2006.
- Produced 13 times more patents per employee than large patenting firms; those patents are twice as likely as large firms to be among the one percent most cited.
- Create more than half of nonfarm private gross domestic product. (GDP)
Small Business Job Creation
Since the 1990's, small businesses have created 60 to 80 percent of the new new jobs. Most recent statistics show:
- Employers with firms with fewer than 500 employees, created 979,102 net new jobs or 78.9 percent.
- Large firms with 500 or more employees added 362.326 net new jobs or 21.1 percent.
Small Business Total In the U.S.
In 2007, there were 27.2 million small businesses in the U.S., according the SBA's Office of Advocacy estimates. Census data showed that there were 6.0 million firms with employees and 20.4 million without employees in 2005. Small firms with fewer than 500 workers represented 99.9 percent of the 27.2 million businesses.
According to Ralph R. Reiland, writing in the Pittsburgh Tribune Review (10/13/08), most of the entrepreneurial income in the more successful small businesses would be taxed away under Obama's plan, with the top federal grab of income rising to 50 percent, totaling his proposed increase in the marginal income tax rate, Medicare and Social Security taxes, and the phase out of exemptions.
Reiland goes on say that "Obama's flawed economic plan may be a vote-getter, but it is a direct threat to employers and employees, especially small business, the sector of the U.S. economy that currently creates nearly three-quarters of all net new jobs, produces 28% of the nation's exporting goods and employs 50 percent of the private sector work force."
Obama's tax plan shows all signs of increasing unemployment and adding to the rising levels of joblessness.
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