Knowing when it’s time to quit
Bookworm on Jul 14 2009 at 9:50 am | Filed under: Taxes
The cat’s out of the bag now, and it’s clear that the Democrats and Obama are planning on destroying small businesses in America. This is no surprise, of course, given that small business — entrepreneurship, independence and individualism — is the antithesis of a government run marketplace:
In the middle of a recession and with rising unemployment, Democrats have been letting it leak that they want to raise U.S. tax rates higher than they’ve been in nearly 30 years in order to finance government health care.
Every detail isn’t known, but late last week Ways and Means Chairman Charlie Rangel disclosed that his draft bill would impose a “surtax” on individuals with adjusted gross income of more than $280,000 a year. This would hit job creators especially hard because more than six of every 10 who earn that much are small business owners, operators or investors, according to a 2007 Treasury study. That study also found that almost half of the income taxed at this highest rate is small business income from the more than 500,000 sole proprietorships and subchapter S corporations whose owners pay the individual rate.
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Here’s the ugly income-tax math. First, Mr. Obama has promised to let the lower Bush tax rates expire after 2010. This would raise the top personal income tax rate to 39.6% from 35%, and the next rate to 36% from 33%. The Bush expiration would also phase out various tax deductions and exemptions, bringing the top marginal rate to as high as 41%.
Then add the Rangel Surtax of one percentage point, starting at $280,000 ($350,000 for couples), plus another percentage point at $400,000 ($500,000 for couples), rising to three points on more than $800,000 ($1 million) in 2011. But wait, there’s more. The surcharge could rise by two more percentage points in 2013 if health-care costs are larger than advertised — which is a near-certainty. Add all of this up and the top marginal tax rate would climb to 46%, which hasn’t been seen in the U.S. since the Reagan tax reform of 1986 cut the top rate to 28% from 50%.
States have also been raising their income tax rates, so in California and New York City the top rate would be around 58%. The Tax Foundation reports that at least half of all states would have combined state-federal tax rates of more than 50%.
Early retirement is look like a very good option for me right now. It is true that as a self-employed person, if I work, I’ll still have more money if I work than if I don’t work. After all, if I don’t work, I have no income at all, whereas if I do work, after state and federal taxes, I still manage to hold onto about 40% of my income. For me, though, hanging onto a mere 40% of my income (and I charge my clients top dollar in my field, which still isn’t much), may not be worth the personal stresses and the actual costs of carrying on my business.
I have to pay for my own equipment and my online legal library. I also have to sustain the wear and tear on my own system as I deal with deadlines, nervous clients, dumb judges (they’re all liberals here), juggling work and family life, etc. At a certain point, the return on my effort gets too small to justify the hassle.
If I were the sole breadwinner for my family, the math would be different. I’d clean Grand Central Station out with a toothbrush to keep food in their mouths and a roof on their heads. But I’m not in that situation, and I have a hard time justifying killing myself simply so that the government can fund the degradation of my health care system.
Hat tip: Radio Patriot
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9 Responses to “Knowing when it’s time to quit”
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Ditto here. My business depends on customers investing in their future and it has completely dried up. Companies are sequestering all the available cash they can against what is about to come down.
Customers don’t want to invest against a future they cannot discern. Combine that with the huge tax burden that is about to be thrown down on me (charging sales tax for consulting services provided, for example) and it really isn’t worth it any more.
Oh well.
So Much for Obama’s promise to lower taxes for 99% of Americans.
It is as true now as it was true back then. The witch hunt against a few, is only ever an excuse to broaden the net to include all malcontents and obstructionists.
The devil says he will only take an inch. A minor sacrifice for great rewards.
All those sickeningly rich book authors, like Brin and Scalzi, who lambasted Bush’s economy and promoted the candidacy of Obama needs to face something called Concrete and Truth.
What makes you think you’ll be permitted to leave the tax base? They’ll just tax your retirement savings or put you on an income “goal”.
Okay, actually I believe this is the flaw in the Dems plans. They are playing last centuries game. Where the Soviet Union, China and even Chavez had natural resources and a manufacturing base to seize and force labor in, to keep their economy going. Not to mention a large capitalist consumer economy to sell to. The US is a human capital economy. You can whip a man to force his work in the mines but how do you get the benefit of his ideas. Can you beat the next “iPod” out of somebody? If you waterboard a bright and innovative mind, it concentrates on how to stop the torture not a hot new consumer product. Look we couldn’t even get a decent days work out of a highly paid UAW member back in the ’70s.
I went to Barnes & Noble on Saturday and bought a new copy of “Atlas Shrugged.” My old paperback edition is so tattered and torn I knew that it couldn’t stand up to another reading.
Two interesting things as I went to pay for the book. While I was standing in line, a young man behind me remarked, “I see that you’ve picked an interesting book today.” Although he might have been a liberal, his statement showed me he was open to discussion about my choice.
I said, “Well, even though this was written 52 years ago, it bears an uncanny resemblance to the present.” He agreed, and we fell into some easy chat about how nice it was that “Atlas Shrugged” sales were through the roof and that ol’ Ayn would be proud that she could still bedevil the second raters even from beyond the grave.
The saleswoman was another matter. I could see hostlity in her eyes and her body language was stiff. She was an older woman with her hair pulled back into a bun and wearing all the little jewelry and blouse flourishes that scream “liberal arts major who recycles, hates Bush, reads the NYT and loooooves The One.”
She was civil, but offered none of the banter that usually occurs in these exchanges. I could tell, too, that my purchase of “Atlas” was probably one of many that had been occuring lately. Her lip curled into the slightest of sneers as she handled the book, as though she had been forced to handle cow manure bare-handed.
When she offered to bag the book, I leaned conspiratorally toward her and whispered, “No, thanks. The environment, you know.” Then left the store.
PS: The next day I returned to buy Hayek’s “Road to Serfdom.” The sweet young thing who helped me find it was confused at first. “That’s ‘Road to Surfdom?’” she asked.
(Suddenly I had visions of old Friedrich tottering on a surf board, wondering if he would survive the 20-foot wave just about to crash down on him so that he could finally—finally!—finish Chapter 10.)
What makes you think you’ll be permitted to leave the tax base? They’ll just tax your retirement savings or put you on an income “goal”.
That’s what the 2nd Amendment is for.
JKB: excellent, excellent points.
Book, many ER doctors are also doing that. Not so much quitting as relocating to part time practices or less stressful work. It doesn’t pay nearly as much, but the government also won’t tax nearly as much of it.
This is predicated upon the fact that ER doctors cannot be reimbursed for their expenses in mandatory care for those that stop at the ER. In this sense, we already have mandatory medical care. It is just mandatory emergency care, and not pre-emptive care or general practictioner/proscription services.
Since a government bureaucracy pays for these emergency cares, presumably, they have no interest in doing so fairly and efficiently. Their lives don’t depend on the ER doctor getting paid, after all. And the family members that were taken care of in the ER pay nothing, so they have no interest to promote the government’s reimbursement of the doctor. One might argue that they have a long term self-interest in doing so, in order to maintain the quality and quantity of care, but when has humanity ever been such a long sighted player?
When she offered to bag the book, I leaned conspiratorally toward her and whispered, “No, thanks. The environment, you know.” Then left the store.
Devastating Parthian Shot, man.
[...] Knowing when it’s time to quit [...]
What makes you think you’ll be permitted to leave the tax base? They’ll just tax your retirement savings or put you on an income “goal”.
This is exactly what is coming, once the crap hits the fan due to Medicare/Medicaid/Social Security. We ain’t seen nuthin yet, folks.
I’d thought we would have until 2030 or so until things got really bad, but the ObamaWagon has accelerated America’s Poverty Timetable so rapidly, that I think we’ll be staring the gorgon in the face by 2020 at the latest.
You can only live on your credit cards for so much time before reality smashes you in the face and leaves you broken, for your foolishness. And when Cousin’ Bammie takes the credit cards for a wild spin around town, spending like there’s no tomorrow, you max out far, far more quickly than you ever expected.