...and here's the long one.
jack sequim wa wrote:
From where I stood, as the CEO of sweetFrog Frozen Yogurt, I was delighted that the new tax was signed into law. In fact, I was proud to play a small role in the process, as I had asked for much-needed tax reform in a November 2017 Op-Ed that ran in Virginia Business. I firmly believed that small business owners needed tax reform to thrive, and I was happy to see our government work together to pass mission critical legislation.
No offense jack but your lemonade stand...
http://sweetfrog.com/images/uploads/graphics/store-team-member.jpg...is a limited liability company... It's not even a corporation. You have no public offering (no shareholders).
Most of us can understand asking the government to give small businesses a break. As an owner of a limited liability company myself, I know small business is a struggle, but you have to understand the difference between a LLC and a publicly held corporation like Harley-Davidson (NYSE: HOG). The most significant issue here is Wall Street. When a company goes public, which is often necessary for operations that require more funding than can be gathered from a handful of rich friends, they open themselves up to a whole new level of politics. It's that board-level of politics that creates the problem with these tax-cuts, because the interest shifts from investing in a business to investing in a portfolio. I'm willing to bet there were managers at Harley-Davidson that wanted to invest more of that $700 million from tax savings into the business and I'm willing to bet the shareholders overruled.
Maybe it's because your company serves frozen yogurt to mall shoppers with a sweet tooth that you don't really have to think much about the mammoth corporations that my company provides engineering services for such as Verizon, Bank of America and Time-Warner. As a small business dealing with these types of corporations it's easy to see two completely different worlds. As a proprietor, when I negotiate with these big companies, I am very much a small helpless critter at the feet of giants - it can be very humbling. Obama made that distinction very clear as he and the Democrats passed measures specifically to help small business while pulling back the reins on large corporations. Republicans have been trying to blur that line because they are serving the interests of investors on Wall Street who know that small business owners are more likely to support their "pro-business" proposals if they think "business" means them.
It's great that you published your opinion in a local paper but I doubt it made the slightest difference in the decision to cut taxes. That decision was made by congressional representatives that were probably serving the interests of Wall Street investors, as indicated by the record-breaking buybacks.
Note: please don't take "lemonade stand" the wrong way... I am not trying to belittle your enterprise as a business, I'm just trying to emphasize the difference between a small business like yours and a large corporation like Harley-Davidson.
jack sequim wa wrote:
Now, regardless of what you think of President Trump as a man and a leader, I’d like to offer some reassurance that the Tax Cuts and Jobs Act will help small-business owners build on the fantastic momentum generated by the American economy in 2017. The stock market is up, jobs are up, sales are up, and this tax reform may help small business owners do even better in 2018.
jack... That fantastic momentum started in 2010 and 2017 (the year you are praising) was the last year affected directly by Obama's policy. Also, if you really are the CEO of sweetFrog, I'm sure you know that you franchise is reported to have opened 276 stores during those Obama years. That seems pretty successful to me; was that not enough? Are you trying to take over the ice cream and candy world or are you just trying to run a business? Honestly, it's a bit dense to be trying to up-shift the economy when it's already in 5th gear.
jack sequim wa wrote:
reasons why I believe Trump’s tax reform will provide economic jet fuel for small business owners from coast to coast:
Tax rates have been reduced.
As you likely are aware, small businesses will be receiving a deduction of 20% for qualified business income. But, back in the day (that is, before December 22, 2017), income from a small business would pass through to the proprietor on their own taxes, and these individuals were sometimes saddled with income tax rates as high as 39.6%.
br reasons why I believe Trump’s tax reform will ... (
show quote)
I know, I've been there, that's why you have so many deductions. But again, you're talking about small businesses, sole proprietorships and limited liability companies... NOT corporations. And just to be clear, Trump's tax cut doesn't change the tax structure of a small business... income will still pass through to the proprietor. But yes, the 20% tax savings will be a nice boon to small business, I agree. I don't have a problem with giving small business a 20% break because it puts that money in the hands of the business. If your business is anything like mine, that money will be reinvested IN the business, which includes the workers. But in case you haven't noticed yet, my issue with this tax-cut is the CORPORATE WELFARE that many of of us see it for. Small businesses like ours are just the flotsam on the wake of much bigger ships. We appreciate the lift, but it's highly doubtful that we had anything to do with the direction of the policy, even with your op-ed. ;)
Something else that I have already mentioned and no one ever has anything to say about it... that 20% savings you're so excited for is tax on INCOME. That part of the law expires. You only get that for a few years. So plan accordingly.
In the meantime, lets talk about corporate welfare, since that's the problem I have with Trumps' idiot tax-cut.
1. Unlike lemonade stands across America, most Fortune 500 corporations are controlled by Wall Street investors.
2. Unlike the lemonade stands where the proprietor decides how to spend the savings, it's the Wall Street investors that decide how to spend the savings afforded to publicly held corporations.
3. So far, it's looking like the most significant measurable impact the tax cuts have had are on stock buybacks.
4. Unlike, regular dividends, which are taxed as income, stock buy backs give investors capital gains.
5. Unlike the tax cut on INCOME, the tax cut on CAPITAL GAINS is permanent.
Are you connecting dots yet?
I won't *say* it was intentional but if there was ever a call to mastermind a way for private investors to siphon money from the government, this would be a genius way to do it. Use business as the excuse, it's become an icon of American culture like freedom and patriotism. Small business owners will think it's all about them. So you get the political "OK" and you cut corporate tax, then you take the savings on corporate income and buyback your stocks, increasing the value per share, so not only are you taking control of money that used to go to the government but your manipulating the stock market with it and multiplying the value of that money. Then you sell for a tremendous capital gain, but wait... being the genius you made sure the tax on capital gains is cut too. In fact, to sell the bill, you agreed to make the cuts on income temporary, but you make the cuts on capital gains permanent so you can ride out the bull market before you sell.
And since Wall Street is open to anyone in the world with enough money to invest, there's no reason to assume that these investors are even American!
It's interesting that Russians are playing such a staring role in the circus around Trump because Russia has over the past 20 years undergone a privatization movement the world has never seen before. I know some of you think Russia is still a backward communist state, but the central control is only extended to energy and defense. Everything else in Russia has been privatized and as a result there is a new ruling class. We often hear journalists refer to them as oligarchs. These are billionaires that have made a fortune literally from cannibalizing the old Soviet system.
Are you connecting the dots yet?
I won't *say* that Russian oligarchs have been looking for ways to cannibalize the United States of America, but if that was ever the case and they had this genius plan in mind, I'm sure the oligarchs would start by contacting American businessmen with a weak sense of morals and the potential to affect tax policies.
jack sequim wa wrote:
The new tax rates are certainly fairer to the business owner, which should encourage more people to take the leap and start their own business. There have always been countless reasons that interested entrepreneurs have wanted to join the sweetFrog family, but, at the same time, I can’t help but think that we and every national franchise now have another selling point. We can remind interested owners that they’ll pay a lower rate on their taxable income than they would have if they had purchased a franchise a year earlier.But, that deduction does more than just help the business owner. It helps the business itself, and now owners will have more money freed up to hire more people and to invest more in infrastructure.
Would you agree small business, medium size corporations are the engine of growth and hiring?
br The new tax rates are certainly fairer to the ... (
show quote)
I would agree that it's one of the engines...
http://www.economonitor.com/dolanecon/files/2013/09/P130925-2.png...but again, I don't have a problem with cutting income tax on small business. I'm hoping that by this point you are understanding that we are talking about completely different stories here.
jack sequim wa wrote:
I believe we won't see the tax cuts full effect until into Trumps mid to end third year to fourth year in office.
Tell that to all the yahoo's out there crediting Trump's tax cuts for the 2017 economy LOL.
jack sequim wa wrote:
The mainstream media academia, and the public at large are focused on large corporate tax cuts, which given time, many will expand, reinvest, adding jobs.
...or just give it to Wall Street, which has so far been the case.
jack sequim wa wrote:
But where the largest growth factors will be seen are small businesses. I don’t think confidence has reached a momentum that individuals will take the leap, the risk, leave the security of their job and start their own business just yet. The depth of 08/09 with the fears it brought are still very fresh. However Trump is repealing parts of Dodd Frank that have handcuffed banks from lending small business loans, and loans at large. Even Frank has been quoted saying "the regulations went to far and were overly restrictive". During the entire two terms of Obama, more businesses closed than opened a first time in American history.
br But where the largest growth factors will be s... (
show quote)
Maybe it was the first time in history that business scams weren't able to thrive as easily. It doesn't appear that legitimate businesses with sensible plans like sweetFrog had much of a problem since they opened 276 stores in that time.
jack sequim wa wrote:
During the heat of 08/09 over 7000 Auto dealers went out of business directly related to Dodd Frank because banks would not extend "Flooring Plans" and tens of thousands of other businesses that depend on loans also went out of business. With a new and improved Dodd Frank combined with many other positive factors, expect a boom in small / medium sized new business and existing business expansion. The one factor that would be a catalyst would be new home construction which todate has not been overly impressive but fully expect to catch on fire mid 2019 with contractor's pocketing the tax cuts. In summary it's just to early to be over critical considering just how bad the recession really was/is.
br During the heat of 08/09 over 7000 Auto dealer... (
show quote)
You really think home construction will increase just because contractors get tax savings? The only reason why home construction would increase is if other people have money to BUY houses. It's demand that drives the economy jack. And before you come back with that circular argument that tax savings = wage increase = consumer demand increase, let me point out that this wonderful tax cut expires in 2025. That makes it kind of hard for a proprietor to pass the savings in terms of wages without the risk of making payroll too heavy to support when the taxes come back in seven years. So unless, those contractors are building homes for themselves, I don't see how this tax cut is going to fuel the economy the way you seem to think it will.
My bottom line on your perspective on the tax cuts is that I agree with most of what you are saying about small business, but I think that's also the smaller part of the picture compared to the corporate welfare that I think motivated the tax cuts. I would be the first one to support a 20% tax cut on small business income and unlike Trump, I would even push to make that permanent, but the moment you attach that to massive corporate welfare, the deal is off.