No business would be successful if it wasn't for the infrastructure of the government supporting them. It is the government who enforces the laws and builds the infrastructure that makes it possible for business to succeed. At least this is the point that President Obama was trying to make when he made his unfortunate "You didn't build that" comment. But was it really government who did that?
The infrastructure part, was it really government? Every new road was not, in fact, built by the government. In most cases, it is a company like Peter Kewitt or JB Parsons that actually builds the roads. Roads are built by contractors. The government only finances the road. Usually, it is a combination of federal and state gas taxes that finances a road.
Many people need a little capital to get a business going, so they get a government-guaranteed loan from the Small Business Administration. However, they do not go directly to the SBA to get the loan. It is usually administered through a bank. Many banks are also small businesses, although some are very large.
What about other government services? None of those would be possible with the sacrifice of individuals. The police for that enforces the law. Those that prosecute criminals. Those that issue business licenses. There are many that are on the government payroll, and in good economic times, most of those people would make more money in the private sector.
Therefore, who builds a small business other than the proprietor? Mostly, it is other businesses. The governments role is there, but it is very small. The government's job is to provide the infrastructure and the environment that a small business can flourish in, but the hard work is mostly done by other businesses and by individual. It is those people who Obama did not give credit to in his, "you didn't build that" speech. If you helped build that, I salute you.
Sunday, July 29, 2012
Thursday, July 19, 2012
The reasons why the deficit is so high.
1. There is no direction in Congress. The House of Representatives is controlled by one party and the Senate is controlled by the other. There are very few bills that will get through both houses. If the House passes a bill that is too Republican, the Democratic-controlled Senate will not even consider it. Congress has not passed a budget for 3 years.
2. The tax structure is too punitive on business, too lax on individuals. In the United States, the tax rate on business averages 35%. This is Federal tax, plus State tax plus local tax. Businesses are getting hit from all ends on the tax front. True, individuals are paying less in tax than ever...it has been that way for 10 years. It needs to be more balanced where individuals pay more but businesses pay less.
3. Jobs have moved overseas. This represents a loss in the opportunity to collect income taxes.
4. People are not making as much money as they used to. Some people have fallen out of tax brackets where they pay taxes to tax brackets where they receive back more than they pay.
5. Yes Congress (not the President) has been borrowing spending a lot of money...at unprecedented levels.
6. True some people are choosing to delay retirement and receive benefits, but more people are choosing to retire early because they have little confidence in working again.
The current deficit is as much a problem with lost revenue as it is with runaway spending. That is beyond the control and scope of Congress.
2. The tax structure is too punitive on business, too lax on individuals. In the United States, the tax rate on business averages 35%. This is Federal tax, plus State tax plus local tax. Businesses are getting hit from all ends on the tax front. True, individuals are paying less in tax than ever...it has been that way for 10 years. It needs to be more balanced where individuals pay more but businesses pay less.
3. Jobs have moved overseas. This represents a loss in the opportunity to collect income taxes.
4. People are not making as much money as they used to. Some people have fallen out of tax brackets where they pay taxes to tax brackets where they receive back more than they pay.
5. Yes Congress (not the President) has been borrowing spending a lot of money...at unprecedented levels.
6. True some people are choosing to delay retirement and receive benefits, but more people are choosing to retire early because they have little confidence in working again.
The current deficit is as much a problem with lost revenue as it is with runaway spending. That is beyond the control and scope of Congress.
Friday, July 6, 2012
Will ObamaCare Effect Your Job?
Many Republicans are predicting that ObamaCare will cost jobs, although the answer is not exactly clear. Those who have studied RomneyCare state that there will little to no effect on jobs. But ObamaCare is a little different, and what people do not do enough of is study the differences between ObamaCare and RomneyCare.
But the question on everyone's mind is this: will ObamaCare cost me my job? The answer is it depends on two factors, the size of the company you work for and the amount of money you earn.
Who will likely not be effected?
If you have a large salary, over 80,000 per year in my estimate, healthcare costs are such a minor part of your overall compensation package that adding another 10 to 15 thousand per year for health care benefits is not a hard thing to do. If you make 80,000 per year or more, health care is about 1/6 or less of your total compensation package. It is true, however, that if health insurance was not so expensive you would be making more money. But at that salary, who's complaining? Who couldn't use another 1,000 or so per month? This figure could be higher and this figure could be lower depending on where a company is comfortable in drawing that line, the line where a company says the amount that they pay for your healthcare benefits is too high a price to pay.
Will anyone benefit?
Do you know anyone who works a low-wage job just for the health insurance? The CBO estimates that this is less than 1% of the population. That is where Michele Bauchmann comes us with the number of 800,000. For example, Bill is an attorney that pulls in a nice annual salary. But his practice includes just himself and a few secretaries and paralegals. This is the size of business that never was able to provide health insurance as part of the benefit package. His wife Jane works at the local school lunch counter for a little over minimum wage and health insurance. With Bill being able to purchase health insurance for his practice, Jane no longer needs to take a job just for the health insurance. The CBO expects that some 800,000 people will be able to give up such jobs. Therefore, ObamaCare does take away the incentive some people have to work. But it is not a bad thing in every case.
Who will suffer?
The people most likely to experience the negative effects of ObamaCare are those who work for less than 80,000 or so. It is at this level that larger companies may decide it is less costly not to offer a company plan, but pay the fine that the Supreme Court says is a tax. These are the people that will have to purchase a private plan from a multi-state exchange or pay the fine that the Supreme Court says is a tax. Companies with fewer than 50 employees will still be exempt from the law. About 4% of America works in a company this size. Therefore, ObamaCare is not universal.
But what if a company has 60 employees, 75 or 100? Companies of this size could save money by replacing full-time employees with part-time employees. It would be a pain for whomever is in charge of human resources, but it would save a company of that size a boat load of money to have 50 full-time employees with 100 part-time employees instead of 100 full-time employees. Even a company as large as 500 employees could skirt the ObamaCare tax by working mainly with part-time employees. A company larger than this is likely to pay less money by dropping your health insurance benefit and paying the tax than by keeping the type of plan required by ObamaCare.
Therefore, take a look at your job profile. If the type of work you do pays around 50,000 a year and if you typically work for a company with 200 or fewer employees, your job is likely in jeopardy. You may find yourself working two to three jobs with none of them providing benefits. Your ability to work and earn a living for your family is not in jeopardy, you will still be able to find work, but finding a full-time job will be difficult. Finding a job with health insurance, good luck.
If you run a business with 49 employees, you probably better be sure that the 50th person you hire is a human resource specialist who can help you navigate through all of the difficult waters that ObamaCare complicates once you hire the 51st employee. Employers can play all sorts of games, if they dedicate the resources to it, to avoid paying the fine. But there will come a point, 300 to 500 employees, that such games are no longer practical.
There are other games that employers can play to avoid paying a fee for not providing insurance coverage. The fee only applies if the employee gets the government plan outside of work. They can hire someone age 25 or younger that could still be on their parent's insurance plan and avoid the fee. They can hire the spouse of someone who has insurance, that way the insured spouse only has to pay a 35 dollar fee to get their working spouse covered. Thank goodness for same-sex marriage if you are an employer. You can also hire someone who is already on medicare, so you could look to hire someone over the age of 65. If you are an employer, you can look to hire someone from a high income zip-code to increase the likelihood that you hire a person who fits into one of these categories.
One easy way for employees to get around the ObamaCare rules and remain employed full-time is to be hired as an independent contractor and save their employer from the ObamaCare fee. As an independent contractor, the employee is completely responsible for paying for his own healthcare and other benefits and the employer is legally free from these obligations.
It is unknown how many people fit into these categories. According to Money Magazine about 51% of the private work force is employed for small businesses. About 75% of the work force earns less than 80,000 per year. The median income in the US is about 33,000 per year. Does this give you a picture of how many people this legislation could touch?
To Sum Up
There are ways for smaller businesses to avoid paying the ObamaCare Tax.
1. Do not hire more than 50 full-time employees. Rely on part-time and temporary workers.
2. Hire independent contractors.
3. Hire those young enough to be covered by their parents plan.
4. Hire those old enough to be on Medicare.
5. Hire those who are likely to be covered by the insurance plan of a spouse...look for those who come from rich zip codes.
6. Hire illegal aliens. (I'm serious.)
7. Hire military spouses.
8. Hire the spouses of public-sector employees.
In conclusion
ObamaCare will not negatively effect everyone, but it will have an unintended effect for many. Employers may take drastic steps to avoid paying the ObamaCare taxes, and employees may also have to take equally drastic steps to remain employed full-time.
But the question on everyone's mind is this: will ObamaCare cost me my job? The answer is it depends on two factors, the size of the company you work for and the amount of money you earn.
Who will likely not be effected?
If you have a large salary, over 80,000 per year in my estimate, healthcare costs are such a minor part of your overall compensation package that adding another 10 to 15 thousand per year for health care benefits is not a hard thing to do. If you make 80,000 per year or more, health care is about 1/6 or less of your total compensation package. It is true, however, that if health insurance was not so expensive you would be making more money. But at that salary, who's complaining? Who couldn't use another 1,000 or so per month? This figure could be higher and this figure could be lower depending on where a company is comfortable in drawing that line, the line where a company says the amount that they pay for your healthcare benefits is too high a price to pay.
Will anyone benefit?
Do you know anyone who works a low-wage job just for the health insurance? The CBO estimates that this is less than 1% of the population. That is where Michele Bauchmann comes us with the number of 800,000. For example, Bill is an attorney that pulls in a nice annual salary. But his practice includes just himself and a few secretaries and paralegals. This is the size of business that never was able to provide health insurance as part of the benefit package. His wife Jane works at the local school lunch counter for a little over minimum wage and health insurance. With Bill being able to purchase health insurance for his practice, Jane no longer needs to take a job just for the health insurance. The CBO expects that some 800,000 people will be able to give up such jobs. Therefore, ObamaCare does take away the incentive some people have to work. But it is not a bad thing in every case.
Who will suffer?
The people most likely to experience the negative effects of ObamaCare are those who work for less than 80,000 or so. It is at this level that larger companies may decide it is less costly not to offer a company plan, but pay the fine that the Supreme Court says is a tax. These are the people that will have to purchase a private plan from a multi-state exchange or pay the fine that the Supreme Court says is a tax. Companies with fewer than 50 employees will still be exempt from the law. About 4% of America works in a company this size. Therefore, ObamaCare is not universal.
But what if a company has 60 employees, 75 or 100? Companies of this size could save money by replacing full-time employees with part-time employees. It would be a pain for whomever is in charge of human resources, but it would save a company of that size a boat load of money to have 50 full-time employees with 100 part-time employees instead of 100 full-time employees. Even a company as large as 500 employees could skirt the ObamaCare tax by working mainly with part-time employees. A company larger than this is likely to pay less money by dropping your health insurance benefit and paying the tax than by keeping the type of plan required by ObamaCare.
Therefore, take a look at your job profile. If the type of work you do pays around 50,000 a year and if you typically work for a company with 200 or fewer employees, your job is likely in jeopardy. You may find yourself working two to three jobs with none of them providing benefits. Your ability to work and earn a living for your family is not in jeopardy, you will still be able to find work, but finding a full-time job will be difficult. Finding a job with health insurance, good luck.
If you run a business with 49 employees, you probably better be sure that the 50th person you hire is a human resource specialist who can help you navigate through all of the difficult waters that ObamaCare complicates once you hire the 51st employee. Employers can play all sorts of games, if they dedicate the resources to it, to avoid paying the fine. But there will come a point, 300 to 500 employees, that such games are no longer practical.
There are other games that employers can play to avoid paying a fee for not providing insurance coverage. The fee only applies if the employee gets the government plan outside of work. They can hire someone age 25 or younger that could still be on their parent's insurance plan and avoid the fee. They can hire the spouse of someone who has insurance, that way the insured spouse only has to pay a 35 dollar fee to get their working spouse covered. Thank goodness for same-sex marriage if you are an employer. You can also hire someone who is already on medicare, so you could look to hire someone over the age of 65. If you are an employer, you can look to hire someone from a high income zip-code to increase the likelihood that you hire a person who fits into one of these categories.
One easy way for employees to get around the ObamaCare rules and remain employed full-time is to be hired as an independent contractor and save their employer from the ObamaCare fee. As an independent contractor, the employee is completely responsible for paying for his own healthcare and other benefits and the employer is legally free from these obligations.
It is unknown how many people fit into these categories. According to Money Magazine about 51% of the private work force is employed for small businesses. About 75% of the work force earns less than 80,000 per year. The median income in the US is about 33,000 per year. Does this give you a picture of how many people this legislation could touch?
To Sum Up
There are ways for smaller businesses to avoid paying the ObamaCare Tax.
1. Do not hire more than 50 full-time employees. Rely on part-time and temporary workers.
2. Hire independent contractors.
3. Hire those young enough to be covered by their parents plan.
4. Hire those old enough to be on Medicare.
5. Hire those who are likely to be covered by the insurance plan of a spouse...look for those who come from rich zip codes.
6. Hire illegal aliens. (I'm serious.)
7. Hire military spouses.
8. Hire the spouses of public-sector employees.
In conclusion
ObamaCare will not negatively effect everyone, but it will have an unintended effect for many. Employers may take drastic steps to avoid paying the ObamaCare taxes, and employees may also have to take equally drastic steps to remain employed full-time.
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