2013 Symposium: Should Entrepreneurs Be Rewarded Or Punished For Starting A Business?

Cartwright: Absolutely, you should be rewarded for entrepreneurship. Being an entrepreneur is hard enough as it is. Add the government taxes on top of that and it becomes even more difficult. Wonder why businesses are losing their competitive advantage against foreign businesses? Labor costs and taxes. We have one of the highest corporate tax rates in the world. But let’s look at the reality. Most small businesses are LLC or S-corps that are taxed at the individual level. So, they’re paying self employment taxes and individual income taxes on the profits of the business. It adds up real quick. When you have to factor in the cost of taxes, you may work all year and come up with very little once you pay Uncle Sam who’s going to allow politicians in Washington to squander your hard earned dollars.

I have long favored either a flat tax or a national sales tax in lieu of income taxes. Realistically, we’re not going to get either of those. So, if we’re looking at the existing tax code, we need to make some adjustments for small businesses. Maybe we give tax credits for every full time employee you have for the year. Let’s give incentives for investing in your business and growing your business so that it’s successful. A lot of municipalities give tax incentives for locating a business in their city or county. Why doesn’t Uncle Sam consider that?

Why do we penalize success in this country and reward failure? Is that the American way? You’re successful, so we’re going to take from you and give to someone who hasn’t done jack shit in their lives. Is that the American way? Is that what our country is about now? Oh, you’re successful so that means you must have done something bad to someone along the way and you must be penalized. You must have stepped on someone along the way or taken advantage of workers along the way. You’re successful so you must have screwed someone along the way so Uncle Sam screws you to get even. I find it un-American. I don’t think we should reward those who chose to do nothing with their lives. I’m not willing to accept the excuses that they were held back or they didn’t have a chance. We have foreigners come here with nothing but the shirts on their backs and become successful yet people born here couldn’t do it? It’s laziness and a lack of work ethic and a lack of initiative. Anyone who wants to do something in their life has the opportunity. It’s just a matter of applying yourself and taking a chance. If you fail, so be it; at least you tried. To sit back on your lazy ass and never do anything about it doesn’t deserve a reward or assistance.

North Carolina: Even though a person is motivated to start his or her own business, he or she is still considered an employee by the Internal Revenue Service, just as any other regularly employed individual. A self-employed individual is held accountable for taxes in the form of regular Income Tax, Social Security and Medicare. It seems that taxes for self-employed individuals are complex, and self-employed individuals usually have to pay more in taxes at the federal level, as well as contribute more in Medicare and Social Security taxes, along with possible city, state and property taxes. Self-employed individuals do have access to a number of deductions to reduce tax expenditures, and any tax savings can be reinvested in their business. All of the IRS red tape heaped on the self-employed stifles enthusiasm, but a successful entrepreneur won’t allow that stumbling block to get in his or her way. It does appear that self-employed individuals are punished for their entrepreneurship, particularly in the malaise of the current economy, but the input of creative ideas and development of a new business really should qualify the self-employed for tax breaks and possible subsidies for innovation in the marketplace. Creativity, self-responsibility and self-fulfillment are all part of the American dream and infuse a struggling economy with new blood and positive reinforcement.

Self-employment presents many challenges with initiating, promoting and following through with a plan, and a certain amount of drive and determination is required from within an individual to bring a new product or idea to commercial success. The process is difficult and risky but is rewarding as well. The self-employed can realize their dreams of self-fulfillment and serious financial gain through their own business venture and can reap the benefits of financial success without attachment to an everyday job with limited income.

If the product or idea is prime for the current market, self-employment can be the ticket to limitless earnings with the added benefit of control over a work schedule. Most self-employed individuals know it is not easy work, with long hours and few free days, but they are doing the work they want to and enjoying it at the same time, and are being paid for it. Self-employment has its advantages, and one of those is the freedom to prosper in a free market setting with unlimited possibilities for success.

Orlando: Self-employment tax is a bothersome hurdle that every small business owner, sole proprietor, and independent contractor must navigate. Ordinarily, payroll taxes include both an employer contribution and an employee contribution, with the employer usually paying a larger share. For self-employed individuals, both parts of the payroll tax burden fall on the individual. The same principle attains to Medicare, Medicaid, unemployment insurance, and a few other items. These are lumped together into one large bill which seems very unfair to independent contractors until it is broken down. At first glance, this may seem punitive, but it essentially taxes all businesses equally, and works, in a way, as a subsidy to people employing other people.

Furthermore, a world without self-employment tax would open the door to all kinds of tax evasion loopholes. Large companies could subdivide themselves into groups of independent, individual-run companies and avoid paying any tax at all. Individuals would never be employed, but would rather be independent contractors, and they would have to pay no taxes at all. No one would every pay unemployment insurance or medicare taxes, so there would be no unemployment benefits and no subsidized health care. Without social safety nets, it’s very likely crime would skyrocket, which would be made even more serious by the absence of police forces to stop such crime. Social security would collapse, since no one would pay it, leading to starvation and mass death among the elderly. A world with such a large swath of tax-exempt individuals would result in a world without taxes, which, despite the fever dreams of a die-hard libertarian, would be an awful world in which to live.

Michigan: Yes, of course, our government should be handing out huge rewards, tax incentives and hugs. The US has lost a great number of industries in the last decade that has caused massive unemployment. Small business is the backbone of our economy. A better system for getting start-up money to new business is needed. We need to relax the taxes for a new business and offer incentives for growth.

Washington, DC: The United States of America was built by enterprising and hard-working people. At the end of the World War II, almost twenty-five percent of population was self-employed; however, since the 1950s, the number of self-employed people was steadily declining. Economists attribute this trend to several factors such as the general decline of self-employment in agriculture, where small farms were substituted by larger and more efficient agricultural productions, and a larger number of businesses being incorporated in order to receive government benefits.

According to the U.S. Bureau of Labor Statistics, around 9.2 million people were self-employed in the country in 2013, which translates to about seven percent of population. It is evident that small businesses find it harder to survive nowadays in America; and the government made its position clear by choosing to provide multi-billion dollar rescue plans to big businesses instead of supporting small ones. Not only that, but every small business owner has to pay self-employment tax which consists of two parts: Social Security and Medicare. As of 2013, self-employment tax was 15.3 percent, a 2 % percent increase since 2010-2012 period when a Tax Relief Act was provided. As the IRS specifies, anyone whose net earnings are more than $400 (excluding church employee earnings which stand at $ 108.28) needs to pay the self-employment tax.

Big businesses are in a much better position that a small guy or gal trying to earn a living in modern America. They can afford to apply for government-sponsored tax breaks and benefits. They can afford to move their operations to other countries where costs are much lower, and they can count on the government coming to their rescue when needed. However, if the USA wants to keep the entrepreneurial spirit which built this country in the first place alive it needs to support its small business owners.

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