SUCCEEDING IN YOUR BUSINESS: Memo to the Incoming Congress (Part 1 of 2)
By Cliff Ennico
To: Members of the 112th Congress
From: America's business owners
Re: Some things you need to think about
As you take your seats in the new Congress, ladies and gentlemen, you will be under pressure to act very quickly to solve a large and growing number of problems.
If last year's election taught you anything, it's that America's small businesses and self-employed professionals have a lot more political clout than you thought they did. And if it taught you anything else, it's that the "old solutions" no longer work. To solve the problems facing America's businesses today will require fresh, original thinking, an openness to new ideas that may not be politically popular and a willingness to take risks -- in other words, an entrepreneurial approach.
We don't need another increase in the Section 179 equipment deduction or other "feel good" legislation designed to placate the small-business lobby in Washington. We need solutions that work, even if they sound a little crazy at first. Here are some ideas I guarantee you haven't thought about.
Don't Create Jobs; Create Businesses: Too many elected officials talk about the need to create jobs. That's putting the cart before the horse. The only jobs government can create are ... government jobs.
You cannot create jobs while taxing and regulating businesses to death at the same time. Whatever your ideological persuasion, you need to get behind America's businesses and entrepreneurs, make them your highest priority and do everything you can to help them grow. They are America's future.
As Calvin Coolidge said, "The business of America is business." America needs thousands of new businesses that innovate, exploit new technologies, compete aggressively in global markets and -- yes -- manufacture things. Growing businesses will hire people, and sooner or later, the unemployment rate will go down.
For some specific ideas, Google my previous columns on the "Tax Reform America's Small Businesses Really Need."
Increase Taxes on Harmful Activities: Looking to raise revenue in a fair and equitable way? Legalize marijuana, cocaine and crystal meth. I'm not kidding. Many people (not me!) are spending hundreds of millions of dollars on this stuff each year, and they're not paying any taxes on it. Legalize these drugs, and then tax the devil out of them the same way you do alcohol, tobacco and firearms.
Freedom is all about having choices, not necessarily the correct or socially acceptable ones. If people don't like paying taxes, they can stop using the stuff. If they choose to continue using the stuff, they pay the taxes.
Oh, and don't forget to include casino gambling ...
Social Security and Medicare: We can't afford these programs anymore, folks -- get your heads out of the sand. Businesses are paying too much in payroll taxes to support these programs, and a lot of people are collecting Social Security benefits who don't really need them. That all needs to change.
Social Security and Medicare should be "needs based" so that the only people receiving benefits are the people who really need them. Yes, deciding on the thresholds will be a political nightmare for you, but we did not elect you to take the easy road.
Also, working people should have the ability to "opt out" of these programs. As with sin taxes, if they are willing to forego their future benefits, they shouldn't have to pay the taxes.
Health Insurance and Elder Care: The big problem with health insurance is that there's too much of it. Yes, you read that right.
When someone else is paying your medical bills, you don't care how much things cost or how much your doctor is billing your insurance company. Consider giving people a tax credit for the cost of health insurance with a high annual deductible -- say, $5,000 or more. Any insurance with a lower deductible would not qualify for the credit. If people have to pay more out of pocket for basic, everyday health care services, they will shop around more carefully for those services and question their bills, which in turn will force health care providers to be more competitive, which in turn will drive costs down.
While you're at it, you should also encourage people to take care of their own elderly and sick relatives, the way people used to do in the bad old days before government programs. Consider expanding the Child and Dependent Care Credit to include all costs of supporting elderly or sick relatives -- or neighbors who don't have relatives. Not just medical costs -- all costs. Not just "qualifying persons" -- everyone.
Allow Business Owners to Deduct Their Own "Employee Benefits": There are too many provisions in the tax code disallowing "business expense" deductions for benefits business owners provide for themselves and their families. Since most business owners work full time in their businesses, there is no logical basis for distinguishing between employees and owners when it comes to deducting benefits. Eliminate that distinction.
More next week.
Cliff Ennico (email@example.com) is a syndicated columnist, author and former host of the PBS television series "Money Hunt." This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.
COPYRIGHT 2011 CLIFFORD R. ENNICO.
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