We’re involved in two very different types of commerce, at two different ends of the state, but we’re united in the knowledge that cutting taxes for the wealthy during a debt crisis is bad for business. That’s not the message you’ve been hearing from politicians who claim to be standing up for “small business” when they oppose fair taxation on wealthy households and profitable multinational corporations. But it’s the truth, and here’s why.
Even though we both employ people in our businesses, we’re not the real “job creators.” That title belongs to our customers, the great mass of middle-class folks who buy our goods and services and make us profitable. So our main concern when it comes to government tax and spending policies is not how they will impact a tiny economic elite — or even our own finances — but how they will affect average families. That’s why we oppose maintaining artificially low tax rates on the wealthy when those rates endanger the prosperity of the middle class.
That threat comes most immediately from cuts to public programs — smart investments such as Medicare, road building and education — that helped create America’s middle class by increasing opportunities and offering community insurance against life’s harshest blows.
In the long run, tax cuts for the rich also unnecessarily add hundreds of billions of dollars to our federal deficits. That ballooning debt undermines market confidence, inhibits business expansion and hiring and, in general, slows economic recovery. Businesses and consumers are more optimistic, able to plan and willing to spend when they know their government is getting its fiscal house in order. Tax cuts for the rich move us in the opposite direction.
Right after the fall elections, there will be a great debate over what to do about tax cuts set to expire at the end of the year. It’s part of a larger question of how to get our federal budget back in shape and our economy back up to speed. Some politicians want to extend these cuts for all income levels — including millionaires and billionaires — but the wiser course would be to target this tax relief to the people who truly need and will spend the money: the middle class.
Middle-income families will experience such tax relief if, as has been proposed as a sensible alternative, the cuts are extended only for the first $250,000 in income (which means $250,000 in profits, not revenue, for a business). Extending those cuts for the first quarter-million dollars in annual income means continuing lower taxes for 98 percent of all American households — and 97 percent of all small businesses. The tax increase for most of those wealthy taxpayers whose income falls above the threshold would be relatively modest, but collectively would bring in hundreds of billions of dollars over the next decade, money that could be used for debt reduction and to strengthen middle-class prosperity programs.
(Neither one of us is in the rarefied group of business owners who net $250,000 in personal profit each year, even though we each operate an enterprise that is fairly substantial by Maine small-business standards: Lisa has 15 employees, Jim has 55.)
Our two stellar U.S. senators, Olympia Snowe and Susan Collins, can be leaders in the year-end tax and spending debate and in the deal that will ultimately be struck. We urge them to preserve middle-class tax relief while allowing more equitable rates to return for our most fortunate citizens. Speaking respectively as a baker and the owner of a movie theater, we can confidently state that such an outcome would rival sliced bread in ingenuity and usefulness while ensuring a happy ending for the American economy.
Jim Amaral is the founder of Borealis Breads in Wells. Lisa Burton co-owns Reel Pizza Cinerama in Bar Harbor. Both are members of the Maine Small Business Coalition.