Small Business Creates Most New Jobs. Give Them Greater Tax Breaks Than Big Business

We've heard and read a great deal about the Bush Tax cuts in the past year. They were renewed by Pres. Obama, and if the polls can be believed, most Americans approved. My question to our Congress comes from the point of view of an ordinary American whose parents were successful small business owners: why do the largest businesses and the wealthiest Americans continue to receive these cuts at a time of such high unemployment, when they are not creating jobs but sending existing jobs overseas? Even though the cuts technically applied to all of us, why did the wealthiest and largest businesses benefit so disproportionately?

And they most certainly reaped the benefits, Gentle Reader. The Tax Policy Center in Washington estimates that the wealthiest 1% of American received a disproportionate 38% of the benefits of these cuts, especially given the reduction on taxes that affect investment income, capital gains and estates. Few Americans grudge anyone money earned honestly. But equally few Americans believe that wealth is earned honestly any more. The relentless volley of stories of fiscal mismanagement, manipulation, corruption and unbridled greed that began after the financial crisis of 2008, and the Great Recession that followed, have made many of us very cynical, very quickly.

We've all heard the increasingly tiresome arguments for maintaining the tax cuts for the wealthiest: 1). they do most of the investing and 2). they create most of the jobs. Really? Look how well the investment strategies of the last 12 years have worked out:

Start with the housing and mortgage scandals. Count up all the names of the bankers and corporate sharks who benefitted obscenely from berining us so close to the Great Depression of the 1930s. Include Rep. Barney Frank, Sen. Chris Dodd, and Sen. Phil Gramm (a 3-ring circus of their own). Gramm worked tirelessly to repeal the Glass-Steagall Act of the 1930s, which worked well for almost 70 years in reining in the financial excesses that caused the stock market collapse of 1929. Include Pres. Clinton, who signed the Gramm-Leach-Bliley Act that replaced it in 1998, effectively removing the safeguards of the past 70 years, allowing unregulated greed to propel our economy into the current crisis. Tuck insider trading into the package. Yes, Martha Stewart went to jail for it, but most of them do not. At least Martha provides practical advice and good recipes. In the past 3 years, precious few of them have been held accountable by anyone except film-maker Charles Ferguson, who made the award-winning documentary "Inside Job," a film not for the squeamish.

Then we come to the argument about their providing jobs. Sure they do: overseas. The government of Malaysia recently sponsored a series of television commercials advertising the friendly business climate in Malaysia, including an endorsement from Jeffrey Immelt, head of General Electric. Most of us individually paid more taxes last year than his company, which received an astounding billion dollar tax benefit last year (this figure is from Forbes, a magazine not known for its hostility to capitalism). When I saw his smugly smiling face sitting next to Pres. Obama (he is this administration's 'Job Czar,' mind you), at the now-infamous "I guess we weren't so shovel-ready, after all" conference, it had the effect of a chorus of fingernails on chalkboard. Perhaps the shovels are flying in Malaysia. Americans are still waiting.

The great majority of new jobs are provided by people like my late parents, who owned a small business that provided jobs for 20 or so people for decades. They invested their money honestly and hired locally. They were never wealthy, and the Bush tax cuts would have been for them what my mother might have termed "nice but no biggie." Those are the people who could initiate the recovery we are all still waiting for, if they have fewer government regulations, significantly lower taxes and greater ability to borrow start-up capital. Thanks to the unregulated greed of the past 12 years, capital seems to be increasingly the domain of the very wealthy.

The amount of money saved from excluding the wealthiest Americans and the largest businesses from these tax cuts could jumpstart our economic recovery, if it were chanelled toward small businesspeople and entrepreneurs. Yes, that would mean more government involvement, a very unappealing prospect. Yes, that would involve the near-certainty that some of the money would be misappropriated. The alternative is to keep rewarding the largest corporations for outsourcing American jobs.

The rationale in 2001 for offering these tax breaks was to make the U.S. a more business-friendly environment. Look how well the friendlier U.S. business environment has worked out. Just ask Malaysia.