X asked how the economy was affecting Z's business. Z explained that on the Eastern Shore it has not been that dramatic compared to the Western Shore but they are preparing for the worse. X stated that she is hoping her life will improve, the middle class won't be the LOST group anymore. Most importantly she is looking forward to more affordable health insurance. She asked Z, "What is your incentive to work harder?"
Excellent question! This is not an in depth research piece on the effects of the stimulus package but an everyday observation on where we are going on the Shore.
Z openly shared the following. She makes a gross income of approx. $350,000 a year. She works 7 days a week, takes all the risks (& headaches) and has 20 employees. She provides them with full benefits. Fast forward to today. Her income is going to drop an additional $75,000, overnight. *Remember anyone making over $250,000 is going to be taxed at a lot higher rate and business owners are losing a lot of tax deductions.
Can she work harder? Why should she? Z would have to make over $500,000 just to stay where she was. In this economy it may not even be an option. She could lay off a few employees, decrease benefits, work more hours, less time with her family. For what, so she fund the new government plan?
Life would be so much easier being just an employee. No headaches, no worries, no extra debt, a normal home life. That is not an option, she takes her responsibilities as an employer very seriously. She feels responsible for too many families. She has worked too hard to just walk away. So she has decided to work less, produce less and increase the quality of her life, emotionally. Hopefully all employees can keep their jobs and benefits. But they all will work less hours and bring less home.
I was surprised with her answer. I will be honest I never gave it a lot of thought how it would effect her, it appeared she has so much it was hard to empathize. Reality is her business success/failure does have an impact on our community.
Now she is planning to lower her income, downsize her home and lifestyle so she can spend more time with her family. Why take anymore risks as a business owner? Why work harder? Where are the incentives?
Our community is made up of many small businesses. They are the backbone of our local economy. The only large "for profit" company is Perdue. What is going to happen? Growth slows, new jobs will be far and few between and less dollars flowing to our economy.
A simple playground conversation gave me a much needed slap of reality. This is only the beginning, CAPITALISM is dying.
10 comments:
I have several friends that are small business owners as well. This is a very true fact and observation. They have businesses that support 3 or 4 families. Now how will they do that if they make too much? They have some tough decisions to make in the up coming year.
As a small business owner in Salisbury for 25 years, I can't agree more. I've recently (within the last 2 years) downsized significantly, because of a variety of reasons, but mostly because, my market has been saturated with low-cost goods from Wal-Mart, Sam's Club, the Internet, and it's become increasingly hard to stay afloat. My only medical insurance comes from my spouse, I have virtually no retirement, my "personal" vehicle is 10 years old, and I haven't taken a raise in salary in almost 10 years. Do I enjoy what I do? ABSOLUTELY, but I question truly how much longer I will be able to do so.
How do you look in your childs face and tell them that is not your bedroom anymore , this is not your house anymore. How are you supposed to live with that failure? Its a lot worse on the shore than this lets on, This isnt CAPITALISM, this is corporate concentrated capitalism. The small businessman built this country and with-out us it will die.
I agree with everything but the comment about the Western Shore being worse off than us here. Percentage wise that may be the case with more businesses actually closing, but here on Delmarva we dont have alot of options once you do lose your job or have taken a pay cut. There are thousands of jobs around Balto. The same cant be said on the shore. Think of all the businesses that have already left Salisbury before this mess. My guess is there will be a lot of empty buildings around, especially if you rely on our present local Govt to attract new non-retail jobs.
She would not lose $75,000 more in taxes at $350,000 a year. The rate at that salary is going up by 3.6% for every dollar OVER $250,000. Not even CLOSE to $75,000 more in taxes.
If we're going to discuss tax policy, at least use real numbers.
If you account for the other deductions she can no longer take and she being sole owner. All profits realized are hers. This is an excellent example of what is coming.
Anon 4:02 is right. The numbers don't add up but they do make for an incendiary post. Get over it. It's a roll back of the Bush tax cuts that got us into this mess. Obama's tax policy goes back to 1999 rates. BTW remember we had a huge surplus. Get it right.
Good catch by 4:02 and 5:32. That's the first thing I though when I saw those numbers. Someone needed to call these guys out on their "fuzzy math".
5:32 Loving your vocabulary...incendiary!
I don't claim to be a tax accountant. I am hoping to open up dialog and a little understanding. Again where is the incentive for those over $250,000 that own a business? You don't think they are going to take a hit? A big hit? Wake up.
I did a post earlier about the reduction in charity deductions. It is ridiculous.
I have heard from several that they are scrambling to see the benefits. This is going to change a lot of people, that affect a lot of others.
Where is the incentive to work harder? Especially on the Eastern Shore? Answer the question, maybe I am missing something? But don't get caught in the numbers, give me a reason that this is going to work.
During the Clinton era, the top tax rate was 39.5% (or so) and we enjoyed the largest economic expansion since the post-WWII era.
What's the incentive to work harder? Because you are *never* going to make $350,000 working for someone else...unless you're an investment banker on Wall Street. I hear that party may be over too!
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