Monday, February 18, 2013

Big Businesses Hurts Small Businesses

...more than Taxes or Regulations.

When I once ran a small business back in 1987 (a video rental store), my major concern wasn't taxes or regulations, it was BIG business. Blockbuster put us out of business two years later. A friend of mine also ran a small business (a family-owned hardware store), and his major concern wasn't taxes or regulations either, it was BIG business. Walmart put him out of business too.

Taxes have always been a common complaint of every business (and individual) around the world, but my friend and I also rationally understood that taxes were necessary for the common good (e.g. schools, roads, hospitals, the power grid, defense, firefighters, etc.); and many of our business expenses were tax deductible. But small businesses owners don't have all the tax advantages that BIG businesses do; and the CEOs of BIG corporations can better afford to hire an army of lawyers and accountants to deal with the regulations and taxes. And corporate executives can also operate with impunity from any personal liability (LLC). My friend and I, by contrast, learned bookkeeping and obeyed the laws.

And back in those days, regulations were never really a major concern for us either, whereas usually just basic common sense would guide us in our day-to-day operations, and any city or state laws might only be described as a minor nuisance and/or expense. We shoveled the sidewalks when it snowed, paid our employees a fair wage, and overall, cared about our customers and employees. I wasn't forced to make my entrance wheel-chair accessible, it was just good business.

BIG businesses can't micro-manage their operations in the same way as small mom-and-pop stores --- but in my opinion, it's most likely the board-of-directors' collective greed and their constant drive for bigger and bigger profits (above all else) that kills smaller businesses...and not taxes and regulations.

My friend and I had always felt we had a bigger responsibility to our community than BIG businesses, who need regulations to make their products and services safe for the general public. Unlike many small business owners, the CEOs of large corporations don't live upstairs from their place of business and have to face real people every day. My friend and I also felt reassured that we had government agencies such as the FDA and the FCC to keep us and our families safe; otherwise we'd be living in a third world country, with the only difference being, we'd be ruled by CEOS, rather than congressional despots.

Many people still think the U.S. Chamber of Commerce is a government agency, much like the Small Business Administration; but "the Chamber" is really a lobbying firm that mostly represents the interests of BIG businesses, and they are paid millions of dollars by large corporations, much like the CEOs on Wall Street. And besides just constantly lobbying for more favorable regulations and less taxation (loopholes) for the largest corporations, "the Chamber" also lobbies congress for free trade agreements that export jobs for cheaper labor --- just like they support H-B1 VISAS to import jobs for cheaper labor.

Fox News and the Republicans like to argue that 96% of the U.S. Chamber of Commerce's members are small business owners, but what they also deliberately fail to mention is that only 11% of all small American businesses actually belongs to the U.S. Chamber of Commerce.

Taxes and regulations have always been a part of the American culture and our capitalist economy, and has contributed to making this country what it is today. Taxes got us to the moon. Theoretically, taxes have always been a form of "redistributing the wealth"...and we have always had taxes since our Founding Fathers. Yet it seems as though the corporate-funded Tea Party today is against ANY and ALL taxes, but instead, advocates for a government so small, it almost borders on anarchy.

Small businesses, on average, pay a higher "effective" tax rate than the BIGGEST businesses do because BIG businesses can afford to lobby our congress for specific loopholes in the tax code that favor them --- that's why we have over 17,000 pages in the tax code. And that's why CEOS like Mitt Romney uses high-priced tax attorneys from PricewaterhouseCoopers to file a 500 page tax return, whereas my friend and I took our receipts to H&R Block.

Some people have accused the Democrats of trying to "spread the wealth" by wanting to tax BIG businesses their fair share. Maybe if the largest corporations on the Dow Jones and S&P all paid the actual "statutory" tax rate (instead of 50% less as an "effective" tax rate), maybe everyone else could pay less in taxes. But even with the taxes we were obligated to pay, before my friend and I were driven out of our SMALL businesses by the BIG businesses, we still made a pretty decent living. We weren't greedy, we didn't gouge our customers, and we didn't evade our taxes.

Now 40 years later, people like my friend and I are being forced to work for those same BIG businesses that put us out of business --- and are now being paid poverty wages (See the letter at Michael Moore's website). 25 years ago at my video store, I was paying my counter help $9.00 a hour. Today Walmart's motto is "We save people money so they can live better", but how can people be "living better" if BIG businesses are also paying their employees the same wages today that I paid my employees 25 years ago.

It's no wonder we need the federal and state minimum wage laws, otherwise, what would BIG businesses be paying their workers? And if BIG businesses paid their employees better wages, we could also pay less in taxes, because then we wouldn't have to subsidize their wages with food stamps and other government "entitlements".

That's also why we need labor unions, the National Labor Relations Board, the Occupational Safety and Health Administration and the Equal Employment Opportunity Commission, because if BIG businesses were left unchecked, those anonymous faces on their board-of-directors wouldn't be held accountable for anything or to anyone at all --- with the exception of the value of their stock prices --- whose stock is held by the largest institutional investors, which are the big banks, hedge funds, and private equity firms like Bain Capital, and who often share the same directors on their boards (like Romney with Bain and Marriott).

Meanwhile, people like my friend and I are working without healthcare insurance while the CEOs of those BIG businesses were making millions of dollars a year. So taxes and regulations couldn't have been hurting them all that much. Maybe those corporate CEOs are complaining because they feel entitled to a much bigger paycheck, year after year after year.

25 years ago, my friend and I understood what "progress" was, and that the bigger fish will always eat the smaller fish (like when one big bank buys a smaller bank), but just to set the record straight, for the most part, it wasn't regulations or taxes that was our biggest problem, it was the unscrupulous, out-of-control and relentless greed of the huge multi-national corporate conglomerates. They have grown to become much more than just "BIG businesses", they've become more like self-perpetuating machines without souls, but with an insatiable appetite for profits. But the Supreme Courts thinks they're "people".

And not only do BIG businesses hurt small businesses, many times they hurt people too (just ask Ralph Nader).

Even with the current tax laws and regulations (such as acquiring a business license and the necessary permits just to open a hotdog or lemonade stand), in the present economy and in a tighter credit market, it makes opening a new small business ever more difficult. Add to that, the prevailing low wages makes it almost impossible to save the necessary "seed money" that's needed for start-up costs.

But the Republicans are telling 12 million unemployed Americans to stop whining and to just start their own business. I would tell the millionaires on Fox News and the CEOs, who are averaging $14 million a year (year after year after year) to stop whining about fair wages, high taxes, and over-regulation.

And if one were to get past all those hurtles, a good idea (a patent) or a successful small business still faces the challenge of being either forced out of business or bought up by a bigger business.

But no one is EVER going to put "big box stores" like Walmart out of business; but when they get "too big too fail", then they're just plain TOO BIG. Period.

The Walton family is collectively worth over $100 billion (about what they claim we are saving when we shop in their stores), but how much money does one person need when millions of low-wage workers have to rely on food stamps to eat? Couldn't the Waltons have been just as satisfied with $50 billion? Read The Growing Cash Hoard and Looking Beyond Income to a Tax on Wealth (New York Times)

After BIG businesses have extracted all the wealth from the masses, taxes and regulations might be the LEAST of their worries. Ever hear of the French Revolution?

It takes taxes to pay for police and soldiers...unless of course, BIG businesses like Walmart are forming their own private armies...and if so, then we'll just have to hope that Alex Jones was wrong, and that FEMA camps aren't really being prepared by the government in anticipation of a massive uprising.
* This was also posted at the Daily Kos

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  1. UPDATE:

    67 Republicans who are still in Congress today, backed an increase in the minimum wage in some form during the Bush years, including Paul Ryan --- now he's telling CNN that “I think it's actually counterproductive in many ways. You end up costing jobs from people who are at the bottom rung of the economic ladder.” (Oh really?)

  2. UPDATE:

    Sign the petition to end the subsidies to businesses that pay poverty wages.