Job-Killing Tax Breaks

As the owner and general manager of two inns near Harvard University, I derive personal satisfaction and intellectual rewards from developing and running a successful small business.

As a capitalist, I disagree with the politicians and policymakers who invoke the dynamism of small business owners to justify cutting taxes on the wealthy and otherwise making our economic system more unfair.

My business success didn’t come from tax breaks. During the past 20 years, we’ve gone from five employees to 40 in part because of public-sector spending. I depend on a wide range of goods and services that only governments can provide. Food inspectors ensure that the food we serve is safe. Highways, railways, and air traffic enable our guests to travel here. And government research funding supports the top universities that anchor the community where we are located.

I don’t hire people because of tax breaks. I hire people to expand my business — and make more money. I measure the success of my business by monitoring our market share and the revenues we see month by month. I’m competitive. I love thinking of new marketing plans and tracking their success. I seek ways to cut costs so that we can build the bottom line. My goal is long-termsuccess.

(Martha Soukup / Flickr)

(Martha Soukup / Flickr)

That’s how you build a business. Not through tax breaks.

Cutting taxes on people who are already wealthy does absolutely nothing for the real Main Street economy. We just increase our investment portfolios. But worse than wasting money, these tax breaks mean that there’s less funding for the vital government services and infrastructure that all businesses — and our workers — rely on. So, while the wealthy get even wealthier, everyone else is worse off.

If the government is going to give anyone tax breaks, they should give them to people like me before I became an entrepreneur. I earned about $8 per hour back then as a single mother with two kids in middle school. I had to borrow nearly all the money I invested in my business. It was a scary time. I worked many long hours in every part of the operation.

But it paid off. My inns are thriving. My partners and I have developed and expanded our business. I now pay in taxes many multiples of what I lived on for years. I now give more to charity than I ever imagined earning annually.

I want other aspiring entrepreneurs to have the same opportunities. Instead of shrinking the government, let’s boost spending. If we ramp up public investment, we’ll attain an economy that works for all of us.

That’s why I support tax measures such as the Buffett rule, which would make sure that millionaire investors pay at least the same tax rate as Americans who work for a living. For the same reason, I also support restoring upper-income taxes to the pre-Bush era rates. Even though my taxes would go up, I’m in favor of ending once and for all those tax breaks for people who make more than $250,000.

You can say it’s enlightened self-interest, but I think it’s just good business. As a capitalist, I understand that the health of our economic system is maintained not just by all of us working hard on our own, but on the investments we all make together.

For 40 years, the wealthy have been disinvesting in our public institutions and services because of a steady stream of tax cuts. Real capitalists should know that this is a mistake. Our nation needs us to re-invest. Paying a bit more in taxes is a good start.

Rachael Solem owns Irving House at Harvard and Harding House, two inns located in Cambridge, Massachusetts. She is a member of Wealth for the Common Good. wealthforcommongood.org
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