BF2S Forums Why the obsession with small businesses?

Small business' will end up huge after becoming really sucessful. Well problem is that most people think they are business genius' after taking a business administration course in college. My dad owns a self employed small business and hires only my step-mom's brother. Sure its not directly beneficial to the economy, but its beneficial to him as a job.

I only believe in tax cuts are the way for people to start up their business though. I guess the whole deal with small business its that it relates to the community more rather than some multinational corporation, creates an "identity" for the community ya know?

JohnG@lt wrote:

Winston_Churchill wrote:

Is it worse than bailing out a failing auto industry?  At least these people are trying to be successful

No, that was a god awful idea as well. I completely believe in natural selection in the market. Throwing money at a bad business will not all of a sudden make it a great business. It just makes it a bad business with more money than it had before and the potential for catastrophe becomes amplified.

One problem with Laize faire is the creation of business' more powerful than the government, which would be a problem. Personally I do not want a revival of the reconstruction era.

JohnG@lt wrote:

Cybargs wrote:

Small business' will end up huge after becoming really sucessful. Well problem is that most people think they are business genius' after taking a business administration course in college. My dad owns a self employed small business and hires only my step-mom's brother. Sure its not directly beneficial to the economy, but its beneficial to him as a job.

I only believe in tax cuts are the way for people to start up their business though. I guess the whole deal with small business its that it relates to the community more rather than some multinational corporation, creates an "identity" for the community ya know?

There's a 91% chance that the small business won't even survive past ten years. Throwing money at them by making credit more available will not change that statistic. We just went through a huge bust cycle because banks were loaning speculatively to home owners. Even there, the odds of default were no where near 91%.

Shit what I meant was a small amount of small business' end up HUGE

I'd rather have the gov giving small business' tax cuts instead of bailing out AIG. Government bailouts is socialism for the rich and covering their ass'. Business' in my opinion should not only be about money, but should be helping the people of your city/state/country the best way possible. Economic nationalism ftw.

JohnG@lt wrote:

Cybargs wrote:

JohnG@lt wrote:

There's a 91% chance that the small business won't even survive past ten years. Throwing money at them by making credit more available will not change that statistic. We just went through a huge bust cycle because banks were loaning speculatively to home owners. Even there, the odds of default were no where near 91%.

Shit what I meant was a small amount of small business' end up HUGE

I'd rather have the gov giving small business' tax cuts instead of bailing out AIG. Government bailouts is socialism for the rich and covering their ass'. Business' in my opinion should not only be about money, but should be helping the people of your city/state/country the best way possible. Economic nationalism ftw.

I'm not disagreeing with the tax cuts at all. I also stated that I don't believe in corporate bailouts. I just have hatred in my heart for easy credit because it leads directly to overexpansion and makes any potential recession a million times worse. They should be taking this $200M and paying down the national debt, not adding to the easy credit fiasco.

Yeah I'm just agreeing here. The only involvement the government should ever have on business in my opinion, is tax cuts and regulation.

cpt.fass1 wrote:

"I understand that they employ 50% of the population"

And we're getting strangled.  What do you think is better a returant that hires 10 people and lets them make liveable wages, or McDonalds that hires 12 people and pays them less then 20k a year?

Honestly? The McDonalds. The odds of a McDonalds going under and putting those 10 people out of work within two years is a whole lot less than 80%.

cpt.fass1 wrote:

Yeah agree'd but then the tax void which I know I edit posted.. Then you have people who can barely afford to live not paying property taxes which makes everything more expensive for everyone.

They pay property taxes via their rent. I don't want everyone in the country making minimum wage, trust me, but the odds of the people who would take a job as a McDonald's cashier suddenly creating a multi-million dollar successful small business are astronomical

cpt.fass1 wrote:

Why? McDonalds started as a small stand and became what it is, so did Wendy's, Taco Bell and Burger King.

The main problem with these companies is they take the money out of the community. You pay 5 dollars for a meal there and only 3.00 dollars is left behind.
Also the property taxes via rent, people making 20k have to double up so instead of two people paying property taxes on there own, it's two people living in one apartment paying property taxes. Less places rented = less money for towns/states to provide services.

How is that different from any other company? Unless you're buying local cattle, local produce, local timber etc that money is going to bounce around. Not only is that completely inefficient and not reasonable in most locales, it completely inhibits growth. You might as well be in stasis. Wealth is not zero sum by any means. Unless that McDonald's is the only business in town it's not really taking anything away from the community at all.

Okay, let me explain some of the proposed small business incentives:

1) Elimination of capital gain tax for a year for an investment in a small business. 
Goal: to encourage others to invest in a small business. 
Impact: Increased investment. 
Risk to investor: Same risks as if investing in a business normally.  Only if the investor sells in the first year at a gain will there be tax - in this case - no tax.
Analysis: Since most businesses run at a lost and incentives exist to delay the expenses until the business turns a profit in later years, this is not a huge change in tax revenue to the government.  There is little change for the investor as well.  However, it will increase the number of "short term" investments at a gain an sell.  Therefore, it'll provide a quick buck for speculative investors who like quick turnaround on their money, and provide an easier way to finance a new company at no additional risk from bank loans.

2) Enhanced expense allowances.  Not defined, so I cannot comment

3) Accelerated depreciation
What: Large purchases will be able to expense faster.
Why: Gives the option of removing revenue by increasing expenses.
Impact: Increases purchases of large ticket items.  Greatly reduces the amount of tax paid by small companies
Analysis: Accelerated depreciation is an excellent way to increase spending.  It also is one of the benefits leftover from GWB.

What's not included in all of these:
All tax legislation whether an increase or decrease to the current govt tax purse are to be "revenue neutral".  Of the above #2 & #3 are a reduction in tax revenue for the government.  #1 has little impact.  This means taxes will go up in another category to "make up" for the tax revenue lost.  So now we need to know what's going to go up...

I think this is the best thing he's proposed for businesses so far.

cpt.fass1 wrote:

Well most local business, buy there goods from local business.

When I was a cook at the bar, we'd buy from the corner produce store. So instead of getting your goods shiped from your corporate business, you're still keeping more locally. So yeah some money gets shipped out but a larger portion stays local.

Hoboken NJ is one of the towns that trys to keep bigger corporations out, and they're probably one of the richest towns in New Jersey.

No, all you're doing is giving wealth to an unnecessary middleman. That grocer is making his purchases from a larger distributor, a distributor that is handling business all over the country. Sure, you're keeping that grocer employed but at what cost? You have to charge more per meal to your customers who then don't have the extra capital to make other purchases. What you're talking about is extreme protectionism and there is zero benefit in it for anyone except the irrelevant and inefficient middleman. If everyone bought local, there would be no trade.

If there is no trade, who is a have, and who is a have not has no dependence on skill or efficiency or anything else that drives our economy, it just exacerbates disparities in regional wealth. Why would an iron rich section export if the focus was only on locally produced goods? Now what happens in an iron poor section?

I understand the 'buy local' mentality. If you buy from your neighbor you keep him employed. It's logical to take that line of reasoning. But at the same time it is vastly oversimplifying matters and in the long run it either destroys trade and turns everything back into a feudal state, or it just creates massive inefficiencies that completely destroys any growth potential. It's a different system than communism, but it is just as ultra-conservative from an economic standpoint.

Dilbert_X wrote:

Because they are the backbone of the economy, and are under-represented in government.
They are also much more dynamic than big business, generally.

Government only cares whose going to grease there wheels.. I got potentially bad news today at the office.

My mom owns and manages a restaurant with less then 12 employees and its been around for 13 years...

To make a Peter Keating/Howard Roark comparison out of what I wrote is a bit silly. There are just very few extraordinary people that have the skill and desire to drive a business from conception through profitability.

Hell, you said it yourself, only 1/3rd of small businesses make a profit. Lending them more money will not change the paradigm. Especially because it will mean that lenders have so much excess money that they now take extra risks and start handing money to people who do not deserve it and will default. They learned absolutely nothing from the housing market crash. Nothing. Same mistakes repeated over and over again.