I think the Bush tax changes may have just screwed some small businesses..

[jbm]

I own a small business and last year,for the first time ever,I lost money. I've just finished doing some preliminary figures,and this year is going to be even worse. I have been consoling myself with the fact that at least I should qualify for a chunk of earned income credit,but then I went to see how much it might be,and I found this little change in the tax code:

http://www.cbpp.org/eic2003/factseic-2003.pdf

<snip>
5. "Modified" Adjusted Gross Income eliminated. Adjusted Gross Income (AGI), which includes a worker's earned and other taxable income, minus business and other losses, is used to determine a worker's tax liability. However, in the past, EIC eligibility was based on "modified AGI," which required workers to add back to their income 75 percent of business and other losses, as well as certain types of tax-exempt income. The resulting higher income level might then exceed EIC income limits and disqualify the worker, or reduce the amount of the EIC benefit for which the worker qualified. Beginning in 2002, the standard AGI definition will be used to determine EIC eligibility.
<snip>




What that means,if I'm reading it correctly,is that you can no longer add back in a percentage of the businesses losses,and since adding back in that percentage is what would have given me a positive income number instead of a negative one,I don't think I'll qualify for the earned income credit. Am I correct that this helps the business owners who were at least managing to still turn a profit,and harms the ones that took the biggest hit in this economy?

[nadinbrzezinski]

1. If this is the case

this will turn small businesses owners, many of whom
are Republican, to turn on Bush

By the way, good luck. I hope you turn your business around
next year

[jbm]

2. Thanks! me too..lol

I have a vending company that services factories and businesses that have between 50 and 100 employees. Three years ago,most of the accounts we had were closer to the 100 employee mark then the 50,but last year they started laying off,going from five day weeks to four day weeks,and a few shut down completely. This year the ones that stayed open are working five day weeks again,but only a couple of them have called back their layed off employees,and there haven't been any new locations open so that I could replace the accounts that were lost. This economic rebound isn't happening in my town.

[Isome]

4. It's not just YOUR town...

If that's any comfort to you. I live in a town that is home to Boeing (for the last 5 to 6 years) and three military installations. Even with the aerospace industry entrenched here, we're not doing much better.

[Elwood P Dowd]

3. It's already happening.

I will have to defer to my accountant on the above tax post, but my business is off 40% compared to 2000. Even he (the republican accountant) is starting to worry. He praised Bush for exactly two years, but now he's worried. His little small business is suffering from reduced clients, increased past due receivables, and more clients going bankrupt.

At one time in our history, small businesses created almost 80% of the jobs in this country. Today, I don't know a single one that's hiring.

[mc6809e]

5. Boo Hoo

I hate to sound so callous, but its WORKERS that have taken the biggest hit -- they always do.

Anyone that has a business, even if it's losing some money right now, has it much better off than the typical worker.

Sorry, but in my opinion, anything that forces greedy business people to pay their fair share is a good thing.

[Elwood P Dowd]

6. I'm a small businessman

Well, at least I was before Bush. Now I have one employee, and I'm living off credit cards and selling off assets. The vast majority of small businessmen live on the edge. It's not like we're GE, Microsoft, or Halliburton.

If things continue like they are now for another year, this "greedy businessman" will lose everything. Oh well, my sister has a spare bedroom, so I won't be homeless.

[jbm]

9. Good luck Elwood..

I hear ya! :)

[Yupster]

15. In this last year,

your employee made more money than you did. As a fellow small business owner, I question whether workers always have it the worst. They can always just walk away from a disaster and get a new job. The owner is left to pick up the mess.

PS -- I am in the process of selling my small business and going to work for a larger company. Luckily I have plenty of offers to choose between.

[foreigncorrespondent]

7. You do realize...

...that if it wasn't for the small business, there really wouldn't be many jobs at all, don't you? I mean, think about it, all the large companies are outsourcing their work to foreign countries, but the small business keeps its work in the United States.

Not all business people are greedy. Some just want to make an honest living like the next Joe!

[jbm]

8. I'm thinking..

you've never had a small business. I started this little business by taking all my credit cards to the bank and collecting all the cash advances that were available. Then I worked twelve hour days monday through friday at the business..and waited tables on the weekends because I was afraid to take money out of the business.The last year of Clintons presidency I actually owed additional taxes at the end of the year,and believe it or not,I was pretty excited about that..lol. I thought it meant I was over the hurdle.

That year, I thought maybe I could finally give up the waitress job,but then I decided that instead I should hire someone so that I would have a back-up in case I (or my child) got sick or something..so I kept the waitress job in order to pay my helper a decent salary.


Last year when things got really bad,the fiscally responsible thing to do would have been to layoff my helper,but instead I gave up my salary and went back to surviving on the waitress wages,only business at the restaurant was down too,so I wound up taking out a loan.

The woman that helps me knows things are tight,but her salary has been constant and I hope that I can keep her job secure. I don't see this as a sacrifice,because if the business recovers and thrives,it will be in large part because of her. I also believe that longterm,if the business does well,I stand to gain more then she does,but right now the stress and the loss of income belong to me.

Small business is a different animal then the corporate bigdogs,and in those early years of struggle,there are no gaurantees,and very little security. If I had it to do all over again I doubt that I would,because I had thought I was doing something that would turn out to be in the best interest of my child,and short term that was not the case. In many,many ways working for someone else is easier and more financially rewarding..but sometimes you go for it I guess.

[RainDog]

12. can you go to the local sba for a loan or something?

I'm sorry to hear about your experience. I've been working toward my own small biz but hesitate to commit to anything with Bush in office...

...because of financially stupid policies, and because I wonder if I don't want to be mobile enough to just get the hell out of this country if he "wins" again...a second term could not only be a disaster for this nation financially, but also in terms of the health of our democracy when the religious right wants to get their theocracy as payoff for backing the neocons.

[jbm]

13. sba loans are pretty tough actually..

first you have to get a regular loan from a bank,and then fill out ten pounds of paperwork to get that switched to an sba loan,and to be honest,I've never quite figured out the advantage. They back the bank loan,so maybe the interest is lower? I asked my banker about them once and he said the bank follows the same loan approval rules regardless of whether the loan is coming from them,or will ultimately be backed by sba..so I dunno.

I could get another loan,and I'm not dead in the water yet. I have every intention of surviving this Bush economy. I'm just bitching cause a little earned income credit would have been nice. :)

Thanks for your concern though.:)

[RainDog]

11. what an incredibly ignorant remark

you must not know a thing about small biz, because the owners are also the workers, for the most part, in a small biz.

not only that, but small biz models are an answer to a great many problems with environment and economics.

if you think that small biz has any sorts of advantages like giant corporations do when it comes to taxes, you are, again, ill-informed and, frankly, embarrassing to yourself, even if you don't know it.

small biz encourages diversity and local markets and community investment...

and, yeah, those are such horrible things.

[w4rma]

17. I'm sorry, but you should direct your ire towards *large* buisness owners

not small ones. Small buisness owners are getting hit just as hard as employees are.

There is no reason to try to divide small buisness owners and workers. We are the ones in the same boat.

[Cleita]

10. One of life's lessons that I have learned is to never

start a small business during a Republican administration. It's way too risky.

[YNGW]

14. Reply

I own my own business, too.

How can you qualify for EIC if you don't have an income? That's what EIC is, "Earned INCOME Credit", not "Earned I'm in Business Credit".

A vast majority of small companies go out of business in the first 3-5 years. I've owned and operated several business, some of which I sold, some of which never got off the ground. I just keep going forward anyway. We humans have a way of making things happen if we really want them to happen. I started my mortgage company 2 years ago and this summer it just exploded into major, major cash flow.

Best of luck to you and I hope you much success. Hang in there. Make it happen.

[AP]

16. Actually, EIC provides a floor so that we don't have working poor people..

...in the US.

If you're a small business owner or an employed person, if you're outflow is greater than your inflow, the government is interested in making sure your head stays above water.

Also, you don't want to make it so that entrepreneuralism is punished and then drive people into being employees when they could be creating new, competitive businesses threatening the hegenmony and stirring innovation and price competition.

Well, you don't want to do that unless you're a Republican.

it's so clear to me that Republicans WANT to punish small business people. They want an economic landscape dominated by a few large corpoprations, and they want a population that begs for crappy, low-paying, benefitless jobs.

If they punish small business entrepreneurs, where do you think those people will be going? They'll have to become employees. So they'll enter the job force, creating a higher supply, driving down demand, which resulsts in a buyer's marke for labor. Which is great for the sort of huge businesses which love Republicans, like WalMart.