Thursday, November 18, 2010

An open letter to the President from an American businessman

Website here. I'm reprinting the letter in full, but there is more to his original post. Be sure to read the whole thing.

Dear Mr. President,

Mr. President, please allow me to introduce you to America’s small business owners. They reside in every state and town in the country. These men and women are the backbone of the communities where they live. They represent the 20% that do 80%. They are the ones who serve on school boards and hospital boards, coach Little League, lead Boy Scout troops, serve in Indian Guides and volunteer in their churches and synagogues. They pay a disproportionate share of the property taxes that build the public schools and hospitals. They give generously to local charities and United Way, buy the uniforms for the Boys & Girls Club basketball teams and make anonymous gifts to send underprivileged kids to summer camp.

You may not care about the community service and enrichment activities that mark the lives of so many small businesspeople. But did I mention that the 34 million small businesses provide 144 million jobs (75% of the jobs in this country) and generate over half of the private GDP? Since our country is in the midst of a recession that you say is “the worst economic downturn since the Great Depression,” I assume that the health of the engine that sustains employment might be of some concern to you. However, your proposed tax increases upon the “rich” will land squarely on small businesses like a ton of bricks. You see Mr. President, 66% of those who earn above $250,000 are small businessmen. I understand that you believe that business owners are rich predators who “need to give more,” but have you considered the effect of your policies upon their employees? I respectfully direct you to Boetcker’s warning that “you cannot lift up the wage earner by pulling down the wage payer.”

As a businessman facing the prospect of higher taxation, please allow me to personalize the likely effect upon my own small enterprise. First, you must understand that taxes are a direct deduction from my bottom line and capital reserve. Why is this important? Every dollar you subtract from my bottom line is a dollar I cannot use to give raises, increase benefits or add employees. Although this may appeal to your “spread the wealth” instincts, it may not be such good news to my current employees or to job-seeking college graduates. Every dollar you take from my capital reserve is a dollar I cannot invest in new property or equipment. This may satisfy your sense of “shared prosperity,” but will not be as heartwarming to my suppliers or to those hoping to market assets next year. Is this beginning to make any sense to you?

The decision to increase my taxes will of course also reduce my disposable income. This will result in fewer dollars allocated to consumption which, ironically, you say is critical to the economic recovery of the nation. Although you may be delighted that I won’t have as much discretionary money to travel, buy a condo at the beach, or remodel my home, those employed by the airlines, mortgage companies, real estate industry and the construction trades may not be as cheery. And though you may be pleased to see me mowing my own lawn and cleaning my own pool again, it may not bring as much joy to my long-time contractors, Bibiano Ortega and Gina McDaniel.

We have observed your tendency to punish your “enemies” and borne witness to your willingness to use executive power to sanction certain industries. Your unwarranted drilling moratorium that has decimated the oil and gas and service sectors in the Gulf States provides a recent example. This policy has already created more unemployment and inflicted more economic carnage on small businesses in Texas, Mississippi, Louisiana and the other gulf states than the actual oil spill could have ever done.

Finally, Mr. President, let me assure you that we have nothing in common with your friend Tony Rezko and we bear no resemblance to your benefactor George Soros. After laboring all of my adult life in the private sector, I know a thing or two about real entrepreneurs. First, we were made to innovate and risk capital to support our dreams and visions. But we will only do so when we feel that the rules of the game are fair and predictable. Secondly, we will not put our hard-earned money at risk if we feel that the portion absorbed by taxation is too great. Lastly, when we sense an animus toward us from the highest office in the land that questions our motivations, integrity and patriotism, we begin to take defensive measures, not increase our investments. I hope this letter provides you with a more accurate view of who the real small businessmen in this country are. And I hope it helps you realize the destructive consequences of your policies on the small businessmen you profess to support.


Kyle Stallings is the Managing Partner of a small oil and gas investment company in Midland, Texas and serves on the Governor’s Business Council of Texas.

5 comments:

  1. Luv ya! World needs a super-heroine who understands the Constitution and basic economics.

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    ReplyDelete
  2. Mr. Stallings,

    I've read that only 3 percent of all taxpayers who report net business income would be affected if the highest bracket tax cuts are allowed to expire. And for all high income earners, their tax rates would increase by only 4.6 per cent, and only on any income that they earn in excess of $200,000 (individuals) or $250,000 (married couples).

    By most estimates that I've seen, extending the high income tax cut would cost the treasury between $600 and $700 billion by 2020. Would the highest bracket tax cut extension really be worth it, given this effect on the national debt?

    We all agree that some belt tightened will be needed to rein in the deficits, but when it comes to tightening our own belts, even just a little bit, we object. Please, make the other guy pay!

    Irving Berlin once said that he loved America so much that he enjoyed paying taxes. It's unreasonable to expect very many people to share this remarkable sentiment. I don't.

    But is it altogether unreasonable to expect people who are dedicated to their communities and their country to make small, bearable sacrifices to help that country climb out of the hole it has fallen into?

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  3. I notice that Mr Stallings says, in the fourth paragraph of his blog entry (fourth of the seven paragraphs you did not include in your repost): "When President Obama talks about raising taxes on citizens earning over $250,000, he explains that “we can’t afford to give tax breaks to millionaires and billionaires.” Only in Mr. Obama’s America does $250,000 of earnings confer inclusion into the billionaire club."

    Mr Stalling's complaint is, apparently, that he objects to the level of "rich" being set at $250,000 and including him and his business. He is definitely NOT complaining about eliminating or cutting tax breaks to "millionaires and billionaires".

    I also find it hard to defend giving tax breaks to a "rich" person who gets and/or controls a large share of the nation's wealth. I do not believe that the excessively rich tend to do things that are beneficial to the society as a whole. They are, after all, just people and are as selfish and self-indulgent as anyone else. They just have more money and the power to do so excessively.

    I do agree with Mr Stallings that small business owners should NOT be penalized for their success. The only real question is what our society should define as "rich" in a progressive tax structure. We must all admit that the income of many "Titans of Industry" are determined by the power of the titans, not by the value of their labor.

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  4. Mr. Stallings lives in Midland, Texas. If there is any more incestuous community than Midland, I would love to hear about it. Generations of oil men; beget more oil men. Entrepreneur he is certainly not. Trust-funder continuing the family business? Absolutely. Those oil wells down there might as well print money. As a small-business owner, I have a hard time with the essay and his own truthfulness. He is a man that makes money from money. And the result is spoiling this earth. Don't believe me? From his companies' web site: "The Permian Basin Acquisition Fund (PBAF) is an oil & gas investment company specializing in the acquisition of minerals & royalties. The company was founded in 1988 and is located in Midland, Texas. Since 1988 PBAF has been a leading purchaser of minerals in Texas and other producing states."

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  5. Sir,

    President Obama's core belief unfortunately, is that wealth is owned by the government to be distributed to the people as the government sees fit. It is therefore not possible to convince this man to allow us to keep the wealth that we have earned. The president does not believe that we should be allowed to decide to give raises, hire more people or otherwise expand our businesses.

    That is why he and his cohorts need to be un-elected.

    ReplyDelete

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