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  • The Centre-Left and Small Businesses


    by Shariq
    11th September, 2008 at 6:13 am    

    It seems to me that no matter how many gains the centre-left make from time to time, small business owners are one group of people we always lose. While big business wants to make friends with whoever is in power, small business owners tend to be a lot more skeptical about the ability of liberal politicians to improve their lives.

    I think this is partly because of the language politicians use and the emphases they place on who is struggling. Even when as talented a politician as Barack Obama addresses middle class anxieties, he proposes middle class income tax cuts, making higher education more affordable and reducing the amount of people without health insurance. These are all great points and need to be reiterated. However I think he could also say the following;

    That the American dream isn’t just accessible through college education but the ability to expand a small business through getting affordable bank loans. This ties in with the credit crunch and would emphasise the fact that the interests of small and big businesses aren’t always the same.

    Or when talking about healthcare, speak of the fact that when the government doesn’t make healthcare affordable its the small businesses who have to pay for covering their employees.

    One point which I haven’t had a satisfactory answer to is why it isn’t possible for people on the left to balance increases in income taxes with reductions in the amount of taxes paid by corporations and in particular small businesses.

    Given the increasing amounts of income inequality, small businesses are there to be won over both in the US and the UK. Admittedly its harder here because we’ve had a labour government for the last 10 years but its worth starting to think about these issues before the next election.


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    Filed in: Current affairs,Economics






    17 Comments below   |  

    Reactions: Twitter, blogs


    1. Shamit — on 11th September, 2008 at 12:46 pm  

      A very good post. I think though the issue is much wider.

      Tax policy expecially in the UK is a huge burden for small businesses however, giving tax breaks to all small businesses wont help the macro economy much in today’s world.

      Most of the population in UK and the US work for small businesses and many of those jobs are being part of the supply chain for larger corporations. As a result many of those jobs are leaving and are not coming back. This of course does not apply to the plumber or the electrician or the town hardware stores.

      And, providing subsidies to businesses that the globalised world would make redundant in the developed world would be foolhardy in my opinion. Yet, governments must make policy supporting companies that deliver innovative and high value product/services.

      On that front, US has a very very good record and is still the best place for someone to have an idea and make it a commercial reality. The UK government over the past few years have been supportive of that kind of innovative growth. On that issue, governments have done well.

      That still does not help many who do not have the transferable skills to this new economy — thats why the Governments and candidates across the Atlantic have focused on apprenticeships and other ways of improving skills for those who do not go to Uni. And funnly enough, the presidential candidates, the politicians here have talked about these issues in great detail but the media does not pick it up.

      I agree with small companies should face a lesser tax and administrative burden but tax breaks should be reserved for only those that deliver economic growth in the globalised world.

    2. Shamit — on 11th September, 2008 at 12:51 pm  

      Finally, Obama’s tax plan is not really giving a tax break. In the US, less than 40% of the population pay Federal Income Tax and reaching the less well off would not be a tax break but a federal support programme. Not a bad idea if directed in the right way.

      But due to increase in payroll taxes, many shops in the Main streets and other parts would either hire people under the table or let them go. That by itself should not kill the policy but have enough teeth in it to actually get most of these people back on better jobs within a relatively short period.

      The middle class on the other hand really get benefits out of Obama’s economic plan.

    3. shariq — on 11th September, 2008 at 1:49 pm  

      Interesting points Shamit. I think even smart Americans tend to ignore the fact that they do have a substantial working class. They prefer to divide people into middle-class and rich. It would be interesting to know how many of the large number of people who don’t vote are part of the 60% of people who don’t pay income tax.

      Also agree with you about small businesses needing to be productive to cope with the globalised economy, but how do differentiate b/w productive and unproductive businesses. surely you give an across the board tax rate and see which companies do well and which don’t.

    4. Shamit — on 11th September, 2008 at 3:09 pm  

      ” surely you give an across the board tax rate and see which companies do well and which don’t.”

      Agree with you completely. We need to let the market decide. The problem is that while the direct taxation of small businesses are reasonably lower the indirect taxation causes huge problems. Government must reduce the indirect tax burden on small businesses.

    5. Ravi Naik — on 11th September, 2008 at 5:43 pm  

      Can I say wtf, Shariq? I spent half-an-hour writing a comment on your “Obama dissed Murray” post, only to see it deleted? :(

    6. shariq — on 11th September, 2008 at 5:50 pm  

      Crap. Really, really sorry Ravi. I didn’t know that sunny had scheduled/was going to post something straight after that. As we try and avoid having more than 1 post every couple of hours and no one had commented, i decided to delete it and repost it at a later time. Again, sorry about that.

    7. Ravi Naik — on 11th September, 2008 at 6:16 pm  

      No problem. :) But I honestly thought for a minute that I had gone mad, imagining a post that wasn’t there. I mean, it’s not even 4:00AM!

    8. Sunny — on 11th September, 2008 at 7:45 pm  

      yeah, sorry about that guys… sometimes I post too much.

      Anyway, I won’t be around for much from next week so Shariq will have the place to himself to talk about the Amkerican elections while Rumbold is hiding from the embarassment of supporting McCain. :)

    9. Jai — on 11th September, 2008 at 7:57 pm  

      I mean, it’s not even 4:00AM!

      Er, what ? “4:00AM” ?!

      Ravi, are you posting from your beach house in Costa Rica again ?

    10. Jai — on 11th September, 2008 at 8:11 pm  

      yeah, sorry about that guys… sometimes I post too much.

      Yeah, you need to spend less time on the internet and more time either chilling out with twinkly-eyed saucy ladies in clear plastic high heels with a penchant for divesting you of 20-quid notes, or more time looking around for a nice girl to take home to momma and settle down with.

      Either option is fine. Don’t worry, we won’t tell anyone. Hell, if you play your cards right you might even be able to combine the two aforementioned options.

      Not that this has anything to do with the Centre-Left and Small Businesses, of course. Sorry Shariq, I’ll stop pulling Sunny’s leg now.

      (Must….fight….the urge….to joke….”It’s the only thing that’s getting pulled tonight”).

    11. Rumbold — on 11th September, 2008 at 8:32 pm  

      In fact, large corporations are the natural allies of the socialists, because governments bring in laws and subsidies favourable to said corporations. Only the small businesses are truly independent from the EU-state-socialist-corporate nexis. This is why we should cut tax on the small business owner, as well as income tax, but leave corporation tax the same.

      Sunny:

      “Shariq will have the place to himself to talk about the Amkerican elections while Rumbold is hiding from the embarassment of supporting McCain.”

      Heh. And how is the Obamessiah these days? Is the Guardian going to launch another ‘Operation Clark County’ to pave the way for the Republicans?

    12. shariq — on 11th September, 2008 at 9:17 pm  

      “are truly independent from the EU-state-socialist-corporate nexis”

      Rumbold, my post on the EU is coming up within the next few days so i’ll reply to that then :)

    13. Rumbold — on 11th September, 2008 at 9:20 pm  

      I look forward to it. Heh.

    14. Sunny — on 11th September, 2008 at 10:24 pm  

      In fact, large corporations are the natural allies of the socialists, because governments bring in laws and subsidies favourable to said corporations.

      Actually, its the Republicans and the Tory governments who historically, while talking up small businesses, have been very generous to large companies.

    15. El Cid — on 11th September, 2008 at 10:44 pm  

      I think you’ll find that it is the Republicans who have also just overseen the greatest nationalisation in human history. Laissez-faire? You sure?

    16. Amrit — on 12th September, 2008 at 1:12 am  

      Lol @ Jai.

      @ Rumbold:

      Heh. And how is the Obamessiah these days?

      Is that a paraphrasing of MY expression I spot? :-P Typical libertarian laxity.

      What Sunny said. C’mon, even I know that! :-P

    17. Rumbold — on 12th September, 2008 at 9:36 am  

      I know that the Tories and Republicans cosy up to large companies. They are already included in my nexus. Sorry for not making that clear.

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