Never mind the fact that Obama got yoghurt splashed on him last night – that’s just an ongoing hazard of being a politician running for re-election in this country. The real story here is this: the President went to Colorado to, essentially, lie to a bunch of kids about how they can get themselves out of this mess that they’re in. And it is a mess. 50% of college graduates are unemployed/underemployed; couple that with student loan debt levels that should really be frightening more people and we end up with a situation where millions of kids are getting out of college and staring DOOM right in the face. And while they are adults – and thus, responsible for their own fates – guess what? The people that connived to put them in this mess are adults, too. We expect twenty-somethings in this culture to make poor life choices, sometimes; what we don’t expect is for the generations above them to so ruthlessly take advantage of that.
Anyway: Obama’s answer in Colorado, last night? …Entrepreneurship. That’s what he was telling the kids. Start that restaurant! Develop that smartphone app! Make your own destiny! Get slammed with a tax hike on small businesses in the form of tighter restrictions on payroll tax exemptions!
…Yeah. One of these things is not like the others.
For the morbidly curious, here’s the situation: there’s a bill in Congress that would freeze student loan rates. It’s stalling because, well, that’s going to cost us $5.9 billion and the money’s got to come from somewhere. So the N-dimensional geniuses over at the White House went to Congressional Democrats and found six billion worth of pork to cut… Oh, I am quite the comedian! They’re Democrats: they never cut spending. No, what Obama and the rest of his merry crew did instead was come up with a plan to generate the revenue via increased restrictions for S Corporations re: eligibility for payroll tax exemptions.
If you’re wondering “So what?” …well, you’re probably not a small business owner: S-Corps are a common method by which small companies – mom-and-pop stores, individual professional workers, START-UP BUSINESSES – file their taxes. Essentially, S-Corps file as individuals – which is, by the way, why Obama’s proposed tax hike on $250K earners is actually a tax on many small business owners, despite the best efforts of his apologists to downplay that minor little detail. But never mind that right now; the point is, by making it harder for S-Corps to be exempt from payroll taxes President Obama is proposing an effective profits tax on them. You can argue whether that’s a good idea or not – it’s not – but if you are planning to hike tax rates on small businesses just starting out then basic etiquette suggests that you not also encourage people to start small businesses.
Because that’s a lie: you don’t want to encourage them. You just want to get some of their money to keep things going until after the election’s over.
Moe Lane (crosspost)
PS: This issue is related to the re-authorization of the student loan rates that my RS colleague David Horowitz is criticizing: but just because we may lose the battle on the loan rates themselves doesn’t mean that we have to lose the battle on how the government plans to pay for them.
[UPDATE] I have just had it pointed out to me via private email that the Obama administration has been gunning for S-Corps for years. And with very little concern over the legal niceties, either.