Governor Schwarzenegger of California is on the wrong track again, this time backing a tax plan that will cripple small business in California. The new tax plan would cut state income taxes for the wealthiest in California, and make up for the loss by starting to tax service industries such as accountants, lawyers, mechanics, etc, adding a huge tax burden on an already stressed business community.
One of the biggest problems with the tax plan is that companies would no longer be able to deduct employee salaries and benefits. Anyone that has run a company, especially a service oriented business will tell you that salaries and benefits are the largest expense they have, and to eliminate the deduction for them would be catastrophic for many companies who are barely making it as it is.
How far do you have to have your head up your ass to believe that this would create more jobs as supporters have said. And they say it will happen because when they cut the state corporate tax rate from 8.84 percent to 4 percent, companies will have more money to hire employees. Isn’t that the old trickle down economics that only a company given a gift such as this could love? Would a company hire more employees when they can cost up to 30% more, because they cannot deduct the cost of doing business!
And Governor, you really believe that giving corporations a handout will encourage them to hire employees they don’t need in the first place, and will drive down company profits when you hire them. Do you think the guys on Wall Street will want to keep the extra savings or decrease their profit by hiring more employees? And what about your promise not to raise taxes? That doesn’t apply I suppose, because once more you are adding taxes, not raising them.
Governor Schwarzenegger and the rest of his cronies who came up with this plan in secret meetings need to pull their collective heads out of their asses and get real. What world do they live in anyway? The California dream is over and more businesses will leave California if this tax plan goes through.
And who will pay for these tax cuts? Not only the small business in California, but every consumer that needs their car repaired, teeth cleaned or any other service job that will raise their prices to offset the loss of the deductions. That’s how the Governor rolls, pass it on to someone else.