Paul Ryan's Economic Double Speak Intentionally Confusing and Unworkable. He's knows it.

Help me, please...help!

I know Paul Ryan pulled a fast one, it's just insane explaining how he did it. While describing the individual tax rates small business owners will pay under Obama’s plan for those making over $200,000, he told Mike Gousha that Canada has a business tax rate of 15 percent, which is…oops, comparing apples to oranges. He just slipped it in there. Ryan first started talking about individual taxes, then out of nowhere, compared that to Canada’s corporate rate, which is 15 percent (but it’s not that simple either).

By the way, Canada’s personal income tax on anything over $132,000, is 29 percent, not the corporate tax rate he mentioned.  

Ryan intentionally confuses the matter by introducing comparisons to other countries. Then Ryan switches U.S. corporate tax rates with dividend income added on, I think, totaling upwards of 45 percent...my head hurts. Needless to say, Ryan intentionally jumbles unrelated numbers just to sound wonkish, and confuse everyone. 

Washington Post Fact Check: 4/15/11: Only 3 percent of all “small businesses” paying taxes would be affected by Obama’s plan … That group — about 750,000 taxpayers — accounts for 50 percent of the estimated $1 trillion in business income reported in 2011. The other 97 percent of “small businesses” shared the rest — and under Obama’s plan, they would get to keep their Bush-era tax cuts.

In fact, many of these businesses are huge, and just as many don’t employ anyone at all:

Michelle Dimarob, a senior adviser to the House Ways & Means Committee, noted, “…bakeries, law firms or otherwise — are providing jobs to people. If taxes go up, then they will have less income to provide jobs and pay people.”

But many of those “small businesses” are just individuals, who don’t have employees and aren’t job creators. That’s part of the Ryan deception. The small business truth is getting lost over time. The truth is provided below by an actual small business man:

Income that passes through to owners is what would get taxed more heavily. Income that stays in the business, and is used to pay new employees, etc., is not taxed at all for the owners. A higher personal income tax rate is an *incentive* to hiring more people and investing more in a business to make it grow, because you’re leveraging pre-tax money.

I find it hard to believe, that a company looks at the tax savings, and decides it can hire another employee. An employee is a cost necessary to produce revenues, not typically an investment. If the company thinks the employee will contribute to greater revenues, it will hire the employee.

Incidentally, the cost of the employee is expensed, so if it is a wash, there is no tax impact. If it is a net loss, even less tax is paid. If there is a profit, more tax is paid, but the company still comes out ahead. The tax rates are not particularly relevant. In fact, hiring more employees, increasing the expense of the workforce might be the ironic result of higher rates. I have never seen a new hire occur because the employer has a little extra cash to spend.