What If American Business Is Not Penalized For Success?

10 08 2007

“No government can exist without taxation. This money must necessarily be levied on the people; and the grand art consists of levying so as not to oppress.” — Frederick the Great, 18th Century Prussian king

Authored by: William Robert Barber

For the overwhelming majority of American small businesses: In order to initiate a business endeavor the entrepreneur must pay fees, licenses, deposits, hire an accountant, attorney, and other such cost collateral to founding the business of interest. Often the business owner subordinates real and personal property and signs a personal guarantee in support of a bank loan to fund his or her small business. If the entrepreneur fails, the business closes and all is lost.




If however the enterprise is a success, the entrepreneur will work long hours building the revenues and negating the business’s liabilities. In order to sustain positive cash flow beyond the short term the business must grow; growth is always associated with additional capital and risk. The small business entrepreneur must be flexible enough to adjust marketing and sales strategy in an ever changing world; he or she must execute and implement a wide variety of differing talents to positively enable an assortment of challenges. He or she must execute these differing talents in an intensely competitive business environment fraught with unanticipated negatives. Small business, the mainstay of America’s economic engine, is in fact, for the entrepreneur, an investment wherein risk is intrinsic and perpetual.



Most start up business fail in the first year; many fail in a matter of years, a few last and grow into long term profitable enterprises that contribute to all of the values America holds dear.



The tax system is founded on the principle of taxing the profitable; the government has authorized a reporting system and form called GAAP which is designed to extract and establish profit from gross revenues. If the entrepreneur is successful he or she must pay the government a tax for his or her success; if on the other hand, the entrepreneur fails, is not profitable, there is no tax owned.



The successful business is penalized for success.



The business owner pays a tax on personal salary and again when profits are personally taken. It is reasonable that if such is the standard, the rule of law, then the less the tax the fairer the system. After all these entrepreneurs take extraordinary risk and in so doing employ and participate in the community both civically and socially; they are roots from which all else derives its image and behavior.



Small business owners who have sustained a profit should never pay more that 10% on profits earned.



Their salary is in keeping with state and federal rules and regulations; however, the profitable business should be extended favorable tax treatment as a benefit and incentive for the risk taken.




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