Religion & Law

On several occasions, although not much recently, we have discussed at Mirror of Justice whether increased taxes for those earning higher incomes is mandated, encouraged, or contraindicated by principles of Catholic social teaching, including the preferential option for the poor. (For one such thread from two years ago, see here, here, and here.) Recognizing that tax law and policy necessarily involves prudential judgment, rather than categorical moral claims, the economic consequences of tax policy, which may involve collateral effects the undermine any supposed benefits of enhancing government reviews, should be a welcome addition to the conversation.

In a guest column by the founder of the up-and-coming small business Intertech in today?s Minneapolis Star-Tribune, Tom Salonek urges reconsideration of proposals to raise taxes for those with income of $250,000, explaining that, in small businesses, ?today?s profits fund tomorrow?s growth.? Referring to the proposal to tax the ?rich? who earn $250,000 or more, he writes:

I'm one of those people. While there?s no doubt that $250,000 is a lot of money, there is considerable misunderstanding about what that money means when you?re running a small business. . . . At the end of the year, when taxes are due, Intertech?s profit is reported on my personal tax return. While I pay tax on this profit -- at the current rate of 40 percent -- the bulk of the profit remains with the firm. This retained profit covers payroll and some short-term financing. But most important, retained profit funds Intertech?s growth. . . . A growing company consumes cash -- lots of cash.

The fastest-growing small businesses may be only three to four percent of all small businesses, but they account for most of the new jobs in the economy and much of the innovation. And, Mr. Salonek notes wryly, these small businesses aren?t coming hat in hand to Congress to ask for bail-outs. But they do ask not to be crushed by new government regulations and higher taxes.

Greg Sisk