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A recent federal GAO report states the obvious: many small businesses don’t pay federal income taxes.
Some people are in a tizzy over this so called finding. Let’s be clear. Businesses pay taxes. Businesses pay payroll taxes. Businesses pay sales taxes and property taxes. The amount of taxes a small business pays would make most people cringe. Income taxes are just one type of tax. Most small businesses will try to offset their losses (expenses) with income so that they don’t have to pay this particular tax. This is Business 101. You would rather invest money back into your business to encourage growth rather than pay it to the government. Generally everybody wins.
I wrote an article in my company’s blog 6 months ago questioning “green” policy efforts. I’ve been doing some more thinking about this subject lately as I’ve come across articles about taxing energy producers to offset global warming.
Let’s think about this logically.
Energy is required to innovate. Physicists need to run simulations on grid supercomputers. Large disk systems are required to store testing data. Email and collaboration tools are required to coordinate project teams. All of these activities require power.
As you increase the cost of power you increase the cost to innovate. Increasing the cost of innovation will likely slow innovation and decrease the number of companies pursuing innovation.
I believe we should focus on decreasing the cost of energy versus building an artificial energy market using tax credits or carbon caps. What we have today is a situation where government is manipulating the energy market to force changes in energy production and costs.
I agree that we should minimize our impact to the planet by reducing waste. I want to leave my children a cleaner world than my grandparents left me (which actually won’t be hard to do). But making it harder to innovate and solve energy production problems at a time we need it most is kind of like cutting off our nose to spite our face. I would rather increase pollution over the next 10 years and keep energy costs low if that meant we could find a longterm energy solution faster.
Many proponents of artificially inflating the cost of energy believe that this will spur change in the market. I agree that this will create change: even more companies moving manufacturing and operations to countries like China and India that are building power plants like mad. But even if you believe that artificially increasing energy costs will drive companies to look for new forms of energy you have to make a big bet: new and cheaper forms of energy will be found.
Maybe instead of creating a carbon trading system people should be buying stock in companies that are researching new forms of energy production. At least they would be putting their money where their mouth is. They could be part of the solution versus becoming a barrier.
