Sunday, August 30, 2009

The Travails of Small Business Doom the U.S. Economy

By Charles Hugh smith


Would you borrow $250,000 to start a business which might, if you're lucky, net 10%? That's your wage, pal, not the net-net--you have to pay taxes on that $25K, too--starting with 15% self-employment. But then the business might fail, and you lose the $250K and have to declare bankruptcy.

A business isn't a license to print money--it's a license for cities, counties and states to print tax revenues. The entrepreneur may or may not print money, but since 75% of all new businesses fail within a few years (and that's in good times; now the failure rate will probably run to 95%), the odds are they will lose all their invested capital and be broke, not wealthy.


So many small city/village downtowns are filled with empty store fronts for this very reason.

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