Why taxing Comcast (and its employees) is bad for small business
(This article originally appeared in The Washington Times)
The Biden administration is proposing higher taxes on “the wealthy” and corporations in order for them to “pay their fair share.” Unfortunately, these taxes will ultimately hurt small businesses, too.
To illustrate that point, let’s look at a big corporation. One in my hometown: Comcast.
In 2020, Comcast earned about $20 billion on more than $103 billion of revenue. Not a bad take, right? The company, which owns NBC, theme parks, movie studios and sports teams also provides Internet services to customers in 40 states. Comcast has repeatedly come under fire for poor customer service and antitrust concerns, much of that deserved. But I pick this company because I’m a customer and they are foremost on mind. Why?
Because my Internet service is down! So you would think I’d be ready to complain loudly about Comcast. But I’m not going to do that.
The higher taxes proposed by the Biden administration isn’t going to worry Comcast very much. The company has bigger things to worry about then the U.S. government. It’s got shareholders. And to appease them and their stock price, the company will simply treat those higher taxes like any other cost of doing business and will adjust. How? They’ll certainly raise their prices, which means higher Internet fees for my business. But, more importantly, they’ll be less inclined to spend.
That’s because when costs — like taxes — go up, companies simply adjust their overhead. Which means less hiring, less services and less support for their customers (that’s me!). They’ll also spend less in their communities. So programs this one that gave out to grants to Black business in my city will be impacted. As well as the millions Comcast — like most other large corporations — plows into its charitable foundation that benefits diversity-oriented programs that address digital literacy and community service.
Inhibiting corporations with higher tax rates impacts their investment decisions, too. Without lower capital gains taxes and the “step up” tax advantages that the Biden administration may also remove, would Comcast have built its 59-story tower that, according to an economic impact report, had a total economic impact of $1.7 billion in the city and $2.8 billion in my state through its direct and spillover activities? Perhaps. Perhaps not.
Even without this project, Comcast, according to the same report, generates $2.7 billion annually in direct and indirect economic activity for my city and more than $5 billion for my state.
What is this “economic activity?” It’s the money that big corporations like Comcast spends with small businesses that clean their offices, cater their lunches, drive their executives, advertise their products, design their conference centers, support their technology, send out their emails, counsel their employees and do the other things that feed a giant organization’s never-ending appetite for ideas and other delights that keep both their employees and shareholders happy.
Big companies don’t — can’t — do this in house. They need small businesses for these services. And countless small businesses need these same big companies for their livelihoods. If you don’t believe me then just check how many have shuttered their doors this past year in cities where employees have been working from home.
Comcast’s CEO is Brian Roberts. He, like many other executives at the company, makes a boatload of money. But he’s not the only “wealthy” person at Comcast. The company nationwide has thousands of employees that — combined with their spouses and partners — easily make more than the $400,000 per year that the Biden administration would call “wealthy.” (By the way, many small business owners along with their spouses and partners are in this income bracket, shhhh!).
So what do these people do with all that money? They spend it on their homes and vacations. They buy clothes. They hire landscapers, plumbers, carpenters and other contractors. They go out to eat and order out for pizza and Chinese food. They get their clothes dry cleaned, their hair colored, their cars washed and their children looked after when they’re away.
They work out at gyms, attend their friends’ parties and get their bones mended when they fall on the tennis court. Oh, and speaking of tennis courts they play tennis, golf and pickleball. Yes, pickleball. They also go to movies, attend the theater and shop online. They pay their accountants, their doctors, their therapists and their personal trainers.
Do you think the small businesses who benefit from their activities want them to spend less? Hell no.
So am I a fan of Comcast, even though my Internet is down right now? Hell yes. Comcast spends on small businesses. Their employees spend on small businesses. When you take away their money and give it to the government, whose money really are you taking away? Yeah, you guessed it.
* Gene Marks is a CPA and owner of The Marks Group, a technology and financial management consulting firm that specializes in small- and medium-sized companies.
Originally published at https://www.washingtontimes.com on March 18, 3600.
