By Josh Knauer
As a software entrepreneur, I find it ironic to see people going online to rail against taxes and government spending. The Internet grew from government research financed by earlier generations of taxpayers. So did computers, GPS technology and many other technologies we take for granted today.
The Global Positioning System (GPS) we access from our phones, computers and cars was developed and is still operated by the Department of Defense, which does not charge user fees.
We know the companies making the latest commercial products, but not the history of private and public sector innovation and partnership behind them. A strong collaboration between the public and private sectors is essential for the continued innovation and job creation necessary to keep our country competitive in the global market.
My company, Rhiza Labs, was recently named one of Pittsburgh’s top 10 fastest growing tech companies. We make easy-to-use tools for collecting, analyzing and sharing data online. My business has directly benefited from the tax dollars that went into the research that created Internet technologies long before Rhiza was established. Like many businesses, we’ve had customers from the public and private sector – from AT&T and Comcast to Pittsburgh Public Schools and the United Way.
In today’s polarized political debate, too many politicians speak of taxes as a cost that businesses should seek to avoid, or worse, as a cost that strangles and threatens the very future of business. In fact, my business and businesses generally have gotten a very good return on our tax dollars.
We need to invest more in basic research to plant the seeds for the next inventions that will change our lives in ways we can’t presently imagine. We need to invest in science and math education so our children have the tools to become the engineers, entrepreneurs and job creators of the next generation. U.S. students used to lead the world in these important subjects, but continuing budget cutbacks and teacher layoffs have left us falling behind our international competitors.
Investments in science and math education now will pay dividends later for companies like mine because we will have a broader pool of job candidates to hire. Tax dollars were a vital component in our past innovations and have modernized infrastructure and fostered economic success. Tax dollars remain a vital component of our economy today.
Unfortunately, we’ve been laying off people in very important jobs like police and teachers, and letting our roads, bridges and schools fall apart, to help pay for a decade’s worth of tax cuts for our nation’s most affluent households. To justify continuing that harmful policy, tax cut defenders claim that letting the Bush-era tax cuts expire for income above $250,000 will hurt our nation’s small businesses. That’s ridiculous.
Fewer than 3 percent of tax returns listing business income have taxable income over $250,000, and many of these fortunate taxpayers are Wall Street investment partners, lawyers and large company CEOs earning income from service on corporate boards or renting out their vacation homes – not the picture of small businesses most of us hold. Indeed, only the richest 2 percent of Americans have any income above $250,000, and everyone would keep tax cuts on their first $250,000.
Contrary to what tax cut defenders claim, job creation is driven by customer demand, not taxes. Businesses don’t pay taxes on their total revenues; they pay taxes on their income after deducting expenses like the cost of hiring and paying employees.
My business would be hurt far more by allowing the tax cuts for America’s most fortunate to continue and instead slashing budgets for things like public education, research and infrastructure to pay for them.
The taxes we pay, wisely invested in education, infrastructure and new research, are the down payments on our future success.
Josh Knauer is President and CEO of Rhiza Labs, a Pittsburgh-based software company. This op-ed previously appeared in the Pittsburgh Post-Gazette.