Flimjo 1, Beaker 0.

Another Battle

Recently, however, Beaker tried teasing me about my attempt to take another, extended vacation.  See, my wife is pregnant with our second child.  He knows I would have probably aimed to take some time off for the holidays in December and head out of town to visit my wife’s family.  But with the pregnancy, we won’t be able to travel in December. 

Beaker knows that, and the following exchange took place the other day:

• Beaker: “So, no holiday break this year, huh?”
• Flimjo: “No, I guess not.  She’ll be 8 months pregnant then, and we won’t be able to take a flight anywhere.”
• Beaker: (smiling)

Remember that Beaker hates it when I take vacations because every day I am not here and billing hours is a day that he loses money.

Flimjo Takes The Lead

His little sarcastic teasing, of course, didn’t keep me down.  I’ve worked my butt off for him this year, and NOTHING was going to stop me from taking some extended time off later this year and before my second child is born. 

So, instead of taking a couple weeks off for the holidays, I decided to take my  ”holiday vacation” at another holiday-like time: September.  Specifically, I am taking two weeks off in the middle of the month.

I obviously had to inform Beaker about my plans.  Here is how the exchange went:

• Flimjo: “Did you take at that draft of that letter I left in your chair?”
• Beaker: “No.  But I’ll get to it.”
• Flimjo: “OK.”
• Beaker: “So what else is going on?”
• Flimjo: “Oh, before I forget, since I won’t be able to take any time off in December, I’m going to take a couple of weeks off in September.”
• Beaker: (silence, then a pause) “Where you going?”
• Flimjo: “Up north to visit my in-laws.”
• Beaker: (pause) “OK.”

The Calendar

Not to be outdone by myself, I decided to throw another wrinkle at Beaker.  Normally, I have to have his secretary make notes on his online calendar of when I’m not in the office.  For example, if I take a day off, she has to write: “Flimjo - Out of Office - Vacation.”

I asked his secretary to write the following for each day from September 15 through September 26: “Flimjo - Out of Office - Christmas Vacation.”

And boom goes the dynamite.

Flimjo 2, Beaker 0.

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The point is a simple one: No one ever got rich alone. 

What prompted me to make this point is a telephone call I received a little while ago.  About three months ago, I met with a recruiter who put me in touch with another lawyer who had a mindset similar to mine.  He had an entrepreneurial bent and had some business ideas.  We eventually spoke over the telephone and met in person to discuss our ideas and how we could join forces in pursuing these ideas.

The meeting was encouraging, and decided to pursue two ideas (one his and one mine).  My idea involves a website that offers a specific service to a sports-related niche.  I’ve had the idea for a while now but could not gather myself to get it off the ground due to lack of time and my pursuit of other short-term projects (like BANS).

However, by aligning myself with someone with a similar mindset, I’ve almost doubled my motivation.  Whereas before, I only had myself to answer to when I hadn’t pursued an idea, now I have someone else to answer to.

To put it more concretely, we met in person about 2 1/2 weeks ago, and we agreed to follow up with a telephone call to figure out which idea we’d put into action.  However, I had been away last weekend, and work, etc., had kept me busy this past week.  In other words, I hadn’t really done much to take that next step.  

But then, this morning, he called me with some ideas on how to get this website up, the name of a designer, a time frame for meeting with this designer, how to pitch the idea to him, and some other suggestions regarding the website’s layout. 

BAM!  I was pumped.  I wanted to get down and get started.

The lesson I learned is that entrepreneurs need to find like-minded people to partner with to pursue their ideas.  Business partners offer two valuable resources, one obvious and one not so obvious. 

First, they offer you a different set of skills.  What you don’t have, they will, and vice verse.  Two heads are better than one.

Second, and less obvious: a business partner offers you an additional source of motivation.  Each person expects the other to operate with the same level of energy and persistence.  If one person gets down and sidetracked, the other will pull him/her out of it.

That’s what happened to me today.  I was sidetracked a bit with work and other issues.  That phone today pulled me out of that rut and put me back on the right path.

Don’t be shy about partnering with like-minded individuals.  Successful entrepreneurs never got rich alone.     

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I get a lot of ideas and inspiration from these blogs.  The ideas are usually passive-income-related and aimed at building wealth without much work.  The inspiration I get comes from reading posts by individuals with mindsets similar to my own (i.e., you don’t have to be a salaried employee forever; you can develop streams of passive income and achieve financial freedom). 

I hope that you can visit these blogs as well and derive from them the same ideas and energy that I get. 

So, in no particular order, here are my favorite money making blogs:

The Lazy Owner

The name of the owner of this blog is Jim, and he calls himself a “lazy business owner.”  Jim and his business partner have a web development and marketing company (IVJR) that they are turning into an automated business that will provide them with passive income. 

The focus of the blog is ”about setting up a business that can run itself,” which, Jim states, “is the only way to truly have a successful business.”  Jim’s goal is to provide some of the lessons that he learned and provide some real-life examples and observations to help aspiring business owners grow their business to a successful level.  The blog covers topics like business models, creating a “muse” (Tim Ferriss-style), marketing, niche businesses, and online businesses.

Retire at 21

Doesn’t the name of this blog just make you want to click on that link??  It certainly grabbed me the first time I saw it. 

Retire at 21 is a blog run by Michael Dunlop, a “young, dyslexic . . . college drop out.”  Michael states that his “drug of choice became [an] Online Business.”  He first starting making money (to the tune of “tens of thousands of pounds”) in his early teens by selling stuff on Ebay.

He now runs his website and blog as ”a leading showcase for other young entrepreneurs to show their talents and share their stories.”  His focus?  You guessed it: retiring at 21.  The blog covers a wide range of subjects, including flipping websites, making money online, SEO, young entrepreneurs, and blogging in general.

But what if you’re past 21??  Not to worry: ”[D]espite the name, the information and advice is more geared towards retiring prior to having a fake hip installed,” writes Michael.  Avoiding that “retire at 65″ mentality is Michael’s goal, and the information on this blog will help you retire before then.

The Blog Entrepreneur

I visit this blog a lot because its owner (Bill) is a lot like me.  He “hold[s] a Director position for a Fortune 400 company,” and his blog is not a ”make money online” blog but is, instead “kind of a score card and sounding board to communicate with the online world.”  Like me, he believes that “you will be far more successful providing value and networking with people than you ever could working on your own.”

Bill makes money from ”content websites, affiliate marketing, and Ebay affiliate stores.”  He currently has ”9 BANS websites, 3 Adsense sites, 1 Affiliate portal, and 1 Ebay store.”  He currently makes about $2,000 per month.  Not bad.  Like me, Bill knows he ”could do even better than this but [he has] a fairly demanding day job.” 

His “goal is to make 5-10k a month from . . . online activity” so that he can consider leaving his day job. 

The blog covers everything from niche sites, SEO, and traffic building to affiliate marketing, blogging tips, and domains. 

The University Kid

Run by a young university student named Jason Pereira, this blog has a bunch of money-making tips and ideas.  Jason also has the mindset I love: making money without significant work.  He covers many different topics, all of which are related to making money easily. 

What I like about Jason is that he takes established methods for making money, and he adds twists to them that are both unique and profitable.  He also comes up with new and interesting ideas that he shares with his readers.  

I was fortunate enough to win an opportunity to be involved in a case study for him for a future product he’s going to release.  The instructions he gave me are supposed to help me make $100 online.  Jason was helpful in his explanations, and he makes himself available for further assistance.  I’ve started work on it, and, while I haven’t gotten to the $100 goal yet (due to time constraints with my present job), I know that I’ll get there because the idea is legit.

If you want to immerse yourself a bit in the money-making mindsets of online entrepreneurs and learn new and interesting ways to make money, visit these blogs.  Your thinking and approach to money will never be the same again. 

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Debt can help someone’s finances spiral out of control, but it can also help someone build an impressive amount of wealth.

But how can that be?

Good Debt vs. Bad Debt

There is good debt, and then there is bad debt.  People who find themselves in financial trouble can blame “bad debt.”  Entrepreneurs who become millionaires can attribute their success to “good debt.” 

Debt usually carries a negative connotation, but not all debt is bad.  If used correctly, debt can help you build wealth and put you on the path towards financial freedom.

Examples of Bad Debt

Debt in any form gives you purchasing power.  You incur debt in order to buy something, whether it’s a widescreen TV, an education, a car, or a house.

The best way to determine if the debt you incur is bad debt is to ask the following question: “Is this debt helping me buy something that loses value?”  If the answer to this question is “yes,” you’re in the world of bad debt. 

Here are two common examples of bad debt:

1) Credit Cards.  High consumer debt on credit cards is probably the # 1 reason why our economy isn’t doing so well.  In the past few years, people have placed boatloads of purchases on credit cards, not stopping to think when or how they would pay off their ever-increasing balances.  Moreover, these purchases usually involve assets that lose value (e.g., televisions, electronics, expensive gadgets, etc.).  If you’re placing numerous purchases on a credit card and not paying your balance off in full at the end of the month, you’re incurring bad debt.

2) Auto Loans.  Getting a loan to buy a car is one of the best ways to get yourself into bad debt.  A car loses over 50 % of its value in the first 2 to 3 years.  Thus, by year 2, the balance you own on the loan is likely more than the car is worth.       

Examples of Good Debt

Whereas bad debt helps you buy an asset that loses value, good debt helps you buy an asset that increases in value.  People like Robert Kiyosaki and Donald Trump are in debt millions and millions of dollars.  But it’s good debt, not bad debt, that they have and that helps them continue to build their wealth.  Here are two examples of good debt:

1) Real Estate Loan.  A loan that helps you buy a piece of property is good debt because it helps you acquire an asset that increases in value at an average of 6 % per year.  Moreover, if you decide to rent out that property, you can generate positive monthly cash flow (i.e., passive income) that puts money in your pocket.  Thus, you get an asset that gains value over time and that puts short-term money in your pocket.

2) Business Loan.  A loan to help you start or grow a business is good debt because, like real estate, a business is an asset that gains value over time (provided it has valuable products and services and is property managed).  An SBA loan or a loan from a stranger like an angel investor gives you the funds necessary to invest in the business.  This investment, in turn, helps you get it off the ground or improve it over time.   

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This Week’s Posts

On Monday, I wrote about my detox weekend.

On Tuesday, I gave a short Build A Niche Store (BANS) update.

On Wednesday, I ventured into politics and kicked off a series focusing on the Financial Facts About Barack Obama by talking about Obama’s plans to let the Bush tax cuts expire.

On Thursday, in the second part of my Financial Facts About Barack Obama series, I looked at the effect of raising the long-term capital gains tax.

On Friday, in the last installment of my Financial Facts About Barack Obama series, I analyzed Obama’s proposal to increase Social Security taxes.

Finally, on Saturday, I posted a YouTube clip of a scene from the film The Dark Knight, which I saw on Friday night.

Posts From Top Commentators

Here are the most interesting posts from the blogs of my top commentators:

Prem from Tech Suave explained how to generate strong passwords in a click.

Hugo Santos from Blogger Venue listed 5 reasons why you should do paid reviews.

Tom from StandOut Blogger listed 11 things he does on lazy days.

Mo from Best Blog talked about the importance of business credit.

One Year Millionaire pointed out that saving money makes money.

The Wealthy Blogger asked when is it time to quit your day job.

Flimjo Five

Here are my five favorite posts from other blogs from last week:

1) The Economies of Success (Or How To Launch A New Site Per Aaron and Giovanna Wall), by Gab Goldenberg from SEO ROI.

2) Great Ideas For Startups Today, by Michael, from Retire at 21.

3) My Recommended Type of Business, by The Lazy Owner.

4) Don’t Forget About Article Marketing, by Chris Jacobson from Money Making Scoop.

5) Build A Niche Stores I Would Never Build Again, by Alan from Affiliate Confession.

Flimjo Love

In his weekly overview, Alan Johnson from The Rating Blog linked to my post about my good start with Build A Niche Store (BANS).

I’m still ranked #250 on 45n5’s list of the Top 100 Make Money Online Blogs.

Since I didn’t do a Flimjo Recap last week, I wanted to point out that Hugo Santos from Blogger Venue, in his Countdown to holidays post, linked to my post about how to find a niche for your BANS store, and Cuzzy from Cuzoogle, in his July 9th Blog Building post, linked to my post about how to improve your search engine ranking with lucky off-page optimization.

Thanks for the links everyone!

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This movie is the best superhero/comic book movie of all time.  Period.  I think what makes it so good is that it’s really not a superhero movie at all.  Rather, it’s a crime saga that runs about 2 1/2 hours long.  The plot is tight; the acting is superb; and the themes of the movie resonate strongly.

But the real treat with this film is Heath Ledger’s performance as the Joker.  Hands down, this is the best acting performance of 2008, and he should win a posthumous Oscar for Best Supporting Actor.  He is one of the best villans I have ever seen.  He makes the Joker so evil and so psychotic that several of his sequences in the movie downright make you squirm. 

If you haven’t seen it yet, run–don’t walk–to your nearest movie theater.  For now, here is a short clip of one of the Joker’s scenes.

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Today, I want to write about Obama’s proposal to raise Social Security taxes.

The Social Security Tax Hike

As it is, the Social Security tax amounts to a 12.4 % tax on earnings up to $102,000.  Obama hasn’t been clear on what he wants to do: 

• Originally (with regard to letting the Bush tax cuts expire), he said he would not increase taxes for people earning less than $250,000. 
• He contradicted himself by saying later that he would tax all income to fund Social Security, including income over the $102,000 cap.  
• To reconcile his contradictory statements, Obama said he would not subject income between $102,000 and $250,000 to the Social Security tax, but he would, instead, subject all income above $250,000 to the Social Security tax.

Let’s give Obama the benefit of the doubt and assume that, after being inaugurated, he will advocate taxing income above $250,000 to fund Social Security.  That’s an additional 12.4 % tax on individuals’ incomes that exceed $250,000.

Effect of the Social Security Tax Increase

This increase will have several detrimental effects, including (1) slapping a huge tax increase on today’s young voters; (2) further removing incentives from striving for professional success; (3) reducing the value of a college degree; and (4) the march towards a socialist revolution.

1) A HUGE increase in Social Security taxes for young people.

According to certain studies, Obama’s policy would impose a 60 % increase in lifetime Social Security payroll taxes for some young voters.  And if you’re college-educated, prepare to lose more because the future earnings of college-educated workers are likely to remain above Social Security’s maximum taxable limit for most of their careers. 

Under the current system, college graduates will contribute about 5 % of their lifetime earnings to Social Security.  Under President Obama, they would contribute almost 9 %. 

This is mind-boggling.  A majority of Obama’s supporters are young college students.  Yet, by voting for Obama, a college graduate earning $40,000 per year today is effectively surrendering an additional 4 % of his or her lifetime earnings to Social Security.  (And considering that Social Security may be bankrupt anyway by the time that college graduate reaches retirement age, he or she may get no benefits in return.)

2) Less incentives to strive for professional success.

For those with college and post-graduate degrees (me included) who have professional jobs, a higher tax rate that accompanies salary and compensation increases past $250,000 makes it less attractive to strive for that promotion or executive position. 

It’s enough that compensation above $250,000 is taxed at 30+ %.  What’s more, the top rate will likely be 39 % under Obama.  His proposal will add an additional 12.4 % tax for income above $250,000.  Thus, high-salaried executives and professionals will be surrendering about 50 % of the top portion of their compensation. 

For example, a partner at a big law firm probably makes about $1 million per year.  I know that’s a lot of money.  But let’s look at a snippet of how much this person will have to fork over to Uncle Sam under President Obama.  In addition to the taxes he pays for the lower brackets of his income (i.e., $0 - $350,000), this person will have to pay over 51.4 % in taxes (39 % after Bush tax cuts expire and additional 12.4 % for Social Security) for all income above $357,700.  $1 million - $357,700 = $642,300.  51.4 % of $642,300 is $330,142.20. 

This law firm partner will have to pay $330,142.20 in taxes for his income above $357,700.  And that’s just for income above that $357,700 tax bracket.  Add on the rest of the taxes he pays for the lower brackets of his income, including Social Security taxes on income up to $102,000 and from $250,000 to $357,700, and he’ll likely surrender about HALF of his total income to the government.

This is insane.  Looking at it from the bottom, I would HATE to fork over that much of my money.  Moreover, it’s not like these highly compensated professionals work 9 to 5.  They work around the clock.  (I know I do!)  Working that hard (i.e., late nights, weekends, etc.) and then having to pay Uncle Sam almost HALF of what you make? 

It’s not worth it.  I’d rather work less and make less because I won’t have to surrender to the government so much of the money I’ve earned for working long hours.  I know a lot of other professionals would feel the same way.      

3) A reduction of the value of a college degree.   

What does this all mean?  Two things.  First, Obama’s plans for Social Security effectively reduce the value of college and post-graduate degrees.  Higher Social Security taxes decrease the incentives of young voters to stay in school and/or pursue post-graduate degrees.  

Ordinarily, additional years of education guaranteed a higher income.  But if that additional income is taxed at a higher rate, the increased tax burden wipes away the value of paying for the additional education in the first place.

4) Socialist Revolution.

If people don’t have a monetary incentive to educate themselves, find well-paying jobs, and excel in those jobs, production will grind to a halt, the middle class will disappear, and the economy will tank.  We might as well become a socialist country because that’s what this is going to look if Obama’s tax proposals come to fruition.

There’s nothing new here with Obama.  There’s no hope or change.  It’s just more (and worse) of the same.

If you’re an entrepreneur or interested in business and money in general, a vote for Obama isn’t the way to go.  These facts about Barack Obama illustrate that, under his tax proposals, we’d be in for one heck of an economic and social disaster.

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Obama’s monetary policy consists of two other major items: raising long-term capital gains taxes and raising Social Security taxes.  Today I want to focus on Obama’s proposal to increase the long-term capital gains tax rate from 15 % to 25-28 %.

Raising The Long-Term Capital Gains Tax

The long-term capital gains tax rate applies to an asset that you hold for more than one year.  Thus, if you purchase a share of stock today and sell it in August 2009, your gains (if any) are subject to the long-term capital gains tax rate.  That rate is currently 5 % for taxpayers in the 10 % and 15 % tax brackets and 15 % for taxpayers in the 25 %, 28 %, 33 %, and 35 % tax brackets.  Thus, the latter 15 % rate is the one that applies to the majority of Americans.   

Obama has stated that he will advocate increasing the long-term capital gains rate from 15 % to 25 % or 28 %.     

Who Does This Tax Increase Affect?

This tax increase affects mostly anyone who owns stocks.  It also applies to real estate investments, but I’ve already explained how you can avoid paying capital gains taxes on your rental properties.

Effect Of Raising The Long-Term Capital Gains Rate

Raising the long-term capital gains tax rate would have several devastating consequences: (1) decrease in federal tax revenue; (2) the move towards a system that doesn’t work; (3) penalizing the middle class; (4) punishing success in general; and (5) inhibiting economic growth.

1) Decrease in federal tax revenue. 

Scott Wainner (of WRevenue.com, one of my favorite blogs) writes in his post about Obama’s cluelessness that, twice in history, increases in capital gains rates have decreased tax revenues, and decreases in capital gains rates (under Bill Clinton and George W. Bush) increased tax revenues.  He uses a helpful chart to support this statement.  The numbers don’t lie.  Simply increasing taxes doesn’t always lead to a corresponding increase in federal tax revenue.   

2) Fairness cannot be imposed or regulated.

Obama insists that, although a capital gains tax hike won’t produce more tax revenue, the rate nevertheless must be increased for “fairness.”  That sounds like socialism to me.  The attempt to redistribute wealth via this backhanded way of taxing individuals who invest their money is an exercise in futility.  This method has been tried in the past, and it has failed miserably.  Free markets–not government regulation–create fairness.  

Enacting revenge on wealthy investors, mutual or hedge fund managers, and business owners effectively penalizes the driving forces of our economy.  Like I said yesterday, no one ever got a job from a poor person.  When people with money are allowed to invest that money, society benefits from expanding businesses, an increase in jobs, and a rise in innovation. 

When you take the gains away from these investors under the guise of “fairness,” you’re imposing a socialist system that punishes business, reduces jobs, and discourages innovation.  And it’s a system that has failed multiples times in our past and across the world.

3) The middle class, not the “wealthy,” are affected.

A major problem with this part of Obama’s tax plan is that it won’t just affect the wealthy (as he so naively thinks).  Instead, it would affect millions of Americans who aren’t wealthy.  As Scott points out, there are 100 Million people in the U.S. who own stock.  In fact, in 2005, 47 % of all tax returns that reported capital gains were from households with incomes below $50,000, and 79 % were from households with incomes below $100,000.  It isn’t just the wealthy who are buying stock.   

4) Punishing success.

For his Harvard education, Obama is an absolute moron on this issue.  Taking a larger chunk of people’s capital gains punishes hard-earned success.  It’s one thing to tax earned income (i.e., what someone earns from a job).  But when you increase the tax on gains people realize from investing (and risking) their hard-earned money (and gains that, by the way, help capitalize businesses and, thus, spur economic growth), that’s another story.

This country has over 300 million people.  Raising long-term capital gains taxes affects ONE-THIRD of that population.  Moreover, of that one-third (or 100 million people), 79 % earn under $100,000.  It’s not just millionaires who will be affected.  It’s middle-class America–a sector that works painfully hard to make ends meet–that will suffer, too. 

I’ve never seen such a concerted effort to wipe out the middle class.  It’s as if we have a communist running for President.  (Do we?)

Taxing middle-class workers for achieving monetary gains in the stock market punishes them for their efforts and wipes out their hard-earned success in the market.  Economic growth depends on rewarding success, not punishing it.

5) Anti-growth consequences.

Punishing over 100 million investors discourages them from entering the market.  It keeps them from investing their money in the stocks of companies.  In addition, like increased taxes on small businesses, a higher long-term capital gains rate reduces the motivation for entrepreneurs to invest their money in start-up companies or in growing businesses.  The whole point of investing one’s money in a business is the goal of having more cash in your bank account.  Take a bigger bite out of that, and you remove the incentive to invest and innovate.

These additional facts about Barack Obama are problematic.  I don’t think this man truly understands the ramifications of raising taxes across the board.  We may not be in a recession, but we’re certainly in a downturn.  This is not the time to raise every tax in the book.  Doing so (especially hiking the long-term capital gains tax) discourages and destroys investment, risk-taking, entrepreneurship, innovation, and the all-important goal that we so desperately need right now: growth. 

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In short, America cannot afford to have this man become President.  Our wallets cannot endure four years of a Barack Obama presidency. 

John McCain has some drawbacks as well, but Obama’s monetary policies will have a far more drastic effect on this country than anything McCain will do.  Thus, I think it’s imperative to look at certain key facts about Barack Obama and how they will affect the U.S., its economy, and businesses and entrepreneurs.

Monetary Facts About Barack Obama

Obama has promised to implement and/or advocate the following policies:

1) Allow the Bush tax cuts to expire for Americans earning more than $250,000 per year.

2) Increase long-term capital gains tax rates from 15 % to 25 %.

3) Increase Social Security taxes by subjecting income over $250,000 to a 12.4 % tax.

I want to look at the effects (particularly the economic and business effects) of these policies, but I can’t do that all in one post.  It’s a lot of information, so I thought I’d spread it out over three posts. 

So today, I will look at the effect of Obama’s promise to allow the Bush tax cuts to expire.  Tomorrow, I will look at the effect of raising the capital gains tax.  And on Friday, I will look at the effect of increasing the Social Security tax.    

Expiration of Bush Tax Cuts

Currently (under the Bush tax cuts), the top income tax rate is 35 %.  Under Obama, that rate would go back up to 39 %.  Obama claims that this shifts the tax burden to American households that earn more than $250,000 per year . . . or, in his words, the “wealthy.”

Burden on Small Businesses, Not “Wealthy” People

But he’s wrong.  This logic (i.e., shifting the tax burden to the “wealthy”) assumes, first, that people who make $250,000 are wealthy.  In today’s economy of inflated real estate prices, high gas prices, and a falling dollar, $250,000 only goes so far and doesn’t even come close to equaling “wealth.” 

But there’s a bigger problem with Obama’s logic.  He isn’t shifting anything to the wealthy.  Instead, he’s shifting the tax burden to small businesses.

Several articles, including this one, have pointed out that about two-thirds of the $700+ billion of income from small businesses in 2006 was reported by households making $250,000 per year or more.  (Income for “small businesses” is primarily derived from sole proprietorships, partnerships, and S-corporations.) 

Note that these are the same households (i.e., those making more than $250,000 per year) on which Obama wants to increase taxes.  Thus, raising taxes on these households will effectively raise taxes on most small-business profits in America.

How High Will Taxes Be For Small Businesses? 

Under President Obama, the S-corporation tax rate would rise from 35 % to 39.6 %.  The tax rate for sole proprietors and general partners, however, would rise from 37.9 % to 50.3 %.  (Sole proprietors and general partnerships have to pay income tax and the Medicare portion of the payroll tax.) 

A tax rate of over 50 % would be the HIGHEST rate a small business has paid since before Reagan was president.

Serious Economic Consequences

If two-thirds of all small-business income is taxed at 50 %, there will be serious economic consequences, including (1) fewer businesses, (2) fewer jobs, (3) more tax evasion and tax avoidance, (4) less federal tax revenue, and, ultimately, (5) a full-blown recession.

1) Fewer Businesses

Right now, the fastest way to achieve financial freedom is by starting your own business.  Under President Obama, however, a 50 % small business tax rate will discourage Americans from starting a small business or expanding or growing an existing one. 

Who would want to start a business where, if you achieve any level of success, you might lose HALF of the business’s earnings to Uncle Sam??  Any reasonable person would rather remain employed (and get taxed at 20+ % or 30+ %) than start a sole proprietorship or partnership (and get taxed at a top rate of 50 %).  A 50 % tax rate wipes away any financial potential of working for yourself or starting your own business.   

2) Fewer Jobs

Obama’s tax increases will also reduce the number of available jobs.  Small businesses create the majority of jobs in the U.S.  So do the math: If fewer people start small businesses, and fewer people expand and grow their small businesses, there won’t be as many businesses (and as many growing businesses) offering jobs. 

Even if you think that a sole practitioner like a doctor who makes $500,000 per year is “wealthy,” ask yourself this question: Have you ever gotten a job from a poor person?  The answer, of course, is “no.”  “Rich” people–or, more accurately, small and medium-sized business owners–provide jobs.    If you place such an enormous tax burden on these businesses, you prohibit them from growing (or starting up in the first place) and even might cause many of them to contract to save money.  And if businesses don’t get started, don’t grow, and if some have to downsize, there will be fewer and fewer jobs on the market. 

This is a stunning cause-and-effect that you don’t see reported in the media or in any popular publication.  Obama has stated (like every liberal) that he wants to create more jobs.  Yet his own tax proposals will destroy job growth!

Think about it in real-world examples.  In your town, the restaurant down the street that was about to open doesn’t.  The manufacturing company that just opened a new plant decides to close it two weeks later because it lacks the funds to sustain the plant during its initial stages.  The doctor who wants to leave a university to open up a private practice in the town center decides that his money can be better spent elsewhere. 

These events all have one thing in common: they don’t create jobs.          

3) More Tax Evasion

Tax evasion would certainly increase.  If business owners have to struggle to pay Uncle Sam, a good number of them might very well try to get crafty with their tax returns.  When the choice is between sustaining your livelihood (e.g., your handy man business or your moving company) or paying Uncle Sam, you can bet business owners will try to avoid paying some of their taxes.

4) Decrease in Federal Tax Revenue

Don’t pay attention to the media on this.  If you have fewer businesses, fewer sole proprietors, and fewer employees (due to fewer jobs) paying taxes, and if you have an increase in tax evaders, federal tax revenue will decrease.  Count on it.

5) Full-Blown Recession

If you’re keeping score at home, we have fewer businesses, fewer jobs, an increase in tax evasion, and a decrease in federal tax revenue.  We’ll also have higher unemployment and less innovation, investing, and entrepreneurship.  Fewer people will have money, and those who do will have less.  Less money means less consumption and less disposable income to spend on products and services. 

These are the classic ingredients of a recession.  Obama’s tax proposals would bring this economy to halt.  We’re not even close to a recession yet (i.e., the economy grew 1% last quarter, and you need two straight quarters of negative growth).  If you think times are tough right now, just wait for Obama to take the helm. 

That’s not change we can believe in.  (It’s actually much of the same failed policies from the 1960s and 1970s.)  Despite the Harvard education (which, by the way, is overrated), these cold, hard facts about Barack Obama illustrate that he doesn’t have a clue about the economy.

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I’ve put up two stores.  One is focused on a good niche (that I know very well) with below-average demand (i.e., low number of Google searches).  The other is focused on another profitable niche with more than adequate demand and low competition (i.e., about 200,000 Google search results). 

I have barely done anything to these stores.  On one, I changed the color scheme myself (with my limited HTML knowledge).  On the other, I found a free BANS theme, uploaded it, and selected it.  I made a couple of changes to the store pages on the left sidebar.  But that’s it.

All in all, after installing BANS, I’ve spent about an hour TOTAL on both of these stores.

I checked my Ebay Partner Network account last week, and I found the following:

Now, as I stated in my first BANS update, this isn’t going to make me rich.  Heck, it doesn’t even buy me a movie ticket or a gallon of gasoline these days. 

But it’s a start.  And passive income is a game of inches.  Every little bit of cash that trickles in adds to your grand passive income total.  Like I said, I did about an hour of total work on both of these sites.  They don’t look all that great, and I have done very little on-page search engine optimization and virtually NO off-page optimization.  And yet, I made $3.59.  And I can guarantee you that more change will trickle in. 

These earnings illustrate the potential of BANS.  I urge you to purchase the software and try it out.  If almost no work makes me $3.59 (and likely more than that), imagine what another couple of hours of site design and SEO will do.  I’m so addicted to BANS already that I want to sit down on a Saturday and spend the WHOLE day fixing and optimizing my two sites.  I know that, once I do that, my passive income from them will increase ten-fold.

And then I’ll put up more sites.  $$$$ 

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