Did you notice during the election just ended that the Number One topic of conversation was jobs? It seemed that each and every politician vying for election – or reelection – was touting his or her ability to create jobs. "Just elect me," they all said, "and I'll create jobs." Did you believe them? Neither did I.
What's the deal with these political types? It's pretty obvious they don't know what they don't know. They seem to think there's some mysterious button you push, or bill you pass, or speech you give that creates jobs. Well, here's The Bottom Line: The only jobs government creates are government jobs.
Let's start with a simple fact: Only a tiny percentage of those who will read this have ever created a job, or ever will. That task is left to the entrepreneurs who risk their time, effort, energy and (often plenty of) money for one, and only one reason: They want to make a profit. Remove the profit incentive and opportunity and you remove the willingness to take a risk. And that risk-taking is what creates jobs if and when they're successful. Or, often financial ruin if they fail. And the Number One disincentive to job creation in our Country at the moment is the uncertainty over future tax rates.
The Bush-era tax cuts for the 54% of us who actually pay income taxes (notice I didn't say for the "rich") expires on New Years' Eve. Unless legislation passes between now and then, we'll experience the largest tax hike in American history. Income taxes will go up for everybody, and for some as much as 50%. Taxes on long term capital gains will go up from 15% to ordinary income levels. Inheritance taxes will go from zero to 55%. Does this make sense, especially in a recession? Of course it doesn't. So why are the Democrats so unwilling to extend those tax cuts for everybody, including the so-called "rich?" The answer is Class Warfare. And it's getting very, very old.
According to the Dems, couples making $250,000 or more per year are "rich." Let's see now. An Orange County firefighter and his R.N. wife would easily eclipse that number. Pay the current 35% tax on that income, plus California's up to 10% income tax, plus SSAN, SDI, FUI, Louie, Dewey and Huey taxes, plus property and sales and inventory taxes, and then throw in the mortgage payment and college tuition for Junior and Sis, and you're anything but rich. And if you're a small business owner who's incorporated under Sub Chapter S, you're paying taxes on your gross earnings before you can make corporate investments or take corporate deductions. These are the people who create jobs. These are the people the Democrats want to punish for being successful. These are the people who stand to lose if the Bush-era tax rates sunset. And then We the People will lose because they'll have less discretionary income left to create jobs. Does this make sense to you? To anybody? Oh yes, I forgot. It makes sense to Obama, the current majority in Congress and the DNC.
So here is my prescription for job creation. Ready? Make the Bush-era tax rates permanent for everybody. Permanent. Remove this uncertainty and get the government out of the way and jobs will miraculously appear, just as they did under Harding, Kennedy, Reagan and Bush. And then lower our corporate tax rates from 35%, the second-highest in the world, to no more than 15%. Why the corporate tax decrease? Something like $2,000,000,000,000 (that's trillion with a "T") in corporate profits which have been earned overseas are languishing over there to avoid the imposition of onerous U.S. taxes on them if repatriated. Allow it to come home without a nasty tax penalty and we'd be awash in capital. It's that simple.
What's that I hear? "What do you, The Chuckmeister, know about job creation, and why are you qualified to opine on this subject?" Well, dear reader, I happen to be a graduate economist and actually know whereof I speak. Plus, I've also created hundreds of jobs over my illustrious business career, unlike, by the way, Obama, Reid, Pelosi, Durban, Schumer, Clinton, Frank, Dodd, Dean, and dozens and dozens of other hopey-changey Robin Hoods currently prowling the Halls of Congress looking for some booty to confiscate.
Only 7% of those who serve in the Obama administration have prior private-sector business experience. That's down from 56% in the Bush era. We have Ivy League academicians and theorists trying to manage a capitalistic economy they abhor without the slightest idea of what they're doing. Maybe that's why my simple remedy to the enormous problems we face as a society is so difficult for them to understand.
The Lame Duck Congress reconvenes today. Let's see if the Ruling Party learned anything from the spanking the electorate administered on November 2nd and decides to finally do what's best for our Country by making the current tax rates permanent. I'm not holding my breath…
My gosh, when the Chuckmeister awakens from his post-Thanksgiving tryptophan stupor he does so with a vengeance! This one should be required reading for every left-leaning resident of our fair city. Anyone who has ever made a payroll or created jobs will rock back, nodding in agreement and sharing your frustration.
ReplyDeleteokay, where to start... well, first, i find it ironic that the example your choice of mr and mrs america, a fire chief and an rn, derive most of their income from taxes, if not from salary outright, then from profits from their work derived from medicare, social security, healthy families insurance, etc. keep the tax cuts and their very jobs become unsustainable. do you think they'd rather essentially take a pay cut (raise in taxes) or lose their jobs? a great percentage of us in the public and private sector have already had to make that choice.
ReplyDeletesecond, i know you said your expertise is economics and not government. this is well illustrated from your suggestion to bring the corporate tax rates down to 15% and watch the capital run in, as if certain corporations dont get a pass on taxes for one reason or another already, or get government help building retail centers or plants or for that matter pro sports stadiums... just like it would be disingenuous for anyone to say we only pay 25% (after sales, gas, utility taxes and more, it comes out much higher as you point out) take cuz thats what comes out of or paycheck, its disingenuous to say that corporations here actually pay 35% (the biggest corporations end up at much less after gaming us). it also shows me that, much as you may know of economics, you must also be green on corporate culture if you believe that lowering corporate taxes would suddenly make them come clean and move offshore accounts back home to pay their fair share.
lastly, in case you have missed it (and i'm not saying that sarcastically, you may have) corporate profits in this country are at an all time high. have been for over a year. are you trying to say that they are holding off on how the tax cuts play out before they suddenly start creating jobs? if record profits dont drive job creation, this will? is that a promise?
please dont disregard me like cmpress. i'm sincerely interested in your responses.
Well Mr. filkinhippy, let me thank you for your mostly positive response. I appreciate hearing from those who view things differently. As to your points: I said O.C. firefighter, not chief. Believe it or not, an O.C. firefighter averages $175,000 per year! Makes me wish I'd decided to live in Missouri and work as an O.C. firefighter (check out the O.C. Watchdog column in the Register on this subject earlier this week if you doubt one can live in another state and put out fires here). How about we substitute a chemical engineer and a tenured high school teacher with a decade of experience. That couple would easily earn more than the threshold at which Barry the 1st wants to tax them as "rich." My point was that $250k in earnings doesn't make one rich. That is, unless you are of the squishy lefty political persuasion who wants to punish the successful and aren't earning quite that much money.
ReplyDeleteAs to your comments on corporations and the taxes they pay, or don't pay. First of all, corporations don't pay taxes. Their customers do. Raise taxes on the corps and they raise their prices, which we all then get to pay in a never-ending spiral. But for multinational corporations, money they earn overseas CANNOT be brought back without a taxable event taking place. And with a 35% tax rate, they won't bring it back. They'll leave it where they earned it because the tax rates there are so much lower. And corporate profits are so high right now because the corps are doing more with fewer employees. They won't hire more until the tax situation stabilizes. And that won't happen until the standoff between the Repubs and Obama and his minions is settled. And yes, that's a promise. Thanks again for sharing your thoughts...
thanks for posting and responding. i didnt say that i view the tax cuts differently. i have mixed feelings. i certainly disagree with your view on taxing corporations, i believe our government treats them way too lightly and also disagree that easing taxes on the richest of the rich is going to infuse them with the desire to start hiring. my answers lie in making things harder on them in regards to moving labor overseas among other things but i digress.
ReplyDeletei'd like to address one point of yours directly and request you do the same. in most of the country, $250k is indeed quite a bit of money. there. i said it. and i think you believe that on some level, too or you wouldnt have a problem with firemen making $175k (not that im saying im okay with that kind of salary for a fireman, either).
what i'd like you to address is the notion of tax oney going back into the economy not creating jobs other than government jobs. the rn is not a government job, but, as i said in my forst post, scratch beneath the surface and... it kinda is. the chemical engineer? what percentage of them work at public univrsities? or private universities with students who pay tuition in full or in part from grants, or government subsidized loans? or if they are in the private sector work for corporations that get some or all of their business from local, state or federal government? or directly are employed by some level of government? i would guess a healthy percentage fall into one of those categories. my point is that less revenue has ripple effects on us all no matter how private we believe our jobs to be. give me another example, i'll show you how government subsidises the business at some level. so, my question to you was, do we take a pay cut (more taxes) or maybe lose our jobs?
You're right, folkinhippy, to state that government has way too much influence on our businesses and our jobs. 7% of U.S. businesses were owned/controlled by the Government as of the day BHO was sworn at, I mean in. It's now 51%! Banks, insurance companies, car manufacturers, student loan operations, etc., etc. Stunningly tragic and frightening to all of us who love freedom. But money doesn't belong to the Government. It belongs to those who earn it, until it's forcibly extricated from them by Uncle Sam. Some of us want the Government to do only those things enummerated by the Constitution; wage war, protect our borders, mint money, deliver our mail and play referee between the children...I mean the states. Isn't it amazing that our Government is doing way too little of some of these things and way too much of others? And isn't it amazing that our Government is doing literally hundreds of other things not within its Constitutional purview? Do you want to give the Feds more of your money so they can redistribute it those to whom they look for votes? Or just some of other people's money?
ReplyDeleteI say again. Tax less, lighten up on the bureaucratic nonsense and then get out of the way; jobs will start appearing immediately. They always have, they always will. Of course, some of our brighter and more adventuresome citizens may actually get "rich" following this formula. And that, my friend, may be just too much for some, such as BHO and Reid and Pelosi, to accept...
Great post, now keep it up!
ReplyDelete7 to 51 per cent? i did some googlin' and cant pin down what you mean there. i know the government took over some banks, an auto company... i just dont see it. 51% of all us business owned by the government outright? a drive around costa mesa shows not one company that was private 2 years ago now is gov't controlled. certainly with such a stark shift our city would have seen some of that dynamic in its limits. with all respect, i call bs on that one. it's possible that 51% of all businesses depend on the government for something or another, but, hey, i'm not on boeing's board and i dont force them to take up US contracts. i certainly dont send boeing lobbyists to dana's office to insure they get those contracts, either. if private capital is so concerned about government overreaching, they can refuse to play.
ReplyDeleteand, by the way, the government SHOULD be in the business of taking over private corporations when they operate against the public interest. if a company is a monopoly, or several companies in a sector engage in monopolistic collusion, or break the law repeatedly at the expense of public health or well being... you cant just rely on the invisible hand to move the pieces the right way. oil companies, for instance... the fed should have taken them over long ago.
and i say nay on taxing less. i dont know where my household income of 120k or so would put us if the bush tax cuts expired, but i would gladly pay it and more if i thought my taxes were actually going to the public good, rather than being squandered on wars against people who can beat $300,000 armoured vehicles with $38 ied's, to wall street bankers so they can resort at st regis, boeing contracts for weapons that'll never get out of development, and on and on... if it went so that my daughter could attend a uc school with no tuition, for healthcare for every citizen, for a saftey net so that if my 401k suddenly became worthless i wouldnt have to spend my golden years eating cat food... well, you get the idea. when so much of our taxes are going right back into the pockets of the well connected and rich, we have a huge problem.
BS? You might want to do some research before leveling such a charge. You said, "I know the government took over some banks, an auto company..." It's a little bit more than that. Try General Motors, Chrysler, car dealerships, AIG and other insurance companies, CitiGroup and other banks, student loans, Wall Street (through the recen tly passed financial reform bill), healthcare (1/6th, 17.6%, of our economy snatched via Obamacare), Fanny and Freddie (controlling virtually ALL of our mortgages), oil exploration and drilling, so-called "green" industries, etc., etc. I didn't say that Barry and the Redistributors took over Leo's Machine Shop on Superior Avenue. I said "owned/ controlled." And the Government now owns or controls more than half of our economy. If you think this is a healthy and desirable change, Venezuela must look awfully good to you as well.
ReplyDeleteAs to your tax picture. If you want to pay the extra taxes an expiration of the current rates would require, I say go for it. I think there's even a line on the 1040 Form permitting you to fork over more if you feel undertaxed and your little heart so desires. As for me and most rational capitalists, I'd rather keep the money I've earned and do with it as I wish. Enjoy your day.
most car dealerships are independently owned, even those affiliated with a major auto manufacturer. please show me where they took over oil drilling. that would be awesome if they did, but im sorry, that is not true. the imposed a 6 month moratorium on deep water exploratory drilling in the gulf only and lifted after 4 months. the government took over citigroup? i thought they just gave them a bunch of money, threatened restrictions, then abated. if that's "taking them over," i sure hope they come for me soon. i wasnt trying to be contentious with the bs thing (if i was, i wouldve spelled it out), but i couldnt help noticing you wont back it up. certainly you mustve got that figure from somewhere.
ReplyDeleteand i said id gladly pay more if my taxes werent by and large going to help the wealthy, which they are.
i am not trying to be contentious, and i'm interested in your responses (and on most levels am enjoying them!). not many sites that disagree with viewpoints will engage those that believe in them. we need more of it. so im sorry that things im saying are making you digress into "if you wanna pay more taxes the, go ahead!" i'll try to keep myself less tongue and cheek so as to keep you from going to silly places like that. unless you were just saying that to (sorta) politely to ask me to move along. in which case, i would be buummin'. i only came over here cuz west all but dared anyone who disagreed with you to let you know, but ive enjoyed it...
folkinhippy, you are nothing if not persistent. Point by point. Point One: Yes, car dealers are independently owned. But when Barry stole GM and Chrysler from its bond and stockholders and redistributed their ownership, he appointed Steve Rattner as his Car Czar to micromanage each and every aspect of their operations. Stevey Boy, you might remember, gained his qualifications for such an exalted and important role by having been a sports reporter for the New York Times. But I digress. Barry started by firing GM's Chairman/CEO. He then ordered Steve to shutter 1,600 GM dealerships and nearly 800 Chrysler dealerships. You'll recall I said "owned/ controlled." It doesn't matter who owns dealerships. If Barry can close them whenever he wants, he controls them. Wouldn't you agree?
ReplyDeletePoint Two: Barry first stated last May he would expand exloration and drilling offshore. That's control, wouldn't you agree? Then, the BP gusher happened. He declared a 6 month moratorium on all drilling and exploration. That's control, wouldn't you agree? Then, he just declared all Eastern Gulf exploration and drilling off limits for the next seven years. That's control, wouldn't you agree? Of note, while drilling in our waters is verboten, Barry used our money to guarantee $2 Billion to finance oil drilling off the coast of Brazil. That's control wouldn't you agree?
Point Three: We bought 61% of Citigroup. We own it. Little Timmy Geithner, the Treasury Secretary who can't figure out Turbo Tax, is in charge and tells it what to do. We not only control it, we own it. Wouldn't you agree?
Point Four: Everytime we've lowered tax rates, revenues to the Treasury have increased. At the risk of repeating myself, this happened under Harding, Kennedy, Reagan and Bush. I'd prefer we not go broke as a Country by trying to ignore this economic fact just to punish the successful for being successful.
This will hopefully put this line of discussion to bed. I'm happy to joust with you on most any subject but I believe we've pretty well worn this one out.
Well, this has been fun! :-) :-) Very enlightening...
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