Does raising taxes on the Wealthiest Americans kill jobs?

This is an important question because it could be a defining issue in the next election. The most recent polls seem to indicate that over 70% of the population agrees with raising the tax rate on people making over $250,000 a year. There are many wealthy people that have also come out and said this is a good idea. So why are so many people not affected by the tax opposed to it?

Nobody likes taxes and most people agree we have a terrible system that needs to be fixed. But this debate centers around question does increasing taxes on the wealthiest American going to kill jobs?  We can not allow people to make claims that raising taxes on the wealthy kill jobs without forcing them to supply some facts and examples of just how many jobs it kills. The Republicans claim this in one line statements but never back it up with any evidence. If they have evidence they need to demonstrate how raising taxes on a professional athlete, pop star, or the CEO of a publicly traded company kill jobs. I do not see how taxing these people a couple of percent more will cause them to lay off people or drastically change their spending habits. Really, how may people do a professional athlete or pop star employ? Are they going to fire their agent of gofer because they have to pay a little more in taxes?

The people that make the claim that taxing the wealthy kills jobs like to fall back to the story of a small business owner, “Joe the Plumber.” Small business owners represent only a small fraction of the country’s richest people. Less than 7% of the population has over a million dollars and less then 10% make more than $250,000 a year. Most people that have more than a million dollars are not running small businesses. If they are running a business at all it is not small. That being said I still need someone to explain how raising the small business owner’s taxes kills jobs. Some people think if they say it often enough it is true and they do not have to prove it.

But let’s look at how a small business works. They are in business to make a profit, so they only hire people that are going to add to the profit of their company.  Let’s say all of the sudden they have pay another $6,000 in taxes. (I get this number by assuming a 3% increase in taxes on an additional income of $200,000 above the $250,000 that is not subject to the higher tax rate. This means the small business owner’s income would be at $450,000 putting him or her in the top 5% of all American wage earners.)  Now being in the top 5% clearly indicates he is in a better financial position then the majority of the country, which is fine. What I want to know is how does laying off one of his employees help him with his net income? Let’s say the total compensation cost of that employee is $60,000 but he produces $70,000 worth of revenue. (Remember if he was not producing more revenue than his salary he would not be working in the first place.) So how do you solve your $6,000 additional tax bill by loosing a $10,000 profit earned off the back of the employee?  If he fires the employee he will have $10,000 less in revenue but his taxes only go down $3,100. He now has $6,900 less in net income! The only way he avoids that is by assuming all that work himself (hard to believe since most small business owners already work 60 plus hour weeks) or he can pass the work on to his other employees, to whom he must pay overtime, eating into his profits. Anyway you look at it laying someone off does not help him with his $6,000 additional tax bill. Clearly the additional tax does affect how much he the owner will take home. So the real question is how much will this additional $6,000 in taxes affect his spending habits? Remember he is making $450,000 a year.

What really causes small and large business to lay people off is not having enough people to buy their products or services. The more people we can get back to work the more our economy can grow. Do not let people convince you that something is bad just because they say so. Don’t let them convince you with simple one liners. Ask the tough questions. Ask them to provide specific examples to back up their claims, that taxing the wealthy at the rates they used to be taxed when the economy was booming is a jobs killer. Make them provide logical well thought out answers instead of over used talking points
 

What would happen if Congress were to prepare breakfast together?

A simple analogy to the way congress is currently behaving is to imagine what would happen if they were given a couple of eggs to share for breakfast.

The Far left would want to make a huge omelet, spend more money and invite more people and turn it into a banquet. They would insist on having bacon because they really want to add pork to everything they do.

The Far Right would insist on giving one of the eggs to the rich, and want the other one poached. They want limited breakfast just like our founding fathers. They to would insist on Pork, but would want ham just to be different. They would not agree with anything their colleagues on the left wanted as part of the breakfast, even if it was something they used to like.

The Left would refuse to eat with the right. The Right would declare that they would rather not eat then eat with the left. Then they would crack the egos over each others heads and we would end with a mess.

Sound familiar?

Check out a video representation of a Congress making breakfast  

Does the Government need to create jobs?

This is an appropriate topic for Labor Day Weekend. This is an important holiday and we should all celebrate the American workers for the long hours they put in at their jobs. Their hard work and dedicated service is important to preserving our way of life. It is through their hard work that we prosper and grow as a nation. We should also take this time to consider all those Americans out of work that are earnestly looking for jobs.

As a True Fiscal Conservative I do not believe we can solve our long term financial problems unless we lower the unemployment rate. All True Fiscal Conservatives agree with this. We may differ on the best way to accomplish it, but everyone agrees we need to lower the unemployment rate.

People that believe the government should just stay out of the private sectors way and let them create all the jobs are being short sighted. They are not dealing with the reality we are currently facing. Corporations are sitting on a mountain of cash and making record profits. There is no incentive for them to change what they are doing. They are in business to make a profit and will and should act accordingly. The reason they are not hiring many people right now is because they can create all the product that is currently demanded with their existing work force. While they would love to sell more, so they can grow and hire more people, they are in chicken and the egg scenario. No company is going to put their profits at risk to kick start the economy.

Recessions are cyclical, they happen; it is a part of the capitalistic system. The government can and should mange them, to try and prevent them from developing into a more serious depression. While we need to look at ways to get rid of our long term accumulation of debt, that is a long term issue that will only become worse if we do not get more people back to work. In this scenario a jobs program is warranted. Any jobs program should be limited in duration and designed to get as many people back to work as quickly as possible.