Tax Breaks Stimulate Hiring? Bull!

Update: January 29, 2010

This subject has resulted in a tremendous amount of conversation in the main stream media. The Republicans have somewhat embraced it, but say it doesn’t go far enough. They want huge tax breaks extended to large corporations and wealthy individuals. But the most informative comments have come from the small business owners themselves, including the National Federation of Independent Business.

What I so glaringly pointed out in this original post was confirmed by small business owners. Some are saying “until you have customers coming in the door, you’re going to have less of a reason to hire”. Others are saying that they wouldn’t take on new employees unless there was work for them to do. Well, any fool can figure that out.

But the Obama administration pushes on. Rep. Nydia M. Velazquez, who heads the House Committee on Small Business, is still insisting that the reason small businesses aren’t hiring is because they can’t get a loans. This exemplifies just have deaf our politicians are. When the people they insist on helping tell them they don’t want that help but the politicians keep forging ahead, something is bad wrong. But Velazques and many of the others know of only one way to conduct business — spend taxpayers money. They aren’t looking after the people; they are looking after self, in the form of bragging points during the next election. Which is exactly how the Republicans run their business. So what’s new.

January 28, 2010

Here’s the case – I own a business that produces widgets. Sales is what it is. I have X-number of employees on my payroll. I’ve had to cut back due to the sagging economy, but the remaining employees have stepped up to the plate. As a result, production and sales has not suffered. To show my appreciation for the extra work, I’ve given each my employees an accompanying pay raise. Even so, my payroll is still noticeably less than what it was, the burden on company benefits has decreased and I’ve seen other benefits as well. Now comes a tax-break incentive from the government for me to hire more people. I’ve been motivated and hire more people. Within three months my profit margins have fallen even though production and sales has not. What happened??

Last night, in his State of the Union address, President Obama proposed a tax break for employers who will hire more people. This is nothing new — we hear this all the time, but mostly from the right; ‘reduce taxes and employers will hire more people’ — you know what I’m talking about — trickle-down-economics. And although Obama’s proposal targets a different kind of employer, he’s assuming that an employer has already elected to make less profits because he prefers not to have enough people on his payroll. That is asinine! If the market for widgets is there, the employer will supply it. Not because he’s getting a tax break from big daddy, but because higher sales equal higher profits. And if that requires more people, he’ll hire them.

No one can convince anyone that a market demand will not be filled without a tax break. The lure of profits will fill the void — with or without tax breaks. This is known as capitalism. If a potential employer needs tax breaks to start a business for a market void, then the market really isn’t there. He’ll have to rely on perpetual tax breaks to stay in business, thus becoming a ward of the state.

This “idea” of cutting taxes for employers in the name of  stimulating hiring is as old as the tax codes themselves. The real objective is ‘taxes are for the little people — not for the wealthy or corporations’.

Although I heard a couple of things in Obama’s speech last night that make a lot to sense — at least to reasonable, unbiased minds — he certainly blew it on this one. However, I suspect “mentioning” a tax cut was designed to appease the right. But if he hasn’t accepted by now that the right isn’t going to ‘come on board’ for anything, he’s never going to accept it. So let’s forget about any kind of tax breaks. Instead, accept a one-term presidency, embarrass the hell out of each and every member of Congress who refuses to get on board with the Fiscal Task Force, raise the hell out of taxes FOR EVERYONE, remove all those tax breaks for corporations, prosecute anyone and everyone who hides their money overseas to avoid taxes, end the war in Iraq, curtail the giveaways to everyone including foreign countries and LETS PAY THE DAMN DEBT OFF. And if the right wants to fight him on it, make absolutely certain it’s thrown in the faces of the voters every day — and every hour if necessary.