If you have read my essays on Free Trade you will know that I believe the source of America’s economic weakness comes from outside the country. Sure, the banking and housing crisis played roles but Free Trade policies are causing permanent damage. As long as American companies employ Americans they are disadvantaged to those who don’t. Not only do foreign companies not pay U.S. wages but they are exempt from U.S. corporate taxes. Corporate taxes in the United States range from 35% to a top end of 41.6%. The top end is greater than Japan’s 40% rate. Do you understand why American businesses outsource? They have to.
The Tax Foundation reported that the United States would need to reduce corporate taxes 20% just to rank in the middle of the international pack. It would be an unrealistic expectation for this Democratically controlled government to cut corporate taxes like this. It would be like asking a child to voluntarily give up candy – permanently.
No, we can expect them to fund the non-stimulus programs by increasing rather than decreasing corporate taxes. After all, businesses are the bad guys. They do nothing for this nation except abuse employees and charge actual money for their goods and services. As a rule, they tend not to engage in social engineering, and rarely do they give away all their money (or borrow money to give) to unproductive or worthless employees. They actually demand something in return for their money. This simply is not fair and such evil entities should be punished, right? Wrong, of coarse.
I do not understand which economic theory the current administration is following. (I have studied economics too.) Someone explain how giving money, through tax credits, rebates, or outright handouts, stimulates the economy? I thought this spurious when Bush did it and we received no results. So why are we doing it again and in a bigger way? When people are losing their jobs, they won’t take this money and run out to Best Buy and buy a new iPhone. If they did this still would have little lasting effect on the economy, iPhones are made in China.
If they were serious about stimulating the economy they would encourage, through tax breaks and other incentives, new business opportunities, the hiring of new employees, or create disincentives for businesses that cut jobs or outsource overseas. What about a tax break for companies who expand and a new tax on American companies who employ non-American third party vendors? How about reducing the corporate tax from 35% to 25% and then add a corresponding excise fee on non-essential goods. Currently we punish businesses who call America home and reward them for moving jobs overseas where they can benefit from lower taxes and virtual slave-labor; AND we give huge tax breaks to foreign companies who export to us.
There is no such thing as “bottom up stimulus.” The bottom doesn’t create jobs they consume resources unless they are employed. Businesses employ people. Employment enables the economy to work because people are producing to meet demand. The fact that they are producing allows them to create demand. Business is at the top and when they employ people they are stimulating the economy and in turn are being stimulated by it. Reagan called this “trickle-down,” a term abused by the left and successfully made to insinuate that the money stays mostly at the top. Today’s conservatives need to rename this, perhaps “top-down job creation.”
The U.S. government is funded 95% through payroll, corporate, and income taxes. Every time a business sheds an employee the government loses tax revenue both from the employee and the business, furthermore they incur additional entitlement payments. When businesses shutter the impact is greater. “Bottom up” simply adds to the government burden and does nothing to address the underlying issue.
Last week I discovered an undated corporate memo on another blog that I want to reproduce here. (I attempted to verify its authenticity, but the author refused to respond. Therefore I cannot be certain the memo is real, so if you work for this company, let me know.) The memo boldly paints a picture of a situation I believe will become commonplace if Democrats increase taxes to fund their stimulus, ah, social engineering plan. This memo clearly illustrates what we have to fear and from whom the threat comes.
To All My Valued Employees,
There have been some rumblings around the office about the future of this company, and more specifically, your job. As you know, the economy has changed for the worse and presents many challenges. However, the good news is this: The economy doesn’t pose a threat to your job. What does threaten your job however, is the changing political landscape in this country. However, let me tell you some little tidbits of fact which might help you decide what is in your best interest.
First, while it is easy to spew rhetoric that casts employers against employees, you have to understand that for every business owner there is a back story”. This back story is often neglected and overshadowed by what you see and hear. Sure, you see me park my Mercedes outside. You’ve seen my big home at last years Christmas party. I’m sure; all these flashy icons of luxury conjure up some idealized thoughts about my life. However, what you don’t see is the back story.
I started this company 28 years ago. At that time, I lived in a 300 square foot studio apartment for 3 years. My entire living
apartment was converted into an office so I could put forth 100% effort into building a company, which by the way, would eventually employ you. My diet consisted of Ramen Pride noodles because every dollar I spent went back into this company. I drove a rusty Toyota Corolla with a defective transmission. I didn’t have time to date. Often times, I stayed home on weekends, while my friends went out drinking and partying. In fact, I was married to my business — hard
work, discipline, and sacrifice. Meanwhile, my friends got jobs. They worked 40 hours a week and made a modest $50K a year and spent every dime they earned. They drove flashy cars and lived in expensive homes and wore fancy designer
clothes. Instead of hitting the Nordstrom’s for the latest hot fashion item, I was trolling through the Goodwill store extracting any clothing item that didn’t look like it was birthed in the 70’s. My friends refinanced their mortgages and lived a life of luxury. I, however, did not. I put my time, my money, and my life into a business with a vision that eventually, some day, I too, will be able to afford these luxuries my friends supposedly had.
So, while you physically arrive at the office at 9am, mentally check in at about noon, and then leave at 5pm, I don’t. There is no “off” button for me. When you leave the office, you are done and you have a weekend all to yourself. I unfortunately do not have the freedom. I eat and breathe this company every minute of the day. There is no rest. There is no weekend. There is no happy hour. Every day this business is attached to my hip like a 1 year old special-needs child. You, of course, only see the fruits of that garden — the nice house, the Mercedes, the vacations… You never realize the back story and the sacrifices I’ve made.
Now, the economy is falling apart and I, the guy that made all the right decisions and saved his money, have to bail-out all the people who didn’t. The people that overspent their pay checks suddenly feel entitled to the same luxuries that I earned and sacrificed a decade of my life for.
Yes, business ownership has its benefits but the price I’ve paid is steep and not without wounds. Unfortunately, the cost of running this business, and employing you, is starting to eclipse the threshold of marginal benefit and let me tell you why:
I am being taxed to death and the government thinks I don’t pay enough. I have state taxes. Federal taxes. Property taxes. Sales and use taxes. Payroll taxes. Workers compensation taxes. Unemployment taxes. Taxes on taxes. I have to hire a tax man to manage all these taxes and then guess what? I have to pay taxes for employing him. Government mandates and regulations and all the accounting that goes with it, now occupy most of my time. On Oct 15th, I wrote a check to the US Treasury for $288,000 for quarterly taxes. You know what my “stimulus” check was? Zero. Nada. Zilch.
The question I have is this: Who is stimulating the economy? Me, the guy who has provided 14 people good paying jobs and serves over 2,200,000 people per year with a flourishing business? Or, the single mother sitting at home pregnant with her fourth child waiting for her next welfare check? Obviously, government feels the latter is the economic stimulus of this country.
The fact is, if I deducted (Read: Stole) 50% of your paycheck you’d quit and you wouldn’t work here. I mean, why should you? That’s nuts. Who wants to get rewarded only 50% of their hard work? Well, I agree which is why your job is in jeopardy.
Here is what many of you don’t understand … to stimulate the economy you need to stimulate what runs the economy. Had suddenly government mandated to me that I didn’t need to pay taxes, guess what? Instead of depositing that $288,000 into the Washington black-hole, I would have spent it, hired more employees, and generated substantial economic growth. My employees would have enjoyed the wealth of that tax cut in the form of promotions and better salaries. But you can forget it, now.
When you have a comatose man on the verge of death, you don’t defibrillate and shock his thumb, thinking that will bring him back to life, do you? Or, do you defibrillate his heart? Business is at the heart of America and always has been. To restart it, you must stimulate it, not kill it. Suddenly, the power brokers in Washington believe the poor of America are the essential drivers of the American economic engine. Nothing could be further from the truth and this is the type of change you can keep.
So where am I going with all this? It’s quite simple. If any new taxes are levied on me, or my company, my reaction will be swift and simple. I fire you. I fire your co-workers. You can then plead with the government to pay for your mortgage, your SUV, and your child’s future. Frankly, it isn’t my problem any more. Then, I will close this company down, move to another country, and retire. You see, I’m done. I’m done with a country that penalizes the productive and gives to the unproductive. My motivation to work and to provide jobs will be destroyed, and with it, will be my citizenship.
If you lose your job, it won’t be at the hands of the economy; it will be at the hands of a political hurricane that swept through this country, steamrolled the constitution, and will have changed its landscape forever. If that happens, you can find me sitting on a beach, retired, and with no employees to worry about….
Superior Mechanical Contractors