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Author Topic: The Jobs scam
Darth_Mauve
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Every third commercial I hear is a political one, usually attacking a Democratic official for supporting "Job costing Taxes".

It almost seems that we are not taxed for money, but for jobs.

The argument is, "If companies kept more of their money instead of wasting it on taxes they could afford to create more jobs."

By the end of the commercial I am ready to get down on my knees and thank the companies for doing this wonderful civic service of job creation.

Then I remember my economics courses.

Companies do not create jobs to give away money. They create jobs to create profit.

They hire people to work. That work creates a product or service. They sell that service or product on the open market. The extra service or product created by that extra employee should be sold for more than that person gets paid, and costs the company in other expenses. Only then will that company continue to employ that person.

But under the economics of the current Republican adds, the pay for those employees must come from tax cuts. If the company can get $50,000 in tax deductions they can afford to hire an employee that costs $50,000 (that's probably a $30,000 a year in pay, and the rest in other costs.)

What about the increased revenue that employee will generate? That is 100% kept by the company because it is this tax cut paying for the employee.

Does that mean that the Government is paying for the new employees? Kind of...

But to pay for them with tax cuts and other incentives, they have to borrow money.

So our grand children are paying for some companies to give jobs to people. Those companies keep the revenues those employees create, but the costs will be paid by our grand children.

But that isn't safe for the companies or their owners. They realize that their grand children will be asked to help repay these salaries, and since they will have a large percentage of money, they may be asked to pay a large percentage of the debt.

The answer--pay for these tax cuts by cutting spending. What do we cut spending on? Services, funds, and resources used by the poor and the unemployed.

So if the Republican's that I am hearing advertise have their way companies will be getting essentially free labor paid for by those who are looking for work.

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Samprimary
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The jobs issue is kind of weird because, as noted, to stimulate jobs creation requires the sorts of bills that the GOP is campaigning so heavily against.
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Kwea
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In all fairness, they aren't asking the government to directly create those jobs. They want the government to make it easier to create jobs itself.
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TomDavidson
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By, apparently, reducing personal income taxes. It's pretty freakin' nonsensical.
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Darth_Mauve
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They argument I hear in the ads is "Job destroying taxes." The idea is that our current tax rate destroys jobs while tax cuts will create jobs.

How?

By giving companies the extra money they need to pay employees.

There are two problems with that plan:

1) Large companies are already making record profits but still not hiring. How would this extra money make a difference? Wouldn't they just be making even higher record profits and not hiring anyone?

2) No one has predicted what percentage of the tax breaks will go into job creation because there is not legal reason for employers to take their new tax breaks and employ people. The market is supposed to do that, but the market at present says its safer and more profitable to take any extra income and put it in the bank or invest it in things like hedgefunds or overseas investments.

Socialism is when the government hires people.
Old Capitalism is when companies hire people.

Socialism gets more people employed, but they are very unproductive. Capitalism gets people productive, but not as many people.

This new thing--Socio-Capitalism has the government paying capitalists to possibly employ people.

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dean
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Rachel Maddow pointed out a couple of weeks ago that lots and lots of big companies don't pay any taxes after they've used all the legal loopholes. Some examples she listed are Bank of America, General Electric, and Citibank. She said that Google only ends up paying about 2% in taxes, rather than the thirty percent being bandied about. What would a tax cut for these people have to do with creating jobs?
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fugu13
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dean: corporate income taxes are the biggest burden on small and medium-sized businesses that either are unable to arrange to pay less of them, or spend proportionally large sums of money arranging things to pay minimal tax. Coincidentally, those businesses are also where a very large proportion of all job creation happen.

What's more, many corporate tax loopholes are a form of rent-seeking by existing corporations. That is, they represent savings an existing corporation has no problem realizing, but a new competitor to that corporation would not be able to realize, at least for a while. Because of that, corporations are made less likely to move into new lines of business (another source of job creation).

By eliminating or greatly simplifying and reducing the corporate income tax, both problems can be dealt with. There's no reason that needs to lower tax revenues or increase the effective tax burden on individuals, either, since some of the money would be distributed to individuals, but most of the replacement revenue would probably be raised by increasing the capital gains tax (which becomes reasonable and equitable to do once the corporate tax goes away -- capital gains has to be lower right now, because otherwise the combination of corporate income tax + capital gains means those who invest are effectively taxed much higher than everyone else, deadening investment).

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Samprimary
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quote:
Originally posted by dean:
What would a tax cut for these people have to do with creating jobs?

Every time an organization like the center on budget and policy priorities (or even the CBO) takes a look at it, cutting taxes really doesn't end up looking like a great way to create jobs. At all. To find 'evidence' that it does that, you have to go directly to right-wing think tanks like the CATO institute, who always magically manage to find otherwise.
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fugu13
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General tax cuts don't create jobs, and no tax cuts create a job stimulus in the short term, but there's plenty of agreement that simplifying corporate taxes and reducing barriers to entry lead to significant long-term job creation.
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capaxinfiniti
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quote:
Originally posted by Samprimary:
quote:
Originally posted by dean:
What would a tax cut for these people have to do with creating jobs?

Every time an organization like the center on budget and policy priorities (or even the CBO) takes a look at it, cutting taxes really doesn't end up looking like a great way to create jobs. At all. To find 'evidence' that it does that, you have to go directly to right-wing think tanks like the CATO institute, who always magically manage to find otherwise.
what? youre the one countering the results of one partisan think tank(CATO) with those of another(CBPP). any group can take public information and spin it their way. and what one might call magic another calls economics.
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Samprimary
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quote:
what? youre the one countering the results of one partisan think tank(CATO) with those of another(CBPP).
The Center on Budget and Policy Priorities is not a partisan think tank. CATO is manifestly a partisan think tank. I guess now you'd like to present a stunningly credible expose showing them to be a puppet of liberal interests or something?
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fugu13
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While I wouldn't call the CBPP entirely non-partisan, they're definitely not a partisan think tank.

While CATO is definitely a partisan think tank, don't discount their analyses prematurely. There are some brilliant people working there who do excellent thinking. They're not a running dog.

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Samprimary
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I don't discount their analyses prematurely; I note only that you have to go to orgs like them before you start seeing anyone say 'yeah we researched it and keeping the bush tax cuts will totally generate a lot of jobs'
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fugu13
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Could you give an example from the Cato Institute of them saying that? As far as I know, they mostly defend the capital gains cuts as helping retain businesses, and thus jobs, and I think you'd find the CBPP is okay with that account.
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Parkour
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Cato did stick up for keeping the bush tax cuts, when cato guys appeared on tv they would say that keeping the tax cuts means more jobs.
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fugu13
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Shouldn't be too hard to provide an example, then.
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Parkour
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I wish. [Frown] I'm not a very good media matters troll.
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Samprimary
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quote:
The Obama administration wants to extend the Bush tax cuts only for those making less than $200,000 a year. This will significantly reduce federal revenues. But the rate cuts it does not want to extend would be more likely to increase tax revenues.

The reason is simple: Those who earn more than $200,000 annually are among the ones who create most of the new jobs and fund new investment — the engines of economic growth. Without these jobs and new investment, the economy will be smaller and throw off less tax revenue...

http://www.cato.org/pub_display.php?pub_id=12172

catolaffernomics jobs jobs jobs.

Also, Moore makes the case that for economic growth and jobs, the bush tax cuts should have been double the size, and today have been proven and should be, according to Miron, indefinite for the sake of economic recovery!

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Darth_Mauve
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Fugu--I will grant that an intelligent look at our tax system could help small and medium size businesses be more competitive and may actually lead to job creation in the long run.

This is very different than the screaming I hear on the political adds that say "Job creating tax cuts" or "Job killing tax hikes." Even if they are referring to things that were neither, but could be considered so only by stretching the definition of tax, hike, or sanity.

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