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Guest Post: Here's Why Small Business Isn't Hiring, Part II

Tyler Durden's picture




 

Submitted by Charles Hugh Smith from Of Two Minds

Here's Why Small Business Isn't Hiring, Part II

Here are four more structural reasons why small business isn't expanding/hiring.

Continuing our exploration of why small business isn't expanding and hiring: here are four more deeply pernicious structural dynamics crushing small business. Yesterday I addressed this issue in Here's Why Small Business Isn't Hiring, and Won't be Hiring; Part II covers three other three systemic issues:

1. The real estate bubble completely mispriced/overvalued commercial real estate. The Federal Reserve's policies of maintaining super-low interest rates and flooding the markets with easy-money leverage has distorted and poisoned the U.S. economy in multiple ways, one of which is the elevation of commercial real estate valuations to absurd heights.

Here's how the dynamic works. Landlord A bought his building back in the dog days of the early 1990s for $1 million; his tenants were struggling in the lingering recession and so he kept rent increases modest, or even cut them to keep tenants in a low-demand market.

Along comes the Fed-fueled credit and housing bubble, and suddenly his building is worth $2 million. Based on standard multiples of income to value, Landlord A calculates his building's rents are now grossly underpriced. With the economy bubbling along, demand is rising for premium commercial space; hey, isn't his restaurant tenant doing gangbusters business every night?

So he raises rents, and the small business tenants eat the increase. Business is getting better, and so they pony up the increased rent with a sigh.

As the bubble inflates, Landlord A gets an offer of $4 million for his building. Landlord A has no trouble accepting the offer from Landlord B, who raised the money for the purchase by leveraging another building of his to maximum debt levels and taking out a short-term loan on his new acquisition.

At the $4 million purchase price, the rents don't even cover the debt and expenses, as property taxes shot up along with the building's value. Landlord B nearly doubles the rent, and a few of the marginal small-biz tenants bail out for cheaper space elsewhere or just close shop.

Then the recession hits. The restaurant's traffic plummets to a shadow of its pre-recession level, and the other tenants are suddenly running negative cash flow, too. Meanwhile, Landlord B's other property--the one he maxed out to finance the purchase of this building--just lost its anchor tenant and he's deep in the red every month.

When the restaurant closes, that's the end of Landlord B's mini-empire. He turns both buildings over to the bank, who hires a realtor to find a new buyer.

The problem here is that the inflated $4 million price tag has become the "real value" and the inflated rents are the new benchmark. Thus the building is listed at the "bargain" price of $2.5 million, and rents are notched down a bit, but not to where they should be, i.e. 2/3 lower.

Adjusted for inflation, the building is "worth" no more at $1.3 million, and rents should be about 35% higher than the 1995 rent, which was a mere 1/3 of the top pre-recession rent.

All of this increase in value and rent is the result of super-low interest rates, which enabled speculation and leverage that drove up valuations, which then drove up rents as landlords raised rents to pay their bloated mortgages and property taxes.

The net result is commercial space is completely overvalued and thus rents are sky-high. Thanks to the Fed's misguided policies, small business has little left after paying rent, and overindebted landlords struggle to pay the gigantic bubble-era mortgage and property taxes: most of the income from small business flows to the "too big to fail" lender.

2. Financing is cheap to global Corporate America and costly to nonexistent to startups and expanding small businesses. If you're the CEO of a global Corporate America firm, borrowing $1 billion to acquire a smaller competitor is cheap, no problem: Corporate America has floated hundreds of billions of low-yielding bonds in the past year to fund buyouts and whatever else they want to do with cash.

If you're a startup or new firm seeking $10 million to expand--forget it. Your only chance is to give most of your company to a vulture capital firm and hope you end up with a slice at the end, after they window-dress it for sale or IPO.

The eventual buyer: global Corporate America, of course.

3. Crony capitalism doesn't like competition; it seeks monopoly or a shadow cartel, imposed and maintained by the regulatory agencies of the Central State. The naive and sentimental view of Capitalism is that it thrives on competition; this is incorrect. Capitalism actually thrives on monopoly, as that's what it takes to skim fat, low-risk profits. Competition mucks everything up, which is why Corporate America arranges for regulatory strangulation of small-business competitors via its partner, the Central State (Federal regulatory agencies).

Since government bureaucracies are a priori delighted to extend their reach, power and budget, it doesn't take much persuasion for them to tighten the screws on potential competitiors with absurdities like "food safety" regulations, which require hit-teams of government agents to descend on criminal conspiracies such as organic dairies.

Meanwhile, back in the real world, food-borne epidemics only spring from Corporate America's own agribusiness "factories," not from the small producers which the Federal government has tagged as "enemies of the State." It would be comical if it wasn't so tragic.

This game is transparent: cartels and monopolies lobby politicos and agencies to crush small business (potential competition) with overlapping regulations so onerous and costly that compliance alone will drive the small businesses under.

Take a look at the sickcare "insurance industry" for an example. Ours is supposedly a "free market" system, yet there are never more than two providers in any market. That's the definition of a shadow cartel.

4. Overlapping regulation designed to suppress competition, benign neglect/hostility from government bureaucracies obsessed with self-preservation and lack of financing make it impossible to scale up a success business in the real world. No wonder young entrepreneurs crowd into social media; it's the only space where startup costs are low, office space is a luxury (your living room will do just fine), regulation is light to nonexistent and you can scale up ideas and enterprises without jumping through dozens of costly regulatory filings and hoops where your Corporate America Overlords are sharpening their regulatory knives to eliminate any competitors before they get a chance to scale up.

Where are the real-world Facebooks and Googles? It's not that there are no opportunities; it's that there is a near-zero chance of raising enough money and political muscle to escape the regulatory and financial black holes imposed by cartels and their yes-men in regulatory agencies at every level of government.

Concentrated financial and political power stagnates the economy by suppressing new enterprise in favor of the Status Quo. That's one key reason why there are so few new small businesses that scale up; the forces of Cartel America and the government are arrayed against such threats. Protect the Status Quo at all costs and you've made lobbyists and their agency lackeys happy ("we did our job, the dangerous miscreants at the organic dairy were punished"), but you've fatally undermined the real economy.

 

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Tue, 07/12/2011 - 18:43 | 1449765 Hard1
Hard1's picture

Sorry Bitchez, not hiring today!!!

Tue, 07/12/2011 - 19:57 | 1449914 Freddie
Freddie's picture

2 words why they are not hiring especially after Nov 2008: Hope & Change

 

Tue, 07/12/2011 - 20:41 | 1450032 CH1
CH1's picture

I reordered my life and got rid of employees a long time ago. It is simply not worth the hassle. I'd rather make less money and actually enjoy my life... and enjoy my work.

Having employees sucks.

Tue, 07/12/2011 - 21:40 | 1450173 James
James's picture

Rage & Outrage coming to America!

 

http://youtu.be/uzgfzPMiDOc-6

Tue, 07/12/2011 - 22:20 | 1450298 Era Vulgaris
Era Vulgaris's picture

I did the same. Should have done it a long time ago. Much happier now with a lot fewer headaches.

Wed, 07/13/2011 - 00:45 | 1450549 sethstorm
sethstorm's picture

No thanks for helping to destroy the US.

 

Wed, 07/13/2011 - 03:01 | 1450766 honestann
honestann's picture

HE didn't destroy the USSA.  The predators did.

Wed, 07/13/2011 - 08:41 | 1451166 sethstorm
sethstorm's picture

His actions to contribute to the unemployment rate did.

Wed, 07/13/2011 - 00:09 | 1450487 e_goldstein
e_goldstein's picture

got 3 more.

"no longer participating."

Tue, 07/12/2011 - 18:42 | 1449768 Hard1
Hard1's picture

Stage of denial

Tue, 07/12/2011 - 18:44 | 1449772 ArkansasAngie
ArkansasAngie's picture

Paperwork efficiency has become a competitive advantage.

Take away that and their tax advantages and ... of course ... moral hazard and the small guy would be able to duke it out with them.  As it is innovation -- whether product or business mdel gets kicked in the teeth before the starter pistol goes off.

Wed, 07/13/2011 - 01:47 | 1450633 Oh regional Indian
Oh regional Indian's picture

Too true ArkansasA.
I think both of the things you point out are huge tells.
1. If paper-work efficiency is rewarded, you know you are in a socialist system, classic hall-mark. The US is clearly USSA now, has been for decades.

2. Innovation is not encouraged unless it's clear that a large part of the benefits go to the cartel. I've been at the stamp-down boot heel edge of that for many years now. The system does not encourage innovation, especially not radical innovation.

ORI

http://aadivaahan.wordpress.com/2010/12/31/a-big-part-of-what-this-here-...

Tue, 07/12/2011 - 18:48 | 1449777 bigwavedave
bigwavedave's picture

need a tax holiday to bring back that $1 trillion in overseas big corp profits to 'invest' in more m&a..... 

Tue, 07/12/2011 - 18:49 | 1449778 Freebird
Freebird's picture

Hiring? Still firing.

Wed, 07/13/2011 - 00:46 | 1450552 sethstorm
sethstorm's picture

That's what you get when employers end up with inordinate amounts of power.

Tue, 07/12/2011 - 18:58 | 1449799 PaperBugsBurn
PaperBugsBurn's picture

So in other words Amerika is choking on its own greed. Gordon Gekko is long gone with the loot, bitchez! Now what?

Tue, 07/12/2011 - 19:48 | 1449899 NOTaREALmerican
NOTaREALmerican's picture

Now what?

 

Exactly.   Applied-socialism / crony-capitalism always end this way.   The politically connected loot,  everybody else is either oblivious or hoping they'll get in on the scams.

Nothing you can do about,  everybody denies the socialism they got rich off of was actually socialism.   Duplicity makes the world go round.

Wed, 07/13/2011 - 09:53 | 1451371 fallout11
fallout11's picture

+1, that's the truth.

Tue, 07/12/2011 - 19:01 | 1449803 oogs66
oogs66's picture

i still think there are no orders...people aren't buying crap because they either already have it, or don't have jobs, or both, so until people are lining up orders, businesses won't hire.  business people - ceo's of fortune 500 companies, and small business owners are no better at forecasting the next year than anyone else.  they extrapolate the past couple weeks, with the orders they know and annualize it.  they all over hired at the peak, and may be understaffed at worst time, but it has little to do with policies, etc, if they could sell more than they are producing they would hire...plain and simple

Tue, 07/12/2011 - 19:03 | 1449808 Auricle of Omaha
Auricle of Omaha's picture

Every day I think about walking away from my business and instead start delivering pizzas. Why work so hard just to make sure everyone else gets paid?

Anyway, got to go... I forgot that I have to head on over to EFTPS.gov to make my monthly deposit.

Tue, 07/12/2011 - 20:28 | 1450000 Kali
Kali's picture

Hear ya there.  Have liquidated and cut back to the bone.  I ain't working my ass off anymore to make sure gov thugs can earn their fat paychecks and golden bennies, while helping my rival corps. Another small biz person gone Galt.

Wed, 07/13/2011 - 08:44 | 1451177 sethstorm
sethstorm's picture

How about having your actions not do collateral damage?  Not everyone owns a business, but that doesn't mean everyone else is a bureaucrat.

Wed, 07/13/2011 - 14:06 | 1452806 Vlad Tepid
Vlad Tepid's picture

And how many businesses do you run, Seth?  How many employees are on your beneficent payroll?

Tue, 07/12/2011 - 20:46 | 1450042 CH1
CH1's picture

Drop out, my friend. Stop making other people happy and start making yourself happy.

Status is a scam.

Tue, 07/12/2011 - 22:00 | 1450245 krispkritter
krispkritter's picture

Shuttered the corp and just started shaving all the 'excess' costs paid to BigGov, Inc. What a joke. Now everything I do is under the radar as much as possible. Want to tax my bartering? Good luck...BTW, EFTPS blows. Another gov't POS. And don't give them any password you use for any other purpose, their reps can see them all.

Wed, 07/13/2011 - 00:47 | 1450553 sethstorm
sethstorm's picture

Do what you want, but the government always will find folks that want to be thorns in their side.

Tue, 07/12/2011 - 19:07 | 1449816 Rainman
Rainman's picture

I might be stupidly naive, but I still believe in that old " what goes around comes around " prophecy. The Bigs might blow up human dreams with their economic terrorism, but it'll eventually take them down in the process. Corrupt governments too. Over a long enough timeline enough hungry ants will kill and consume an elephant.

Tue, 07/12/2011 - 19:13 | 1449822 mynhair
mynhair's picture

Why Small Business isn't hiring:

Osha

EPA

ADA

FDA

IRS

DOA

DOJ

DoE

BIA

you get the picture......

How many of you use water filters?

Tue, 07/12/2011 - 19:47 | 1449898 Jendrzejczyk
Jendrzejczyk's picture

Excellent list. May we add:

-local motor vehicle admins raising fees

-brutal parking enforcement,

-speed/red light camera fines

-unemployment insurance hikes because we had to lay off employees and the rates pole vaulted from 2% to 9%

-credit card interest now at 17%

-no credit available even if we wanted to risk expanding

-customers have less money and no credit left

-many of the newly unemployed must work at any price so freelancers are putting downward pressure on margins.

I'll stop now.

Tue, 07/12/2011 - 19:50 | 1449902 mynhair
mynhair's picture

Yep, you get the picture.  Woe be us.

Tue, 07/12/2011 - 20:48 | 1450048 CH1
CH1's picture

And don't forget class envy. It poisons employees. You're a boss... of course you have enough money to give them more!

Tue, 07/12/2011 - 19:55 | 1449917 Grinder74
Grinder74's picture

don't forget the f'n SEC

a la #4:

 start-up hf sued for "fraud", has not assets to pay "penalty", goes bankrupt

 JPM sued for "fraud", pays penalty less than 5% of profits, stays in business to make billions more

 

Tue, 07/12/2011 - 19:56 | 1449922 Grinder74
Grinder74's picture

don't forget the f'n SEC

a la #4:

 start-up hf sued for "fraud", has no assets to pay "penalty", goes bankrupt

 JPM sued for "fraud", pays penalty less than 5% of profits, stays in business to make billions more

 

Tue, 07/12/2011 - 19:36 | 1449824 bob_dabolina
bob_dabolina's picture

#4 is huge and I can't stress that enough. 

It's ridiculous and the blame rests 100% on the shoulders of government. Take this one example. Inspectors shut down a 7 year olds lemonade stand because...get this, she didn't pay her $120 temporary restaurant license. 

http://www.cbsnews.com/stories/2010/08/06/ap/strange/main6748628.shtml

In Bethesda, Md., a lemonade stand near the U.S. Open was shut down because the kids operating it weren’t carrying a vendors license

http://blogs.wsj.com/in-charge/2011/06/17/lemonade-stand-gets-squeezed/

Another issue this touches on is this maniacal obsession with green energy. It is preposterous. The amazing thing about this obsession is that the government goes out of their way to make the carbon based energy complex non-existent. We haven't built an oil refinery in this country in 10 years. This behavior triggers two primary consequences; i. it hurts good paying domestic jobs; ii. it raises domestic energy prices. Here is the funny thing, this idea is heralded around to save the planet (which is bullshit) and you have countries like China that just do not give a shit. They will raise power plants all day long and pump all kinds of stuff into into the atmosphere like it's no ones business. I don't know if anyone knows which way the wind blows (jet stream) but all that shit blows in this direction. So we kill our jobs to save the environment and what happens?  China hires people and pollutes us anyway.  

The whole point of this green energy revolution (kicked off by Al Gore who is inline to make billions from this) is another form of government control. It's one more avenue they have to get up in your business and dictate your life. They want to tell you what type of light bulb to buy, how much you drive your car, how warm your house should be, etc, etc. Furthermore, they are poised to make lots of money from this scam. If they can tell you what products you must buy and they have a vested interest in companies that produce those products (Al Gore) than of course they are gona' make a killing. And if you think Al Gore is doing everything he can to reduce his own carbon foot print than I have some Lehman stock to sell you.

In the mean time we can all enjoy $50 light bulbs because that's what's good for us. 

If people let government decide what foods they eat and what medicines they take, their bodies will soon be in as sorry a state as are the souls of those who live under tyranny.”

-Thomas Jefferson

 

Tue, 07/12/2011 - 19:41 | 1449891 NOTaREALmerican
NOTaREALmerican's picture

Re : In the mean time we can all enjoy $50 light bulbs because that's what's good for us.

 

You can't pretend to want no socialism in one area and then turn a blind-eye toward socialism in another area.

 

Big-MIC:   The original Big-Gov scam.  Been going strong for 50+ years.   Completely captive to the crony-capitalists that own it.

Big-Ag:  Gentlemen farm subsidies (for the Emu's)

Big-Road, Big-Water:  For the developers.

Big-Airport:  More government concrete.

Big-FIRE:  Too big to fail. 

Big-AntiDrug:   How long as that scam been going?

Big-PoliceState:   The future.

 

Socialism is socialism:  capital (loot) allocated to politically connected cronies.  We lost the 2nd world war when we let Big-MIC turn the country into a crony-capitalist hell.  

 

 

Tue, 07/12/2011 - 19:54 | 1449911 bob_dabolina
bob_dabolina's picture

what fuck the? lost you me

Tue, 07/12/2011 - 19:59 | 1449929 NOTaREALmerican
NOTaREALmerican's picture

What they got rich on, the socialism, everybody loves.  

Tue, 07/12/2011 - 19:18 | 1449834 random shots
random shots's picture

Small business is the current bubble. Too many idiots who were laid off in the last recession go into business for themselves and are saved by the biggest consumption bubble in ages and cheap debt. When it stops they have to go back to the factory...oh wait.

Tue, 07/12/2011 - 19:27 | 1449855 Gatorman3
Gatorman3's picture

Actually most of those idiots are long gone and already milking the system leaving us hard working fools.

Tue, 07/12/2011 - 19:40 | 1449889 random shots
random shots's picture

Those were the truely stupid. The ones that are left had some savings going into this recession...there are a lot of these folks who are now exhausting their funds and hoping we can go back to 2006.

Tue, 07/12/2011 - 20:18 | 1449979 sagerxx
sagerxx's picture

This small biz owning idiot is still here, thanks. Although income is down about 60% (went from arguing with the wife whether we should put in a hot tub or a steam shower to juuust barely making it). Now figuring out whether to renew our biz lease in 9 months (assuming the world is still here), or if I should get into small-scale sustainable farming. Prolly end up doing both...

Wed, 07/13/2011 - 11:13 | 1451855 TheMerryPrankster
TheMerryPrankster's picture

If you thought making a living with a small biz was difficult wait until you try farming. Mother nature has an infinite variety of pests that always seem to enjoy whatever you grow and of course rain, wind and hail rarely seem to cooperate with your planting schedule. Everything is perishable.

But of course nothing beats the magic of turning dirt into food with only time, effort and a little cooperation from nature. Watch out for chipmunks, they are the IRS of the food chain and will try to take 30% of every crop, while offering you nothing in return.

Tue, 07/12/2011 - 19:30 | 1449858 mynhair
mynhair's picture

Why Small Business isn't hiring:

Cuz Boner brought up the "100W bulb" under circumstances where 2/3 majority was required to pass.

This calls for this one, just be over 18.

http://www.metacafe.com/watch/516478/lucy_pinder_topless/

Keep hoarding those 100W bulbs!

Unless you marry a pair.

Tue, 07/12/2011 - 19:29 | 1449859 zorba THE GREEK
zorba THE GREEK's picture

 Hey, them little bastards were cutting into my action. They had 

 unfair advantage not paying for license. Shut em down, it will be

 good lesson for them to learn about real business world.

 Now I can sell bottle water for $3.00 each. (cost .22)

Tue, 07/12/2011 - 19:29 | 1449862 tbone654
tbone654's picture

Now let the local government (liberal city of milwaukee) add a requirement that ALL full time employees must have 12 paid sick days per year, and all part time employees must have 6 paid sick days per year...  and bye bye Harley Davidson, they've moved out to the local suburbs...

Now let the state government (was liberal governor Doyle) add a new requirement called "combined reporting" that allows WI dept of revenue to collect an additional $22 MILLION each year from Harley Davidson because they have assembly plants in York PA and KC MO...  and bye bye Harley Davidson, they will probably move to Texas...  or mexico...

ack!  who doesn't get this?

Tue, 07/12/2011 - 19:39 | 1449883 honestann
honestann's picture

Almost everyone doesn't get it, apparently.

The only way to make sense of everything that's happening is to get to understand the situation at the most fundamental level.  What is the fundamental level?

predators DBA government
predators DBA corporations
predators DBA central banks

In other words, the fundamental that virtually nobody identifies correctly is... they are predators.

Just consider the nature of predators.  They grab whatever they can, whenever they can, however they can.  They don't think long term, they leave long term thinking and action to the prey they consume.  The predators just get away with whatever they can.  They have exactly ZERO concern for honesty, ethics, justice or production... except to scam, coopt and destroy the first three in order to steal and consume the last.

This is how people must understand what is happening, or they will become utterly consumed and destroyed by the predators.  Predators CANNOT be reasoned with.  Predators CANNOT be bargained with.  Predators CANNOT be counted on to comply with agreements.

The only successful way to deal with predators is to cage or kill them.  Period.  As long as humans continue to treat predators like "good, upstanding citizens" because they wear fancy suits and walk upright, the predators will utterly dominate every honest, ethical, benevolent, productive individual.

And what stops the honest, the ethical, the benevolent, the productive?  Only one thing.  Their failure to recognize and identify exactly what is the fundamental phenomenon playing out in the world, which is...

predators gone wild.

And nothing else.

Tue, 07/12/2011 - 21:16 | 1450118 Truffle_Shuffle
Truffle_Shuffle's picture

++ Well said.

Tue, 07/12/2011 - 20:02 | 1449940 Freddie
Freddie's picture

Harley makes shit that is screwed together by union thugs.  Total junk. 

The only good thing about Harley is it reduces SS and Medicare cuts because loads of old guys get killed riding those junk bikes.

Tue, 07/12/2011 - 22:53 | 1450369 Id fight Gandhi
Id fight Gandhi's picture

I thought Harley sourced to china, all their boots, shirts and jackets are made there.

Harley just equals a midlife crisis anymore

Tue, 07/12/2011 - 19:30 | 1449863 honestann
honestann's picture

It is really quite simple.  Anyone who is not utterly and completely insane would refuse to risk any significant time, effort, money or resources starting a small business in an utterly out-of-control predator-state like the USSA.

A lot of already existing small business owners have shut down because the predator behavior isn't worth dealing with.  Expect a LOT more people to follow suit.  40% of doctors claim they intend to retire or find other work if Obamacare goes into force, either because they refuse to care for their customers however government thugs demand, or because they refuse to be slaves to government thugs themselves, or because it just isn't worth it.

These are appropriate decisions.  I left the USSA while the leaving was good, and I'm very happy to be free of these considerations for my own life.

Tue, 07/12/2011 - 19:39 | 1449886 tbone654
tbone654's picture

I employed 27 drivers at one point in 09...  state told me they did not qualify as contractors because they didn't meet 11 criteria...  So I was required to pay $12 per $100 of pay for each driver for workers comp, and back 2 years...  That's 12 points of margin just for that, then add 12 paid sick days...  I'm no longer in the trucking business...

I will never hire another employee...

I will hire contractors...  And so is everyone else I talk too until all their captive employees become contractors...

Just makes sense...  sorry, too much uncertainty...  I can get er done other ways...

Tue, 07/12/2011 - 19:57 | 1449924 LetThemEatRand
LetThemEatRand's picture

All valid points, but there is a bigger problem from which all of this stems.   The giant corporations can afford to navigate/pay for all of these rules and requirements and while they publicly decry the rules, they privately push for them through lobbyists precisely to put small business out of business.   Small business owners need to understand that the mega corporations do not have the same agenda, yet they often select the political candidates that "talk the talk" for the small business owners who then elect them only to be disappointed.  No one is representing the little guy in Washington anymore, and that includes the little guy who owns the small business. Republicans pretend to be that party but it's a big lie.  They are betrothed entirely to their giant corporation donors.  And no, I'm not suggesting the Dems as an alternative.

Tue, 07/12/2011 - 20:50 | 1450052 honestann
honestann's picture

Oh, it is wwwwaaaaaayyyyyy beyond that already.

For example, Obama exempted McDonalds from ObamaCare.  That sent the message all the large predators understand.  Immediately they sent notice to Obama that they would donate massive sums to his re-election and slush funds, and presto-chango, now over 1000 companies have been excluded from ObamaCare and other rules and regulations.

Hell, by 2012 there won't be a large corporation in the USSA that needs to comply with anything.

Tue, 07/12/2011 - 20:56 | 1450064 CH1
CH1's picture

Big corps and big guv - Partners in Fascism.

Tue, 07/12/2011 - 20:19 | 1449974 RockyRacoon
RockyRacoon's picture

Those rules were set forth by the IRS many years ago, and each State has its own versions thereof.   If you were not aware of them you were not ready to run a business.   I've always used subcontractors in the businesses I owned and was fully aware of the lines that were not to be crossed.  I never loaned one of them a screwdriver nor a ladder.

http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

There is no way I'd start another business in this environment, but it's not for lack of awareness of the ways that both Fed and State governments smother entrepreneurs.

Tue, 07/12/2011 - 20:45 | 1450038 treasurefish
treasurefish's picture

Well, aren't we the good little lapdog (er, racoon) licking up the beast's scraps off the floor.  You missed the whole point.

Tue, 07/12/2011 - 21:00 | 1450067 RockyRacoon
RockyRacoon's picture

I didn't miss the point, but he was bemoaning the fact that he was trying to run a business without knowing how to run a business.   The rules suck.  The taxes suck.  OSHA sucks.  The regulators suck.  The government stifles business at every turn to the benefit of the corporate vultures.   What has that got to do with an admission that the rules still apply?   My businesses always competed with the contractors who ran their business off the tailgate of their trucks, while I complied with Workers Comp rules, liability insurance costs, and other regulatory crap that existed.   I still made money because a business has to be run IN SPITE of these deterrents.

Wed, 07/13/2011 - 00:52 | 1450562 sethstorm
sethstorm's picture

So you advocate slavery to business as a solution?   Why should they not have the same freedoms you have?

What happens when contractors cost the same (or more) versus proper FTE's - where each level of contracting or amount of short term contracts causes you more pain?

You're the kind that is the problem in the US - and deserves any government action against you.

Wed, 07/13/2011 - 08:46 | 1450573 sethstorm
sethstorm's picture

[duplicate, please remove]

 

Tue, 07/12/2011 - 19:36 | 1449877 CaveatEmptor
CaveatEmptor's picture

Why would small businesses hire when they need to deal with an increasing number of federal, local and state requirements? I could grow my business but I have planned to just navigate in a holding pattern until there is less economic and government uncertainty. 

Tue, 07/12/2011 - 19:40 | 1449882 mynhair
mynhair's picture

At least you have a choice still.  I'm stuck with 1031 stuff that made great sense at the time. 

I can't get out, even tho I want to bail.

Tue, 07/12/2011 - 19:56 | 1449921 Raymond Reason
Raymond Reason's picture

I was self-employed for 28 years with up to 20 employees.  Shut the doors in early 09 as a survival strategy.  It was the best decision i've ever made.  Didn't realize what a burden i was carrying until i dropped it. 

I was in over 50 lawsuits over the years.  Its all bullshit, it's all a trap.  Insurance is bs.  Owning assets is a liability....and i don't mean debt.  Now i'm free.  Judgement proof.  No insurance whatsoever.  It's all a scam, once you learn to live under the radar.....let freedom ring. 

Tue, 07/12/2011 - 20:03 | 1449944 smlbizman
smlbizman's picture

i been ringing those freedom bells since 09....fuck em....

Tue, 07/12/2011 - 20:58 | 1450070 CH1
CH1's picture

Yes, fuck 'em!

Tue, 07/12/2011 - 21:36 | 1450160 Raymond Reason
Raymond Reason's picture

Actually still have auto ins.  But if there wasn't a law, i wouldn't have it.  Can't trace my tags though. 

Hahaha!  Like your comment!  Goes well with the avatar. 

Tue, 07/12/2011 - 20:27 | 1449996 Jendrzejczyk
Jendrzejczyk's picture

I hear your freedom bells ringing. Getting closer every day.

Tue, 07/12/2011 - 20:33 | 1450006 Kali
Kali's picture

right there with you fellow ant.  Screw the grasshoppers.

Tue, 07/12/2011 - 19:39 | 1449884 MacGruber
MacGruber's picture

 

Tue, 07/12/2011 - 22:47 | 1450356 Mr. Mandelbrot
Mr. Mandelbrot's picture

 

 

 

Tue, 07/12/2011 - 19:39 | 1449887 Kyle Reese
Kyle Reese's picture

This is all great news.  Makes me feel like I am not crazy.  Meanwhile to subdue myself the requirement to keep my 2 DVD a month and unlimited streaming on Netflix just went from 14.99 to 19.98 a month.  I think its time to short Netflix.

 

Dear Kyle,

We are separating unlimited DVDs by mail and unlimited streaming into two separate plans to better reflect the costs of each. Now our members have a choice: a streaming only plan, a DVD only plan, or both.

Your current $14.99 a month membership for unlimited streaming and unlimited DVDs will be split into 2 distinct plans:

   Plan 1: Unlimited Streaming (no DVDs) for $7.99 a month
   Plan 2: Unlimited DVDs, 2 out at-a-time (no streaming) for $11.99 a month

Your price for getting both of these plans will be $19.98 a month ($7.99 + $11.99). You don't need to do anything to continue your memberships for both unlimited streaming and unlimited DVDs.

These prices will start for charges on or after September 1, 2011.

You can easily change or cancel your unlimited streaming plan, unlimited DVD plan, or both, by going to the Plan Change page in Your Account.

We realize you have many choices for home entertainment, and we thank you for your business. As always, if you have questions, please feel free to call us at 1-888-357-1516.

–The Netflix Team

Tue, 07/12/2011 - 19:45 | 1449895 mynhair
mynhair's picture

So cancel, get Giganews, and download it.

Though, in 3 yrs, I have yet to see anything in HD, and I don't care.

Tue, 07/12/2011 - 19:53 | 1449906 Kyle Reese
Kyle Reese's picture

Never used Giganews is it like a Torrent?

Tue, 07/12/2011 - 19:56 | 1449920 mynhair
mynhair's picture

No.  Is as fast as your connection with no sharing.

Content comes in parts that need UUEdeCode.  Is the old part of the Net, known as UseNet.

Tue, 07/12/2011 - 20:00 | 1449935 Kyle Reese
Kyle Reese's picture

I didn't know anyone used that anymore.  how safe is it?  Im not going to get someone knocking on my door for streaming Rambo to my PC...

Tue, 07/12/2011 - 20:09 | 1449961 Freddie
Freddie's picture

Old usenet is still around?  Cool.

Tue, 07/12/2011 - 21:02 | 1450084 CH1
CH1's picture

in 3 yrs, I have yet to see anything in HD, and I don't care.

Right. I've seen HD... it's a big freeking "so what?"

They can keep the new gadgets - I have my life back.

Tue, 07/12/2011 - 20:06 | 1449952 Freddie
Freddie's picture

Netflix, TV, the newsmedia and Hollywood are the elites aka c**ks***ers working with the banksters.

Tue, 07/12/2011 - 20:22 | 1449988 RockyRacoon
RockyRacoon's picture

I got that today as well -- except the name wasn't Kyle.

Like they're my long time friends or something?

What about Vudu?  Isn't that a Walmart subsidiary?  How is their stuff?

I see the option on my BluRay player but haven't looked into it yet.

Tue, 07/12/2011 - 19:41 | 1449890 newworldorder
newworldorder's picture

As my brother in law said today -  He ignores all this doom and gloom stuff. Somebody will fix them, somebody always does and they would get this deficit stuff under control. When I implored him to buy a few gold coins, he said gold is overvalued and he doesn't buy commodities. He will stick to money in the bank or his safe at home.

He is not a dummy but does not trust anything that does not have a government guarantee. Left me speachless. All I could do was to shut up and offer him a beer.

Tue, 07/12/2011 - 20:02 | 1449938 NOTaREALmerican
NOTaREALmerican's picture

He's smart.   When all is said and done the same sociopaths that own the system now will own things "then".   Most people won't notice the differences.   As long as he can think like an amoral scumbag he'll be alright.   Many people can when times get rough.

Wed, 07/13/2011 - 10:05 | 1451412 fallout11
fallout11's picture

Meet the new boss(es), same as the old boss(es). The Roman empire finally collapsed but most citizens of the former empire out in the far flung provinces didn't even know about it for years to come, business continued as usual. Argentina is really any different today than it was in 1998. Talk with Russians about the last 20 years there. Survival adaptation. 

Tue, 07/12/2011 - 20:02 | 1449939 I am Jobe
I am Jobe's picture

I see ignorace still is the greatest this in Amerika. Pur him a bourbon.

Tue, 07/12/2011 - 19:43 | 1449893 Westcoastliberal
Westcoastliberal's picture

Couldn't have said it better, and so clearly stated.  We've definitely arrived in 1984 with all the gov and corp doublespeak; it's almost like over the past 5 years or so a new language has been developed but us small biz guys were never invited to the party.  Now they'll do anything and everything to crush competition (and this happens to online biz too).

Nothing will change until some huge event occurs that knocks it all down, and who knows what that could be?

Tue, 07/12/2011 - 19:54 | 1449910 NOTaREALmerican
NOTaREALmerican's picture

Re:  Nothing will change until some huge event occurs that knocks it all down, and who knows what that could be?

 

Of course, if we had a Representative Democracy of the PEOPLE (instead of the corporations) we could require companies be broken-up when they exceeded a specific size or concentration of market share.   But, that would be anti-capitalist.   Much better to have a government owned by the corporations and pretend we have Democracy.  

 

(We do have the best eagles and flags tho).  

Wed, 07/13/2011 - 04:16 | 1450819 Urban Redneck
Urban Redneck's picture

Actually, the US has had those laws for about a hundred years.  There are some gaping loopholes in them, so the only time they get used is when one moneyed behemoth wants to encroach upon another, then the lobbyists/bagmen from each side duke it out, the winner does their dance and someone from the White House or Capitol Hill sends instructions to the DOJ as to which side to take...

Tue, 07/12/2011 - 19:51 | 1449903 WSP
WSP's picture

Very good assessment of the small business climate.  Obviously the situation is much more complicated, but that is the beauty of the piece---it sums it all up a simple package that even the dumbest bureaucrat can understand.  Do the facts change anything?   No, because the corruption that exists in our kleptocracy is so pervasive that nothing will change, however, it would nonetheless be useful for the "useful idiots" (aka mainstream media) to at least understand why.

Tue, 07/12/2011 - 19:59 | 1449932 I am Jobe
I am Jobe's picture

The 7 States Where White Collar Jobs Are Disappearing

http://finance.yahoo.com/career-work/article/113103/7-states-white-colla...

Tue, 07/12/2011 - 20:03 | 1449942 giddy
giddy's picture

Would never ever start another company under these conditions.  Why would anyone?  The intellectual elites -- ivy league tribe -- see Main Street and small business as laughable.   OK.  So laugh.  Show your brillance.  Create jobs. Or... maybe not.

Five years ago my company employed 25 people with a revenue of $12MM.  Today I employ me.  My revenue is way less than $250,000.  My choice. Am not alone.

Cheap/skilled labor overseas is simply another tax to US Business.  To compete US govt must offer lower tax rates -- so that jobs may migtrate back -- and to find parity with overseas markets. Revenue/taxes are interchangeable.  Impacts even the lowest demoninator -- small business. Think best-execution. Zero-sum. Thugs at Treasury think we're too stupid to notice -- or as BO say's "Americans don't think about Treasury auctions..."  Well -- I do.  And I won't be creating any new jobs in this economy anytime soon. 

 

Tue, 07/12/2011 - 20:07 | 1449946 reader2010
reader2010's picture

Marc Faber once said only hookers and beers are made in America these days. I am sure whorehouses are still hiring. 

Tue, 07/12/2011 - 20:05 | 1449948 indio007
indio007's picture

I'm sick of people blaming things "big business". It's not the big business per se , it's the psychos that occupy the levers of power . Now we could argue whether the structure of the modern corporation is capable of maintaining a sane populace on the Boards of directors AT ALL. Let's assume there can be big corporations that would not do what is complained of. Namely,a monopoly,  zero competitors within a known and consistant revenue stream. That's the profit motive biting you in the ass. Profit implies an unfair bargain. Corporate boards need a higher motivator than profit. In fact, corporations have higher duties than profit motive. That is all corporations must be formed to fill a public purpose on some level. When a corporation operates in way that is injurious to the public it can be dissolved via Scire Facia.

The Massachusetts Charter was dissolved by Scire Facie. 

We are all puppets on a string wainting for the nutjobs to reform themselves. We need to go to the courts. I hate to say , but the rubber meets the road in the court house. 

 

Anyone in America could tomorrow go down to the court and attempt to have Bank of America's corporate charter revoked. 

There is evidence of massive fraud in every Land Property Record in the union. Sitting there.. staring at us. We have done nothing.

 

 

Tue, 07/12/2011 - 20:10 | 1449960 disabledvet
disabledvet's picture

let me sum this up in one word: oil. now move along, move along.

Tue, 07/12/2011 - 20:13 | 1449967 Jack Burton
Jack Burton's picture

We blame government for regulations. But who owns government via massive campaign contributions and bribes? Yep, big corporations. So who is surprised that government regulations strangle small business while big business basically writes it's own regulations!

Tue, 07/12/2011 - 20:13 | 1449968 duo
duo's picture

Interesting post.  My favorite machine shop, who had been in the same building for 22 years, finally bought their own building 20 miles up the road.  Funny thing was that there is only one tenant in the old building...everyone else left already.  Being a loyal tenant for 22 years meant nothing, and now the landlord has an empty building.

Our startup is looking to raise $10 million, and yes, it's nearly impossible without giving away the company.  "Angel investors"...not so much.

Tue, 07/12/2011 - 21:23 | 1450126 CH1
CH1's picture

Do yourself a favor and figure out how to do it small, decentralized, without playing it the expected way. Get away from the game and enjoy what you create.

The game is rigged.

Tue, 07/12/2011 - 20:21 | 1449985 francis_sawyer
francis_sawyer's picture

Here's why small business isn't hiring... Now go eat your peas & quit asking me for a fucking job...

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………………./…./
…………./´¯/’…’/´¯¯`·¸
………./’/…/…./……./¨¯\
……..(’(…´…´…. ¯~/’…’)
………\……………..’…../
……….”…\………. _.·´
…………\…………..(
…………..\………….\…

Tue, 07/12/2011 - 20:36 | 1450016 Fred Hayek
Fred Hayek's picture

And there's not just new regulation but year long threats of new regulation. Only a pack of idiots like the Obama administration, who've collectively worked about a month in the real world, could not see that threatening unspecified but promised to be massive new health care regulation for more than a year would give employers pause.

How fucking stupid do you have to be to not see that?

They're worse than little children in their solipsistic self-absorption. Any normal adult could look at such a circumstance and put himself in the position of a small business owner and realize that threatening him (for over a year!) with huge new regulations and potentially huge new costs would make that small business owner either hesitate or simply choose not to add employees.

How frigging insular would your mindset have to be to not realize that?

Wed, 07/13/2011 - 08:50 | 1451206 sethstorm
sethstorm's picture

It doesn't help that people see business attacking regular people as if they were the bureaucrats.

Quit the collateral damage, and the support for the overregulation will drop like a rock.

Tue, 07/12/2011 - 20:39 | 1450026 francis_sawyer
francis_sawyer's picture

I'm anxiously awaiting the synopsis that will explain to me the 4 "structural" reasons why, when our sun blows up into a red giant, we will experience a dearth of hiring & organic plant growth on the planet...

Tue, 07/12/2011 - 20:43 | 1450036 otnotdoit
otnotdoit's picture

Now Jack ask yourself who owns the corporations? I think you will find it is just a few wealthy families.

Tue, 07/12/2011 - 20:44 | 1450037 Bobbyrib
Bobbyrib's picture

Your comments are why I'm going to slow down spending. I'll start saving so when my job goes I won't be living on the streets.

Tue, 07/12/2011 - 21:22 | 1450131 francis_sawyer
francis_sawyer's picture

While you're still working, you could just invest in cardboard, so when that point comes, you can live in the biggest McMansion under the interstate...

Tue, 07/12/2011 - 21:34 | 1450150 Bobbyrib
Bobbyrib's picture

I got a year's worth of living expenses saved (inflation hedged). Being that small businesses are not hiring and there is no way in hell multi-nationals will hire Americans, I could just save all my disposable income.

Tue, 07/12/2011 - 21:26 | 1450140 CH1
CH1's picture

Start a micro-business doing something you love.

Tue, 07/12/2011 - 21:34 | 1450154 Bobbyrib
Bobbyrib's picture

What I love to do will not bring in enough money to live on.

Wed, 07/13/2011 - 10:13 | 1451455 fallout11
fallout11's picture

Such is often the case, unfortunately. What is incentivized for profitability is often personal slavery by another name.  Then again, that is why it is called "work".

Tue, 07/12/2011 - 21:27 | 1450143 Seasmoke
Seasmoke's picture

i am so glad i was smart enough (maybe just lucky) that i decided that in 2009 when i had a chance to open a franchise i decided that it wasnt worth the risk with government getting worse and worse (i had no idea at the time how bad really)......now i know chances are 99% i would have failed and if i didnt, they would have milked me dry to keep the local and state thugs in comfort......it went against my gut instinct to not work and to lay low ......it felt like being lazy......now i will never go back .....i have seen the light .....i hate public unions and all politicians and all levels of government and i will not risk my capital for them

Tue, 07/12/2011 - 21:41 | 1450165 Bobbyrib
Bobbyrib's picture

You forgot to mention (or maybe you had no clue) franchises are somewhat more successful than other small businesses, but the franchisors make you use most of their products..which they sell to above the usual market price. Running a franchise may give you brand recognition, but it also narrows your profit margins and you can't run the business the way you see fit.

Tue, 07/12/2011 - 22:36 | 1450336 Elliott Eldrich
Elliott Eldrich's picture

I had seriously considered buying into a couple of different franchises a few years ago. Then I started doing a lot of due diligence about franchises and how they really work for many people. Suffice it to say I decided to not pursue that path.

What's worse, after some of the stories I read, was the realization that there are many franchises out there that are quite simply scams designed to fleece prospective owners. There are some genuinely rancid scumbags out there who are preying upon newly-jobless middle-aged people desperately searching for a way to take their modest savings and turn it into an income. Instead they find themselves utterly destitute, having been wholly fleeced by the new pirates of the golden age of franchise fraud. 

Anyone considering buying into a franchise had better do their homework. They they had better do it again. For me personally, as of now the word "franchise" gives me the heebie-jeebies, I literally shudder when I hear it.

Wed, 07/13/2011 - 05:51 | 1450869 Bobbyrib
Bobbyrib's picture

Agreed, I checked into it too. I heard they were more successful than most small businesses, which is appealing, but you are basically working for the franchise, not yourself.

 

Unfortunately, it was only a matter of time until someone turned franchising into an outright scam. Sorry to hear that people are being fleeced out of their savings by unscrupulous, scumbags.

Tue, 07/12/2011 - 21:54 | 1450229 Stuck on Zero
Stuck on Zero's picture

Many Americans believe that they are well off because they have a big fat IRA, a lot of stock, bonds, a McMansion worth $1.2M, a Mercedes AMG, and a fat paycheck.  One morning they will discover that their fortune was really digits in a computer.  Nothing more.  The real wealth will have been looted.  The house will collapse in value and the AMG will be too expensive to maintain when you are jobless. 

Tue, 07/12/2011 - 22:11 | 1450269 SystemsGuy
SystemsGuy's picture

Um ... no. That's not socialism, it's corporate fascism, a state that exists when large corporations have compromised or co-opted the regulatory function of the government. I have both lived in and studied countries that viewed themselves as socialist, and by and llarge they tended to provide the necessary support for both small business and the individual for them to effectively compete on a more level playing field (albeit still weighted towards large corps). It's more difficult for individuals to become mega-wealthy, and those that have achieved that level have less power over the government than they do in corporate fascist states such as the US. Ironically, you can't have one without the other.

Socialism has its own problems, with higher taxes being a bigger part of it, but those higher taxes often seem, curiously enough, to correlate with a greater aggregate standard of living, but they also typically have smaller extremes in market cycles. Additionally, such governments usually tend to be less invasive. 

Significantly, the more fascist a society is, the more virulently it tends to attack socialism. Nazi Germany was a fascist state, supported largely by its large (non-Jewish-run) banks and military-industrial, energy and pharmaceutical industries. The initial targets of the Brown Shirts were not Jews or Gypsies but socialists and communists. This is a pattern that has been repeated by most Fascist countries before or since.

 

Wed, 07/13/2011 - 10:16 | 1451470 fallout11
fallout11's picture

Love your avatar (Uncle Iroh).

Tue, 07/12/2011 - 22:46 | 1450351 Mr. Mandelbrot
Mr. Mandelbrot's picture

 

 

Tue, 07/12/2011 - 23:50 | 1450463 bankruptcylawyer
bankruptcylawyer's picture

systems guy. you equate socialism with fascism except you qualify by saying it's more equitable. essentially there is NO discernable theortetical difference, it's just a matter of you know it ( equity ) when you see it.

 

i'm sick and tired of all these non-definitive distinctions between what real socialism is and what natzi fascism was. the truth is there is no 'systems' differnce. no label that has any meaning other than to say one was more 'fair' than the other .

Wed, 07/13/2011 - 12:35 | 1451491 fallout11
fallout11's picture

They are opposite ends of the politico-economic system.

In fascism, big business controls the political process.

In socialism, big business is subordinate to the political process.

(Definitions paraphrased from frequent ZH article contributor Charles Hugh Smith)

Wed, 07/13/2011 - 01:40 | 1450628 expectplannedevents
expectplannedevents's picture

Cisco laying of 5000 workers..

blame: amazon..china..taxes..rednecks..debt douches/credit cunts-they're plastic..carbon feces..organic fracking..zoloft and oregano, SmartCars, Anthony Weiner Reverse Mortgages..Americas getting a c-section while sueing the F out of the docta!

Red, white and we lost suit..

Wed, 07/13/2011 - 02:30 | 1450697 AldousHuxley
AldousHuxley's picture

http://www.youtube.com/watch?v=whVf5tuVbus&feature=related

 

23 Things They Don't Tell You About Capitalism

Thing 1: free market doesn't exist;  NAFTA is 1000s pages long when free market should make it just 1 page. free market means child labor. etc.

Intellectuals are leading the new paradigm

Wed, 07/13/2011 - 02:35 | 1450715 praps
praps's picture

Most US assets are owned by a tiny minority of the population. They charge high rents and the better things get, the higher they raise the rents. These sky high rents are the major drain on small businesses – how come the article does not acknowledge that directly? The other problems presented by the author pale into insignificance compared to this.

We should have a system of tax based on land values, replacing all other taxes. Then as land values rise due to increasing prosperity, the community benefits, not just the tiny minority who own everything. Wealth would be a lot more evenly distributed and small businesses would stay in business.

Wed, 07/13/2011 - 04:29 | 1450823 Urban Redneck
Urban Redneck's picture

And who determines the "value" of the land?  The manipulation of property tax rates in the face of declining land values to feed the spawn of corruption is going on right now.

Wed, 07/13/2011 - 11:04 | 1451550 fallout11
fallout11's picture

We had such a system in American prior to 1913 and the Income Tax act. Taxa revenue was based on tariffs & customs duties (i.e. imports/exports) and property taxes, as set forth by the US Constitution. This naturally placed tax burden primarily on the very wealthy (example: John Rockefeller) who owned vast amounts of property (mines, railroads, factories, warehouses, ships, etc), and/or did most of the importing/exporting in America. In effect, the bigger you were, the more you paid.

The Income Tax slowly moved the primary tax burden to income (aka wages/labor for most, taxes on income other than these could be hidden or offset elsewhere), as the US had a burgeoning (via immigration and population growth) and largely property-less labor force that was basically untapped for tax revenue. The rest, as they say, is history.

Wed, 07/13/2011 - 12:14 | 1452287 Urban Redneck
Urban Redneck's picture

The US didn't have Social Security,  Medicare, or the most expensive military in the world prior to 1913.  Modifying tax burden to fall primarily on "land" would 1) bankrupt a large number of US homeowners, transferring ownership of their houses to TBTF  and 2) cause rampant food inflation.  Since, at present, taxation of "Land" is an authority of the States, the 10th amendment protections would need to be eroded in order to do this.  Furthermore, since the State governments have massively expanded since 1913, I think the property tax rates back then were substantially lower, but I haven't looked into it. 

Wed, 07/13/2011 - 12:58 | 1452514 fallout11
fallout11's picture

I'm not suggesting rolling the clock back to 1912 (too late for that, I suspect, given the last 100 years), merely pointing out how we got to where we are and that it did used to work....120 years of proof prior to 1913.

On a localized level (i.e. here comes the one-off anecdotal data), property tax rates here are actually lower (by roughly half) than they were in the 1900's, per records at the county courthouse. YMMV.

Thu, 07/14/2011 - 10:05 | 1455797 Urban Redneck
Urban Redneck's picture

At a local level whether taxes are applied on a land valuation basis or land use basis can make a huge difference, but food prices in the US have been kept artificially low through land use taxation, the only farmers or ranchers with the economies of scale to operate in an environment of land valuation taxation (and less than a wholesale elimination of government spending) are the TBTFs, short of food price inflation on par with the depreciation the dollar.

The bigger problem I see trying to fund a significant chunk of the government through property taxes is that wealth taxes (especially in a ZIRP environment) act as a dis-incentive to saving and retirees really get screwed because they would have to have a banker's stash first, just to cover even a decade's worth of taxation, so anyone planning on retiring to paid off house and living within their means (regardless of the availability of Social Security) is out of luck, and most of the current retirees would forced back into the work force or into low footprint waiting-for-death complexes.

 

Thu, 07/14/2011 - 15:15 | 1457085 fallout11
fallout11's picture

Good points Urban.  But your last paragraph, to my mind, describes "what already is", rather than what could be.  Savings are already dis incentivized and retirees (aka the fixed income set, soon to be the catfood eating set) really get screwed via inflation and rising taxes/junk fees/nickle and dimed. They already need a banker's stash just to cover taxation and maintenance.  Then again, one could say that this has always been the case in economically depressed times, how many people lost their homes and farms during the Great Depression from non-payment of taxes?  Or in the south in the aftermath of the Civil War?

Sadly retirement is already largely a thing of the past for most Americans (average retirement set aside = <$50k, while amount needed for a halfway comfortable income) retirement is now projected to be >$1M), they (will) work until they cannot or die. Lots of MSM articles on that score of late, and I can think of at least one from Charles Hugh Smith. See Stephen Pollan’s book, "Die Broke".

 

Wed, 07/13/2011 - 04:30 | 1450825 Kreditanstalt
Kreditanstalt's picture

You can opt out of this:

Don't borrow.

Save in gold.

Don't shop at their businesses where possible.

Buy locally, support tax evaders and under-the-table, work-on-weekends sellers.

Wed, 07/13/2011 - 08:18 | 1451103 Edna R. Rider
Edna R. Rider's picture

I haven't commented in a long time but I have to remark to all the nellies on the site.  While I agree things look rather dim in the mid- and long- term, I run a small business, have built 4 of them over 20 years, and our software business is hiring, albeit slowly.  We expanded internationally and slowly hire one talented programmer after another (it takes quite a long time to find someone talented; it takes longer to find someone who works hard).  None of the voodoo things you've outlined above impact our hiring, nor anyone's hiring I know personally.  It is all about demand.  We are in a very slow economy and appears to be slowing.  It makes anyone with a brain reluctant to hire.  It has nothing to do with the IRS, or any other government regulatory things and it has nothing to do with Obama either.  I have zero interest in Obama, Romney, Paul, or any other official, but "small business owners" really only care about tracking down the next paying customer.

Wed, 07/13/2011 - 08:43 | 1451173 CaveatEmptor
CaveatEmptor's picture

Very true. If money isn't coming in then a small business owner isn't going to hire new employees. In this environment I would assume you aren't hiring people in advance expecting growth but are waiting for your current employees to be overworked slightly before bringing someone else on board. Also, instead of taking on any employment risks of hiring someone locally, finding someone outside the USA that you can pay as a flat-rates becomes more and more appealing due to federal and state regulations. 

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