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Guest Post: Want More Tax Revenue? Increase Jobs Not Rates

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Submitted by Lance Robert from Street Talk Advisors

Want More Tax Revenue? Increase Jobs Not Rates

The Obama campaign has amplified its push on increasing taxes on the wealthy and has painted Mitt Romney as a Robin-hood in reverse saying that he wants to take from the poor and give to the rich.  The attack on Romney is incorrect as the real truth is that it is the current Administration that is failing, once again, to recognize that the problems facing the economy has nothing to do with the current tax rate structure.  

It is election season, however, and the Obama campaign's "eat the rich" rhetoric will play well with the 22% of the population that is either unemployed, discouraged, working part-time for economic reasons or have just given up looking for work.  It will also play well with the rest of the country that are living paycheck to paycheck as real wages have been on the decline over the last couple of years while the cost of living has risen.  While the speeches, finger pointing and podium pounding will certainly tug at the heart strings of those living in a recessionary economy - it only serves to deflect attention from where it should be directed - employment.

employment-full-part-2009-080312The current administration, since the recessionary lows, has seen employment increase in the U.S.  While more informed individuals will quickly point out that employment growth has been primarily observed in lower paying retail, service, healthcare and temporary hires - it has been an increase in employment nonetheless.  Likewise, the economy, as measured by GDP, has grown albeit at a very sub-par growth rate.

Unfortunately, it is this very anemic, and lower end, employment that allows Obama's attacks on the rich to reverberate so loudly.  Since the beginning of 2009 full-time employment is still lower by 1.485 million jobs.  The rest of the employment has come from temporary hires which have surged by 1.585 million jobs during the same period.  This has suppressed median family incomes exacerbating the problem of maintaining their standard of living leading to record levels of dependence on government assistance.

taxes-employment-gdp-080912However, Obama's own employment record, as poor as it is, is evidence that the real answer for increasing economic growth, and tax revenue for reducing the deficit, is not from raising taxes but rather by increasing employment.  The chart shows the annual changes in employment, federal receipts and GDP. Not surprisingly when employment has increased federal receipts and economic growth have followed.  With an economy that is currently greater than 70% based on consumption - higher levels of employment leads to higher levels of consumption.  

Consequently, increasing taxes on "the rich" has the exact opposite effect.  In a weak economic environment, where aggregate end demand is low, businesses remain on the defensive.  Increasing productivity to suppress employment and wage growth, combined with extensive cost cutting, are the primary weapons of choice to protect profitability.  By threatening to increase taxes, or actually doing it, businesses and individuals become more defensive in order to combat higher taxation which reduces consumptive capabilities and stifles end demand.

taxes-rates-revenue-gdp-080912The chart shows the top marginal tax rate (the rate that the rich would pay) going back to Calvin Coolidge.  There are two important points to be made:  1) Tax rate adjustments have a very limited impact on economic growth as the economy very quickly absorbs and adjusts to the rate and; 2) tax revenue is much more correlated with economic growth.  The first point is critical.  When tax rates are adjusted, either up or down, there is an immediate, but brief, reaction to the adjustment.  In every instance where tax rates were increased - tax revenue and domestic growth were negatively impacted as businesses and individuals adjusted spending to accommodate for lower incomes.  Secondly, as I stated, tax revenue growth is much more closely associated with economic growth as shown in the next chart.

taxes-gdp-080912It will surprise most people that over the last 50+ years regardless of the level of tax rates - tax receipts as a percentage of GDP have remained mired between 16 and 21%.   Why?  Because when you raise taxes; you lower economic growth and less revenue is collected.  When economic growth slows, or slides into a recession, tax revenue also slows.  This is why during recessions tax collections are at the lowest and during periods of economic growth they are at their highest.

While the current administration continues to demonize "the rich" for not paying their fair share - the real culprit is the administration itself.  The continued lack of actions to provide fiscal policy measures to promote economic growth, a health care plan that has guaranteed higher taxes in the coming year and continued expansions of federal debt to GDP continues to stifle both economic and employment growth.  With the level of federal debt rising - the increasing levels of debt service continues to rob from future economic growth as revenue is diverted from productive uses. 

taxes-feddebt-gdp-080912The chart shows the Federal Debt to GDP overlaid with tax revenue and economic growth.  When debt to GDP was on the decline both economic growth and tax revenue were on an increasing trend.  However, as debt to GDP began to climb the economic growth rate began to deteriorate.

Today, what is not understood by the current administration, is that we are mired in a "balance sheet" recession.  The deleveraging process is compounded by a sub-par growth economy and high levels of unemployment.  Dependency ratios on government welfare incentivizes individuals to be less productive leading to lower productivity and reduced demand.  

It is this lack of final demand from consumers that keeps businesses from creating jobs or expanding.  The NFIB (National Federation of Independent Business) has continually reported that "poor sales" are a major concern of those surveyed.  Furthermore, those saying this is a good time "expand" their businesses remains at recessionary levels.   This isn't the type of backdrop that you need to create jobs or economic growth which would increase tax revenue for the government in a "healthy"manner.  Raise taxes in this type of environment and you guarantee that economic growth will be reduced even further.

While Obama may refer to Romney as "Romney Hood" - Romney has the right idea of focusing on economic growth first which will provide revenue growth later.  Obama's plan is the same as the "Sheriff of Nottingham"  who tried to tax his way to prosperity from the meager earnings of the serfs in his kingdom.  It will work for a while but ultimately those serfs will rise up and revolt.

 

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Thu, 08/09/2012 - 18:36 | 2692404 reader2010
reader2010's picture

Tax em to death!

Thu, 08/09/2012 - 19:35 | 2692535 AldousHuxley
AldousHuxley's picture

but that's how government creates jobs.....takes taxes from private workers and creates low wage shit job in the government shuffling paper....ie lawyers.

 

want more tax revenue? get rid of tax exemptions. Either government provides the product or services, or you get nothing...

government cheese or no food. Forget EBT.

Thu, 08/09/2012 - 19:41 | 2692550 Benisprintingqu...
Benisprintingquintillionsbehindourbacks's picture

To create jobs there would have to be a fuckload of cash to cover all the paychecks. That shitload of green is not there because the Bankers stole it all. They have ALL the wealth. To create jobs, they would have to let go of some of that green. Good luck with that. The only way we're ever going to get our wealth back is we're going to have to start hanging them. It's going to be a long, long depression.

Thu, 08/09/2012 - 23:03 | 2692963 earleflorida
earleflorida's picture

and a very, very short WWIII...

Thu, 08/09/2012 - 21:17 | 2692782 Stoploss
Stoploss's picture

Long, long, LONG LONG ago, there was an outfit that would use capitalist pricing theorum, in the arena of high and low pricing, by balancing the prices in the arena with a slight bias to the high side. They would use competitive rates to control those prices, and when the odd price collapsed, they loaned fresh capital to another indepent entity to pick up what pieces were left and create a new entity from the ashes of the old.

There were no tax issues to deal with as a result.

New job's were always created, on their own, with no help, from, any body..

Some might call that price stabiliteeeeeeeeeeeeeeeeeeeeeeeeeee,

and job creation............

 

Any guesses who this was??

 

Fri, 08/10/2012 - 03:06 | 2693352 AnAnonymous
AnAnonymous's picture

Any guesses who this was??

______________________________

'Americans'.

Thu, 08/09/2012 - 18:40 | 2692408 Sofa King
Sofa King's picture

Sheriff of Nottingham, my ass. More like the Sheriff of Rock Ridge.

Thu, 08/09/2012 - 19:02 | 2692458 LMAOLORI
LMAOLORI's picture

 

 

Someone should tell obama that robin hood robbed from a tyrannical govt. who was taxing the people into abject poverty and returned the stolen money to the people. Of course he's playing to his base and it's likely they don't understand that either.

Thu, 08/09/2012 - 19:23 | 2692517 GeezerGeek
GeezerGeek's picture

His base would have to know how to read to be familiar with the story of Robin Hood as originally written. I suspect most of those just watched the "Men in Tights" version of the story. Meanwhile, everyone should spread the meme that Robin Hood was anti-tax, anti-big government, and pro-working class. Not only that, he used his ability to keep and bear arms to put venison on the table. So he was an early adopter of the 2nd Amendment, as it were.

Fri, 08/10/2012 - 04:44 | 2693405 Marco
Marco's picture

Nice meme, of course you have to ignore that the tax was actually rent paid to the fully legal landowners (or at least as legal as land ownership can ever get).

Thu, 08/09/2012 - 18:41 | 2692411 govttrader
govttrader's picture

Seriously...I'm not running for office...I just need to make jack trading and then retire to my farm...trying to fix the system is like banging ur head against the wall and expecting a different result.  Buy bonds!!!

http://govttrader.blogspot.com/

Thu, 08/09/2012 - 18:59 | 2692429 vast-dom
vast-dom's picture

you mean buy bond bubble!!!

 

nice try.

Thu, 08/09/2012 - 18:41 | 2692412 bankruptcylawyer
bankruptcylawyer's picture

i'm so against taxes, that now i'm against jobs.

Thu, 08/09/2012 - 19:00 | 2692436 vast-dom
vast-dom's picture

i'm so against anything gov related. it's all out of control and disgusting. lose the obamney abomination as well as their respective parties and shitcan income taxes.

Thu, 08/09/2012 - 19:47 | 2692564 LawsofPhysics
LawsofPhysics's picture

I agree, shut it all the fuck down, no wars, no industrial military complex... NOTHING. Then and only then do we find out the true value of everyone's labor. Fucking bring it. Plus one for you sir!

Thu, 08/09/2012 - 19:44 | 2692553 GeezerGeek
GeezerGeek's picture

We do need some sort of taxes to fund necessary governmental functions. The federal tax code, however, is an abortion, or more properly stated, it should be aborted.

I started doing some tax planning, this being my first year of retirement and on the Social Security wagon. My wife still works (which is as it should be - she's younger) but has a below-average salary. Anyway, I first calculated taxes based on her income, my SS income, and a pension from long ago that covers the utility bills. I felt great when the taxes came out at zero. Then I added in a $20K withdrawal from my IRA. Suddenly the taxable income jumped, not by $20K, but by that plus more than 50% of my SS payments. The marginal tax rate for the $20K increase in income resulted in a tax increase of $3850, or more than 19% of the IRA withdrawal. I tried it with a $30K withdrawal and got similar results, with the marginal tax rate on the next $10K being 27%! Having had all my possible SS converted to taxable income, I suspect that an even larger withdrawal from the IRA would be less disadvantageous. But still, WTF?

I'd also like to mention again a recent interview on French TV with Will Smith (I saw it on youtube). He was saying he didn't mind paying taxes, but then he heard of the proposed 75% tax rate there. "75?" he asked,  then paused. Finally he said "God Bless America!". Even Hollywood types get it when they get hit hard enough in the wallet, I guess. 

Thu, 08/09/2012 - 21:01 | 2692612 vast-dom
vast-dom's picture

what the hell are you talking about? need income tax revenues? have bernankzi and the illegal fed print up whatever funds are needed rather than gift it to wall st!!!!! and of course gov can sell their bogus bonds to raise revenues.  and let us not forget ALL the sales taxes, real estate taxes, DMV taxes, etc etc etc heaped on us!

 

ERGO NO NEED TO TAX INCOME. AND ALWAYS THE NEED TO SHRINK DOWN THIS MOTHERFUCKINGLY MASSIVE GOV BLACK HOLE.

Thu, 08/09/2012 - 18:43 | 2692417 Sudden Debt
Sudden Debt's picture

I thought taxes created jobs....
you know...
poolcleaners, servants, chauffeurs, etc... for the bankers, senators and all...

Thu, 08/09/2012 - 18:45 | 2692420 HelluvaEngineer
HelluvaEngineer's picture

D to the U to the H

Thu, 08/09/2012 - 18:45 | 2692421 Xibalba
Xibalba's picture

The last act of a dying government is to loot it's people.  

Thu, 08/09/2012 - 19:17 | 2692505 Doubleguns
Doubleguns's picture

Those running the govt loot the people.

Thu, 08/09/2012 - 19:51 | 2692571 bankruptcylawyer
bankruptcylawyer's picture

the last act of a dying people is to die or run away or get enslaved and reincorporated into a foreign culture. 

this is why the only way to survive in the long run, is to spread. jews know it.your mom knows it. planet mars knows it.

Thu, 08/09/2012 - 18:45 | 2692422 Mithril
Mithril's picture

The whole system is bssaackwards!

Thu, 08/09/2012 - 19:29 | 2692424 roadsnbridges
roadsnbridges's picture

The quickest way to increase jobs and revenue is evidenced by this:

http://www.youtube.com/watch?v=zNZczIgVXjg

(disclosure:  long Soylent Corp.)

 

Crud, subtlety suks sometimes.

Thu, 08/09/2012 - 18:47 | 2692426 Arnold Ziffel
Arnold Ziffel's picture

Do I still get my $3,000?

Thu, 08/09/2012 - 18:51 | 2692430 Dr. Engali
Dr. Engali's picture

Obummer's campaign theme; Tax the shit out of them until they stop moving then tax them one more time just for the hell of it.

Thu, 08/09/2012 - 19:11 | 2692487 Bohm Squad
Bohm Squad's picture

Where I grew up, we called that a double [tax] to the head.

Thu, 08/09/2012 - 19:25 | 2692523 Caggge
Caggge's picture

Maybe we need a situation like this: Live within your means. Pay for what you are getting and stop sending the bill to the next and next and next generations. If you go to war......pay for it. Bush should have raised taxes if the US needed to go to war. Everyone wants something for free and the weak politicians will always give as much of someone else's money to get re-elected.

Obama shouldn't raise taxes. He should stop borrowing 1.3 Trillion and make the American people live with the reality of the situation they are in. Then watch all the politicians try to get re-elected on the truth of the situation. The first place to cut is the politicians pay, benefits, budgets,  and pensions. They have created this monster over many years. They should be the first in line to take some responsibility for creating the problem.

Thu, 08/09/2012 - 19:51 | 2692572 Benisprintingqu...
Benisprintingquintillionsbehindourbacks's picture

"Make the American people live with the reality of the situation"? Where in the fuck do you live? Everyone I know is broke as fuck. They don't have shit. All that fucking money your talking about, well it didn't go to the people. It went to all the rich cocksuckers. Get a fucking grip

Thu, 08/09/2012 - 20:22 | 2692670 Caggge
Caggge's picture

Everyone you know is broke as fuck? Are they driving a SUV or car. Maybe they should be riding a bike if that is all they can afford. Maybe if your broke friend had to live with the reality of the situation they would demand more of their political "leaders". Americans aren't entitled to a better standard of life then the rest of the world. I don't live in the US anymore. Go to another country once in your lifetime. See what the reality of the world is. America isn't special. They don't deserve a free ride. If all the money went to the rich cocksuckers, which I agree most of it did, then living with the reality of the situation is where change will begin. America is in desperate need of a revolution. Balance the budget and you will get your change. The rich cocksuckers don't want that so they bribe the politicians to keep the status quo. You might want to get a grip on the situation. For an American to cry because everyone they know is broke as fuck while they live a standard of life that is higher than 90% of the world is amusing.

Thu, 08/09/2012 - 21:06 | 2692695 Caggge
Caggge's picture

Most people in other countries would risk death to be as "broke as fuck" as an American. You just don't realize what broke as fuck is.

 

Edit:

Most people in other countries would risk death to be as "broke as fuck" as an American. You just don't realize what broke as fuck is.....yet. It is coming though and sooner than you imagine.

Thu, 08/09/2012 - 18:50 | 2692434 knukles
knukles's picture

Jesus people!
That proposition sounds so... uh... well... capitalist and free enterprise, smaller gubamint.
I wonder....

Thu, 08/09/2012 - 19:33 | 2692440 razorthin
razorthin's picture

Jobs, and ultimately tax revenue, will come back when prices are allowed to fall and the $US comes back, i.e., never.  The "credit" for the expansion in the 80's was misplaced with Reagan.  Since we live in a universe centrally-planned by fed chairmen, Volker was really da man - he set the stage.

Thu, 08/09/2012 - 18:54 | 2692442 billwilson
billwilson's picture

Really????? What fucking economics school did you go to?????

There were a lot more jobs when the rich paid higher taxes. Now all they do is sit on their money instead of spending it ... constipating the whole economy. TAX them til it huts ... and NO they are not the job creators. The job creators are the pople buying stuff ... you know ... demand.

 

Thu, 08/09/2012 - 19:00 | 2692453 roadsnbridges
roadsnbridges's picture

"The rich", as in John Kerry, Dingy Harry, Schmucky, and Pelousy?  I agree.  Tax them to death.

Thu, 08/09/2012 - 19:55 | 2692580 Benisprintingqu...
Benisprintingquintillionsbehindourbacks's picture

Tax every last dime out of them, then sentence them to death. They never created one single job, instead they destroyed a few hundred million jobs. Hang the motherfuckers and then feed their entrails to the hogs

Thu, 08/09/2012 - 19:01 | 2692455 Dr. Engali
Dr. Engali's picture

The rich were taxed at 90 % but there were so many deductions that the effective tax rate was 40%.

Thu, 08/09/2012 - 19:02 | 2692456 vast-dom
vast-dom's picture

bill wilson you desperately need a drink and new perspective. give your will over to those that comprehend the destructive nature of gov and taxation.

Thu, 08/09/2012 - 19:36 | 2692539 shovelhead
shovelhead's picture

The Kult of Krugman needs serious deprogramming, not a drink.

Careful of the foamy saliva...you never know where they have been.

 

Thu, 08/09/2012 - 19:13 | 2692494 Bohm Squad
Bohm Squad's picture

Bill, Production comes before Demand...Say's Law.  

 

Fri, 08/10/2012 - 02:41 | 2693337 Terminus C
Terminus C's picture

Really?

So... If I don't grow any food, or hunt, husband or otherwise produce some form of protien I will never get hungry?

Fuck man! You just made diet plans a thing of the past!

Thu, 08/09/2012 - 19:58 | 2692583 TrulyBelieving
TrulyBelieving's picture

Of course your being sarcastic.  It would be hard to believe anyone could really think with this perspective and have enough brains to know their own name. 

Thu, 08/09/2012 - 20:36 | 2692699 Jena
Jena's picture

Let alone find their way here.

Thu, 08/09/2012 - 22:39 | 2692926 TrulyBelieving
TrulyBelieving's picture

Perhaps I was too harsh on bill, my apologies and I hope he does find his way.

Fri, 08/10/2012 - 00:14 | 2693128 Lednbrass
Lednbrass's picture

Based on previous posts, you were accurate.

Fri, 08/10/2012 - 01:22 | 2693261 dirtbagger
dirtbagger's picture

Right on, but from the negatives, facts just seem to be a minor inconvenience to most ZHer's.  Anyone as igonorant as this author should not be allowed to post anywhere except on telephone poles.  Problably collects his check from the Heritage Foundation.  Has the author ever heard of the feed back loop.  After 30 years of supply side economics and laffer curves horeshit, there is not one bit of evidence that lower taxes create jobs - actual real life evidence seems to prove the opposite.  

Let me explain it to the idiots-  without capital flow constraints, individuals are going to invest their excess capital where they can maximize return with the lowest risk.  If the best investments are outside of the US,  please explain how lower tax rates are going to create more investment . e.g more domestic jobs.    With higher tax rates, there is a greater incentive to re-invest profits back into the company, thereby deferring taxes and eventually paying at the lower capital gains tax rate.   

Why this concept is so difficult to understand escapes me.  There are a lot of really dumb fucks on ZH who swallow up the right wing swill.  They must believe that they will all be billionaires one day. 

Thu, 08/09/2012 - 19:01 | 2692454 MedicalQuack
MedicalQuack's picture

For jobs quit with the excise tax on medical device companies, doesn't fit anymore with change of economy.  Tax the data sellers and that included the HFT guys who are ven out pacing Facebook with profits on this.  We need a quarterly excise tax as companies won't build factories and hire employees for jobs when they can gather up a few geeks to write some algorithms and mine the web and sell the results for profit...data for nothing and the profits for free.  If we tax the heck out of these guys and not make it as profitable, it will stand to balance intangibles and tangibles. Shoot Walgreens makes just short of a billion a year, selling data only..big pot there. 

http://ducknetweb.blogspot.com/2012/07/cook-medical-cancels-plans-for-fa...

Thu, 08/09/2012 - 19:38 | 2692542 Bohm Squad
Bohm Squad's picture

I like your idea!  We should selectively tax and redistribute that wealth to others who are doing what we deem as valuable.  That may work.  [/sarc]

I'm glad you are able to dictate how the economy should work better than its billions of participants and stakeholders.

For fun, you should read "iPencil".

 

Thu, 08/09/2012 - 19:04 | 2692467 emersonreturn
emersonreturn's picture

installations such as Dying for Jobs will be increasingly prevalent.  hunger and injustice predictably reconfigure loyalties.  i don't think politicans, richer than god bankers, wall street barons, university presidents, corporate demi gods, union stucco heads are prepared for the massive animosity, the genuine disgust people of all walks are feeling; and it's wholly true, the privileged are no longer immune or...privileged.

Thu, 08/09/2012 - 19:05 | 2692470 papaswamp
papaswamp's picture

Problem is...most new jobs are so weak...they don't qualify to have federal taxes withdrawn. The US has to get into a trade war to save itself...and probably cause a depression, before it can generate the needed ~40 million jobs to bring the country back...otherwise everything else is lip service.

-3.8 million job openings (jolts)
-12 million on unemployment
-8 million part time that want full time
-20-40 million between 18-60yrs NILF that could/ should be working

We have a demographics problem that no one wants to talk about.........

Thu, 08/09/2012 - 19:12 | 2692490 roadsnbridges
roadsnbridges's picture

I've always wondered what happened to Social Security Insurance.

I don't get squat back from my house or auto insurance, unless I experience a loss.

Thu, 08/09/2012 - 19:59 | 2692596 GeezerGeek
GeezerGeek's picture

But your daughter(s) can get free condoms as long as she/they are covered by your health insurance. What? You say your daughter(s) are not sluts? Too bad, then, you lose out on that benefit.

As for Social Security Insurance, you must live a long life to even come close to breaking even. Sort of the opposite of life insurance, where the sooner you die the sooner your spouse benefits. Obviously not all forms of insurance are created equal.

Thu, 08/09/2012 - 19:16 | 2692504 Bohm Squad
Bohm Squad's picture

I think the problem is a few layers beneath that.  We don't have an environment where entrepreneurs can thrive.  A problem complicated by loose money and high barriers to entry.

Thu, 08/09/2012 - 19:36 | 2692540 ForTheWorld
ForTheWorld's picture

Consider this: Australian entrepreneurs go to the US to make money because of the high barriers to entry here. If you've never stepped foot outside the US, you won't know how easy it is compared to most western countries to start a business there.

Thu, 08/09/2012 - 19:46 | 2692562 Bohm Squad
Bohm Squad's picture

I can't argue that point, but imagine how much easier it would be everywhere if those barriers were lowered [everywhere].  I think your comment reinforces the idea lower relative barriers attract capital (in our case, Australian entrepreneurs).

Hey, do the toilets flush backwards down there??  :)

Thu, 08/09/2012 - 23:32 | 2693049 ForTheWorld
ForTheWorld's picture

It would be nice. If I could, I'd have a few things I'd start out small in.

As an additional piece of information I should have added - local entrepreneurs have problems, and thus look overseas, but cashed up Chinese/SE Asia/Middle Eastern investors are buying whatever they can get their hands on, and then leveraging that to start local small businesses. I attribute this to a few things: 1) People care about it for about 30 seconds, 2) We're a country full of cashed up bogans looking forward to Friday arvo at the pub and maybe shagging a sheila or two on the weekend (hopefully without getting the knob rot), and finally 3) We spend so much on investing in property that Bazza/Dazza/Gazza/Shazza doesn't have enough left over to diversify into more productive endeavours.

And no... there is no directional flush except straight down, and the water is injected from the top, rather than the bottom, and the S-Bend is MUCH bigger. Better to flush a crocodile through. :D

Thu, 08/09/2012 - 19:11 | 2692483 buzzsaw99
buzzsaw99's picture

not a poorly written piece but contains the some of the same irksome tendencies/deficiencies/memes that are oft repeated here.

 

1) usa centric

2) no mention of the trade deficit or outsourcing

3) no mention of the kleptocracy

4) finding fault with the administration instead of the administration's owners.

 

The twin deficits exist to enrich the bankers and billionaires, not the poor. Things are the way they are because that is the way the real owners of this country want it. All the problems the author describes are the result of careful planning at the top, not some problem they wish they could correct. Ask the bernank, he has publicly stated that the only bad inflation is wage inflation. That's fukked up.

Thu, 08/09/2012 - 19:36 | 2692497 razorthin
razorthin's picture

Beware of hanging manikins.  And, in the case with this guy, red herrings dangling on a hook.

Thu, 08/09/2012 - 19:15 | 2692498 roadsnbridges
roadsnbridges's picture

Outsourcing is not the same thing as offshoring.  You people always let the Libs redefine the language.

Thu, 08/09/2012 - 19:23 | 2692516 buzzsaw99
buzzsaw99's picture

Outsourcing, offshoring, whatever. They could stimulate until the cows come home, send out checks, cut taxes to zero for everyone in the usa, it still wouldn't create many lasting jobs in the usa with the trade deficit, ever increasing efficiency, and global wage suppression in place.

Thu, 08/09/2012 - 19:26 | 2692524 roadsnbridges
roadsnbridges's picture

True.  Goobermint has no clue what a job is.

Thu, 08/09/2012 - 19:19 | 2692509 TWSceptic
TWSceptic's picture

Don't tax the rich more, tax the parasites. Start with Obama, lower his wage to $1 and tax his books sales 80%. Because we have to do better than the French.

Thu, 08/09/2012 - 19:21 | 2692512 roadsnbridges
roadsnbridges's picture

120%  - he didn't write them.  Somebody else did that, and he skipped on employment taxes.

Thu, 08/09/2012 - 20:03 | 2692618 GeezerGeek
GeezerGeek's picture

But about the one book that makes him all that money: He didn't write that, someone else wrote it for him!

Bill Ayers, probably.

Thu, 08/09/2012 - 19:25 | 2692518 Zero Govt
Zero Govt's picture

Bummas cheap-trash jingoism has only one goal, to deflect from his record as the biggest spender in global history with fuck-all to show for it

he is a complete and utter failure, and should have been jailed for Solyndra and misappropriation of hundreds of millions of taxpayers money not to mention the Nobel Peace Prize winner continuing the US elites ever more deranged and murderous foreign thuggery

Romney is a chip off the same (banksters) block

Govt is a fuking tragedy, it has been for 2,500 years, bin this human sewer of an institution

Stop Paying Your Taxes... don't feed the idiots

 

Thu, 08/09/2012 - 19:29 | 2692528 Heroic Couplet
Heroic Couplet's picture

Obviously no one on Main Street listens to the Republicans. RoMONEY is the worst candidate since Bush, and Bush isn't even speaking in Tampa. "Tax cuts create jobs" is a Republican campaign slogan, until this year. Rs have shot themselves in the foot. However, it's Rush Limbaugh's job to get Mitt into the White House, so let Rush do his job. Murdoch has heavy loses from the cell phone hacking scandal, so let Rush play Republican leader.

Thu, 08/09/2012 - 20:09 | 2692633 GeezerGeek
GeezerGeek's picture

Wrong. Romney is the worst Republican candidate (presumably) since McCain. Hard to believe Republicans even claim they want the presidency based on the candidates they've put up in the last few decades. Can't think of any Democrats I would have voted for, either. 200+ million people to choose from and all we get are politicians who have risen to, and usually beyond, their levels of competence.

Thu, 08/09/2012 - 19:39 | 2692529 ForTheWorld
ForTheWorld's picture

This part:

"Consequently, increasing taxes on "the rich" has the exact opposite effect.  In a weak economic environment, where aggregate end demand is low, businesses remain on the defensive. Increasing productivity to suppress employment and wage growth, combined with extensive cost cutting, are the primary weapons of choice to protect profitability. By threatening to increase taxes, or actually doing it, businesses and individuals become more defensive in order to combat higher taxation which reduces consumptive capabilities and stifles end demand."

From this paragraph, recent earnings reports from Australian companies (to give insight into my perspective) and the number of job loss announcements that have come out recently, we could suppose that businesses simply don't want to hire because they want to keep earning a healthy profit. This, of course, is understandable from the point of view where one simply wants to hoard as much money as possible. However, it is this hoarding of cash that means that companies won't hire, because they have to protect dividends for shareholders, and the profit justifies the overinflated share prices (see: Apple Inc).

If productivity continues to increase, and we see fewer people required to manufacture anything, and people cannot afford to pay for even community college (I know some people who are that poor), where will the consumption required to push the economy forward come from? If people with capital aren't investing and consuming, how can Joe Six Pack right at the bottom of the heap be expected to either?

I'm not sure why people keep banging on about the government and job creation though. Out of one side of their mouth they speak "Oh down with big government! Small government is the best! No impediments on the economy!" and then out of the other side they say "Oh what has the government done about creating jobs? Where are the jobs?! Don't tax the rich!". If you can't tax the people with large amounts of money to at least have roads to drive on (which even then is debatable in some areas), then how are you going to maintain the roads? Taxing people on food stamps?

(I've used roads as an example of something EVERY person uses regularly)

Thu, 08/09/2012 - 19:57 | 2692588 Bohm Squad
Bohm Squad's picture

Consumption cannot drive the economy for long.  This is the problem I see with your argument.

I mentioned Say's Law above for a good reason.  People must first produce something of value before they have means to consume something of equal or less value.  In other words, production comes before consumption.

The government does not create anything - they consume.  Government jobs are only possible because the government either taxes, borrows or prints money with which to pay those people.  In the two latter cases, Say's Law is violated and therefore the cycle is unsustainable.  I doubt many in this audience would say government job creation is a good thing.

The story outlines the greater of the two solutions:  Create more jobs.  But more specifically, create an environment in which people can create more jobs.  THIS is the role of government:  To create such an environment without interferring in the environment.

Thu, 08/09/2012 - 22:14 | 2692888 ForTheWorld
ForTheWorld's picture

My argument isn't about consumption driving the economy as such - it's that if goods need to be produced for consumption to occur, but a greater number of people are unemployed, and businesses are hoarding cash and laying more people off, then how can demand increase/people consume anything more than what they need to survive with a dwindling supply of cash in their accounts? I'm not inferring that the government should create jobs or not create jobs. That's entirely up to people who want to run a business and produce physical goods or services.

Taking your point though that consumption cannot drive the economy for long though, then what can (or does)? When a person has a job, they consume more. When they don't have a job, they (in theory) consume less. Our entire economy is based purely on consumption and the money that moves around thanks to this consumption.

What sort of government created environment would be good for businesses to create jobs? I ask because it seems as though there's almost always been an environment to create jobs, and it's only in the last few years when banks stopped lending, people started losing their jobs, and credit essentially stopped flowing that things have been pretty bad. Then it just became a feedback look where things get worse, because no one wants to take a chance and use their cash to do anything.

The way I see it, businesses can (and do) get around most taxes and create environments themselves where they CAN prosper, yet they chose not to. If the theories are correct, and the majority of politicians are bought and paid for BY corporations, how could it be any easier for a business to conduct business in the current environment?

I'm not trying to be dense or rudely argumentative - I just want to understand as many points of view as possible, and hope that others would want to do the same and find common ground.

Thu, 08/09/2012 - 20:02 | 2692597 shovelhead
shovelhead's picture

Because some nitwits do not understand that GOVT. DOESN"T CREATE JOBS. Govt CAN hire people whose wages come from private sector people with jobs (or borrowing, natch).

That is not wealth creation. It is redistribution.

Those free Govt pamphlets that tell you how to walk your dog probably cost $30 each.

Oh yeah, don't forget to include the self addressed envelope with postage both ways.

Boem beat me to it ...

Thu, 08/09/2012 - 19:30 | 2692530 LawsofPhysics
LawsofPhysics's picture

No cheap energy, no growth, no new jobs, period. Wages do matter morons. Let's be optimistic and say the world becomes an efficient manufacture like Germany, who are we selling to? Fucking mars? Bloody sheep.

Thu, 08/09/2012 - 19:30 | 2692531 slewie the pi-rat
slewie the pi-rat's picture

sad

Thu, 08/09/2012 - 19:30 | 2692532 Stonehedge
Stonehedge's picture

"

Guest Post: Want More Tax Revenue? Increase Jobs Not Rates"

 

Fuck You. Do Both. If it was good enough for Ronald McDonald its good enough for us. Return tax rates to Reagan rates and eliminate the Cap Gains tax. Its all fucking income dickheads. Tired of inside raiders stealing and then paying minimum tax. And to the twits bitchin about food stamps fuck you the hardest. Get over it, its tough enough just to survive in this terror dome we call freedom--thats a whole other joke and comment...

 

Thu, 08/09/2012 - 19:46 | 2692559 LetThemEatRand
LetThemEatRand's picture

The vast majority of wealth stolen from the middle class in this country over the last few deceades is sitting in the investments of a few thousand people, and does not appear as income.  Therefore, if you focus only on income as a source of tax you are advocating the existence of royal families that will rule humanity for untold future generations.  How about this -- end the capital gains tax over say $1M annually.   Beyond that, tax the shit out of it.  Tax the shit out of companies that offshore manufacturing, and give tax breaks to companies that do not.  Even the playing field on slave labor countries with tariffs.  Fuck free trade -- it only enriches the oligarchs.   We have proof.  Look around.

Thu, 08/09/2012 - 19:55 | 2692581 LawsofPhysics
LawsofPhysics's picture

Correct, if you can spend it to make your own living standards better, then it is fucking income. Long guillotines mother fuckers.

Thu, 08/09/2012 - 20:02 | 2692610 Stonehedge
Stonehedge's picture

Didn't want to propose anything as radical as Britian taxing wealth during the Reagan era, but radical times deserve radical response. Oh but they might leave the country and we'll be deprived of all their future investment? Fuck em. Rather be done with them. Easier to monitor them as foreign threats than tolerate them as the rapists next door.

Thu, 08/09/2012 - 20:02 | 2692611 Stonehedge
Stonehedge's picture

Didn't want to propose anything as radical as Britian taxing wealth during the Reagan era, but radical times deserve radical response. Oh but they might leave the country and we'll be deprived of all their future investment? Fuck em. Rather be done with them. Easier to monitor them as foreign threats than tolerate them as the rapists next door.

Thu, 08/09/2012 - 20:20 | 2692667 GeezerGeek
GeezerGeek's picture

I'm inclined to prefer consumption taxes as a way to collect from the super-rich. Buy a yacht, pay a tax. Buy a jet, pay a tax. Buy a politician, pay a tax. No taxes on peanut butter, though, or cat food.

Thu, 08/09/2012 - 23:03 | 2692965 GMadScientist
GMadScientist's picture

The mafia thanks you profusely.

Thu, 08/09/2012 - 20:00 | 2692599 Orly
Orly's picture

Love me some Lance!

Thanks.

:D

Thu, 08/09/2012 - 20:10 | 2692638 XitSam
XitSam's picture

This whole article is based on a faulty premise: That Obama wants the economy to be better, he just has the wrong plan.  Obama wants more people on food stamps, welfare, unemployed, dependent on government. He is a Marxist and will not be satisfied until the middle class is eliminated.

Thu, 08/09/2012 - 22:31 | 2692915 icanhasbailout
icanhasbailout's picture

The electorate is going to break down like this:

1) People who vote for Obama or Romney expecting some material reward - kickbacks, subsidies, bailouts

2) People who vote for Obama or Romney because they hate Romney or Obama, respectively

3) People so disgusted by both they don't vote

4) A few percent of Libertarians, Ron Paul fans, Greens, and other third-party voters

Thu, 08/09/2012 - 22:59 | 2692958 GMadScientist
GMadScientist's picture

Please fill in the dots between Romney paying more taxes and less jobs being "created".

Jobs are created when demand for products require it and not a minute sooner, regardless of how much money Mitt can manage to shelter; pretending that taxing him less will inspire "job creation" is ignorant voodoo.

Fri, 08/10/2012 - 01:59 | 2693298 dunce
dunce's picture

The current administration is not failing to recognize the real prolems, it is refusing to acknowledge them as if by denying their existence, they do not exist. The problems are not unique in history and the solutions are well established but a political anathema to socialists.

Fri, 08/10/2012 - 03:20 | 2693360 AnAnonymous
AnAnonymous's picture

'Americans' fear their State. They know the efficiency of the monster they laudated not so long ago and are frightened they might be the next State dinner...

The article focuses on the government as it was that special in a US citizen economics PoV, when US citizens put an abundant on the path of forced depletion.

Private companies do the same at the very moment: they push prices up to get the most of the existing consumer base, they no longer try to expand as much as possible the consumer basis by lowering prices.

As the world is reached 'Americanism' saturation point, new physical inputs are lacking to expand the basis.

But concentration of wealth keeps increasing.

Less and less customers, but richer and richer customers, therefore, prices are to be pushed up.

Remember, US citizen economics claim to limit consumption through price formation. The prices are going to adjust accordingly to allow the proper rate of consumption.

With the huge inequality of wealth brought by US citizen economics, richer can easily buy out shares from poorer if prices are low to speculate up. And as concentration of wealth goes, richer can pay more and more for the same amount of wealth.

Limitation of consumption through prices... Going to be a long road.

As to governments, as it is an increasing priviledge to live in a US citizen nation, the price of the priviledge has to go up, following the same principle: less and less but richer and richer customers.

'American' world is a big club and a large swath of 'Americans' are no longer part of it. Cant afford paying the club fees.

Fri, 08/10/2012 - 04:40 | 2693404 Eddy Vluggen
Eddy Vluggen's picture

The rich are bending themselves in weird ways to avoid any taxation; we should go back to the nineties, where taxation for the rich was over 70% of income.

Companies like Coca-Cola, as an example of one of the companies that would "suffer" do not pay any tax at all. Having them contribute their fair share would be a step toward a cure for this mess.

<cite>Consequently, increasing taxes on "the rich" has the exact opposite effect.  In a weak economic environment, where aggregate end demand is low, businesses remain on the defensive.</cite>

This is an outright lie of course; Coca Cola will not hire "more people" if they have to pay less taxation, companies are by definition always defensive and cutting costs. The idea that rich people generate jobs is the second lie in this piece.

I'll be dropping this site altogether if the quality of the argumentation in the articles remains at this level.

 

Fri, 08/10/2012 - 06:39 | 2693457 AnAnonymous
AnAnonymous's picture

I'll be dropping this site altogether if the quality of the argumentation in the articles remains at this level.

______________________________________

Dont worry, it can easily and regularly go below that quality of argumentation.

Fri, 08/10/2012 - 12:38 | 2694375 Mad Cow
Mad Cow's picture

Take thoughts to their conclusion. When a company is taxed, it is passed on to the consumer. How can you centrally plan the number of people a company will hire?

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