Phil Hauck's TEC Blog

Sunday, March 21, 2010

Reaction to Job Creation ideas ...

The previous post, on Job Creation, was also printed in the Green Bay Press-Gazette. If a blog is about opinions, here's one. I received this reaction directly from a reader who's hot button I pressed. I liked the thoughtfulness(?) of my reaction that I sent to him. (He did sign his name, to his credit.)

His reaction:
"I read your op ed with great interest, then with great laughter, and then with disgust! Typical pro-business BS.
"You don't want business to pay taxes. You don't want business to be subject to any reasonable regulation. Thank you Wall Street and the banking industry.You don't want business to pay social security, unemployment, and health insurance costs. You want someone else to pick up the tab.You want grants, another name for handouts, You don't want business to have to pay for its own capital investments. It's no wonder this state is broke! From a workers perspective, when will business create jobs that pay enough to keep us off of assistance or having to work two and three of those great jobs?
"You want it all and you don't want any responsibility. You and your republican cronies are outright crazy!"

My reply:
Thank you for responding. I appreciate knowing how people are reacting, even though, as with you, you think it is off-base.
Might I respond, please?

From my perspective, I agree that it's "typical pro-business BS." But may I explain regarding several of your points.

1. Actually, I do want businesses to pay many taxes and fees. They should pay for the ones where they are getting services from government, such as sewer, water, trash pickup, as well as services they use from any other source.
Basically, all income that is created comes from a business providing a service or product that a customer values enough to pay more than it costs. That income goes to people to spend on themselves and their families, less the portion that government takes to provide government services (schools, streets, trash, sewer, water, Medicare reimbursements, Social Security payments, defense, enforcement of regulations, police, fire, etc., etc.). If a business has money left over after its costs (including paying down working capital principal and interest), it can invest it in new facilities (buildings, equipment) needed to expand. It can also pay more dollars out to employees or shareholders, which will then be taxed like other income to individuals.
My point is that people should be taxed based on their income levels (yes, progressive), not the job-creating business enterprise. The more dollars are left with a business after true operating expenses, the more that is available to be used to develop new products, do R&D, test, promote, sell and finally manufacture ... creating more jobs. Costs and prices can go lower, all else being equal, only when a business expands. If a business can't expand, its costs will only increase on average ... and it obviously not only won't add jobs, it will probably lose some.
In summary: Yes, there should be taxes on services they incur ... no others. Let as many dollars as possible stay with the enterprise so it can do what it is supposed to, which is to sell more and create jobs. Tax individuals.

2. On Regulations. Regulations are important. They are society's way of telling a business what it doesn't want that business to do, to provide its code of conduct. Plus, obviously, our ethical habits that we would apply anyway. So, yes, "reasonable regulations" are extremely important. Wall Street greed? Way out of proportion! Yes, either better regulations need to be put in place, and/or the ones in place have to be enforced. Probably both.

3. Businesses paying Social Security, Unemployment and Health Insurance costs. Social Security is a tax applied to people; the business simply pays it on the person's behalf. Unemployment: Debatable. Why should a business have to pay more for an employee it doesn't need? If society wants that person to have some income as a welfare payment, then it's part of government taxes. That's one view. Another is that businesses don't mind paying Unemployment at all. They can't use the person right now, but they have probably been very appreciated employees and the business leaders are happy to contribute to a fund the laid off employee can draw from. They are sorry the situation exists. Some Unemployment is important. Health Insurance costs? Yes, you're right. Personally, I don't think a business has any business paying health insurance costs. We wouldn't be in this fix if people knew what the actual costs have been. We would have fought back and corrected this problem we have now a long time ago. Third party payments don't work. Let's go back to where we pay our doctor directly, based on what we can afford. Health Care is not a Right; it is a Benefit to the extent we can afford it. The medical community wants income; they should only have what we can afford to compensate them. Needs a longer story.

4. Grants ... regarding training, I assume. I don't care whether a company has to pay for the training of its new employees to have entry-level skills (which are increasingly sophisticated, as you know ... to operate machine controls, CAD systems, etc.), or government does through the technical colleges. If a person comes to me with the skills I need, he gets hired. If he doesn't have the skills, it's debatable. Either way.

5. Capital investments? Of course a business should pay for its own capital investments. It does that through retaining income and borrowing. Unfortunately, if I invest $100,000 in a capital investment (building or new equipment), I can't deduct those dollars as expenses this year even though they are gone and no longer available to me. I can only deduct a portion of them based on how long the government tells me I have to depreciate or amortize the equipment. Accelerated depreciation would be good, allowing me to charge off those expenses faster and use the freed-up dollars for job-creation activities (see #1, above).

6. The state is broke? We have a State Senator, Rob Cowles, who keeps reminding us that when you commit to pay out dollars into the future, that creates a structure that is certain. Is there a certainty that a revenue stream will pay for them? If not, a "structural deficit" will occur. That's what we have ... lots of certain commitments, that don't flex based on available revenue. That's what's causing the state to be "broke." I'm not sure I understand your exact linkage of the state's deficit to how a business operates.

7. When will business create jobs that pay enough to keep us off assistance or having to work two and three of those great jobs? Good question. The world is becoming much more competitive, which drives prices down. Costs ultimately have to come down with them. Right now, we have lifestyles and "structural commitments" that are allowing virtually no savings capability for families. It's not a question of asking businesses to raise salaries based on revenue dollars they don't have. They can't do that. (It's just as bad as asking an insurance company to take on anyone regardless of "pre-existing conditions". Would I take on someone whom I KNOW will be more expensive than he/she is able to pay me?) It's more a question of figuring out how to live within the global conditions that are creating the top line restrictions. It's not "business as we have known" by any stretch.

8. I want it all and don't want any responsibility. Actually, I don't want very much. And I do try to take responsibility. I expect that you do, too. You cared enough to write.

9. Republican cronies. I'm not a Republican, but you're right, I do have Republican cronies. Democratic cronies, too. More and more Independent cronies, though.

We all have the same objectives, we just see different ways of trying to get there. It is all about people, not businesses ... but the capitalistic system we have, with all the required regulations to provide its morality, is the best the world has created to take care of people long-term. It requires A GREAT DEAL of responsibility, as you know. We haven't operated it very well in the past three decades or so, I would agree.

Regards, and best wishes in all that you are doing to make things better as well,

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