I drafted the following on April 18 of this year. Given some recent reports, I believe my musings are particularly relevant. Additionally I believe that; for those who don't normally follow economics, it is very informative. Please enjoy and consider with respect to the United States' current economy.
Recently the US Governing bodies have been wrangling over budget and tax issues. There seems to be two prevailing opinions put forth by the news media; either raise taxes on some or cut taxes.
I believe the falicy is that neither of these is the real issue.
The real issue is JOBS! Hold on. Before you go sayin' they're two different issues, just follow my logic. The reason we have budget problems is simply spending more money than the government takes in. I happen to believe that cutting spending is a problem that must be addressed. However, as any business owner can attest to, even if you cut spending to the bare minimum you will likely be left with a need to increase revenue. Even if not for immediate needs, you'll certainly need increased revenue going forward.
If we can agree that we'll eventually need greater revenue, the question is how to get it. Since the current tax code places heavy emphasis on income tax, we would do well to have more wage earners in the system than trying to tax more on a dwindling work force. If we overhauled the tax code to move to a "flat" or "consumption" tax, we'd still be better off having more wage earners paying into the system.
Think of it this way; if you want more of an activity, make it less expensive. If you want less of an activity, increase the expense (or taxation) on that activity. That's right, we tax wages for services performed. Is it any wonder then that people have figured out how to do less (or no) work and collect a paycheck from the government?
Once we agree that we must increase revenue to the government, and if we can agree that increasing the number of jobs would do that, we can then focus on bringing those jobs to our shores.
Now that we've agreed that we want jobs here in America, we have to give businesses good reasons to come back here. Our labor costs may be more than other countries, but we have an extremely efficient (don't laugh, it's true) work force. If we were to get rid of many onerous taxes on businesses and roadblocks that prevent businesses from getting permitted in a timely manner, it would go a long way to improve the marketability of the U.S. as a manufacturing haven.
I agree on much of what you have proposed. JOBS, I believe, is very important; no question about it. I think that putting people to work should be the main priority. I also agree that if more people are working, the more revenue the country brings in. Jobs also helps self-esteem. I believe that it makes people feel that they contribute to society and it is important that the message get across that all need to contribute.
ReplyDeleteI resepectfully disagree with you on one point. I don't believe that the only reason that companies went overseas was to avoid taxes. I believe they went for that AND cheap labor (that is discussion for another time). If I understand you correctly, you advocate for lowering corporate taxes to entice them to come back. I am not sure I agree in that GE was owed money because of the tax breaks already given. This may be an extreme case. Oil companies are making record profits and getting assistance from the Federal Government. I would also refer you to a 60 minutes piece done several months ago in which the owner of the Horizon Oil rig moved the company overseas to a post office box in Europe and now pays no U.S. income taxes. I hope this is not getting off the mark but wouldn't lowering taxes not make a difference because being offshore, they don't have to pay any taxes?
Would you agree that with all the rhetoric of cutting federal jobs would add more people to the unemployment lines resulting in more jobs needed to make up for the losses. Would you also agree that language of the government "goinng back to 2008 spending levels," makes no sense? It suggests that things cost the same as they did three years ago and does not take into account price increases? I know it is off topic but just wondering what your thoughts on that were.
Again, I think your idea of more people going back to work would be one way to help increase revenue. More also has to be done because there are more people in the country. The population has not remained neutral. I think there is much more that needs to be done. I think this arguing on both sides does no one any good. It appears that it is like children fighting that if neither one can get their way, they call each other names; ridiculous! I also believe that there are people in society that need our help and we need to help them.