Monday, April 26, 2010


April 24, 2010

The logic of this should have been seen from a mile away. Businesses have been flocking to Nevada from California because the tax environment in California is horrendous! But now, the Federal Government is stepping in and raising taxes nationwide, including in states have been wise enough to keep them low. As with any other Socialist country, equality of misery is the first mandate.

As the Federal government raises taxes and regulations, even the flourishing states like Nevada and Texas will see their industries (in the words of Ronald Reagan) ‘voting with their feet’ by moving to more tax friendly countries. It’s not a case of being anti-American or unpatriotic, it’s a case of survival. There’s nothing Patriotic about laying off worker after worker so you can pay your taxes.

The job of any business is to succeed; to make profits and grow. The positive collateral of success is increased workforce, increased wages, and true “spreading of the wealth.” However when the government comes in and dictates (Hmmmmm… isn’t that the sources of the word ’dictator’?), businesses can’t grow, can’t hire new employees, and therefore can’t contribute to the economy.

“But rich big wigs don’t care about the workers, they just wanna get richer. Increased profits doesn’t mean increased labor force or pay,” I hear you say. Really? That’s like assuming someone with a really expensive tricked out, exotic car is never gunna’ put gas in it. History has shown the exact opposite. Look at the most successful businesses, MicroSoft, Wal-Mart, Oracle… they all expanded. And business can’t expand without more employees. Even after their founders grew filthy rich, they continued to expand, continued to hire new workers, and continued to grow. Today, Google has the most outrageously plush, nearly decadent, offices in the world (outside of Royal palaces) and because of this ‘pampering’ of their employees people are pounding down the doors of Google just to get the opportunity to work there! Google didn’t need some government regulation to make them offer onsite massuses or meditation rooms… they did it because it attracts the best of the best employees! They did it on their own.

But even these true havens to the workers will be fleeing overseas if punitive Federal taxes force Google to fire their massuses and daycare providers. Like most government programs, it will have the EXACT OPPOSITE effect of the intent!

Now… let’s say for argument that if the government backed off of regulations and did something that would jumpstart the economy like a shot of adrenilin to the heart… that the big mucky-mucks in corporate America didn’t hire new workers, they collected higher profits and just sat on them. I don’t think for a moment this would happen – businesses want to grow, you can’t grow by putting your profits into a mattress, and the corporate bosses know this – but let’s just play this game and accept the premise for argument’s sake. When corporations “sit on” their money, they do it in one of three ways…. 1) They give bonuses to their current employees and administrators 2) they invest their profits in the stock market and other negotiables or 3) they just put the money in the bank.
NONE of these three actions is some dead end or black hole to the economy (and therefore your wages/employment!)
1) Bonuses… those bonuses are spent on big yachts, fancy cars and other big ticket items. This employs thousands of boat builders, auto workers, tire manufacturers, windshield makers, big-screen TV makers, Bose employees, construction workers needed to create huge estates… &tc.
2) 2) Investments – the money put into stocks of ‘public’ companies funds research, development, and expansion IN THE PRIVATE SECTOR. Stocks are a type of loan from the individual to a company that fund the further growth of that company. If people would jump into the stock market and buy stocks of nanotech companies we would see a growth in cancer prevention/treatment, cleaner energy, and a host of other advancements. When mankind enters the nanotech era, we will see an advancement not seen since the invention of language… and it will be funded by stocks and stockholders… not the government. With all that is being said about “green job” potential, it doesn’t hold a match to the potential for nanotechnology!
3) Money in the bank. This is where the money that funds your home mortgage comes from. Your car loan, your small business loan, your home improvement loan; the funds for these all comes from individuals who have put their money in a savings account, a certificate of deposit, or other bank program. So you WANT people to put money in the bank… it gives YOU more money to borrow.
Now, what is REALLY the dead-end and black hole of the economy is the Federal government. The waste, fraud, and abuse present in the federal government is unmatched! When you send your money to Washington (in taxes) it truly DOES go down the drain. This is the entity that was paying four-thousand dollars for a toilet seat and thousands for a hammer!

The solution to a sluggish economy and unemployment? Easy. Elliminate all, or most, corporate and business taxes! Just bare with me here. Imagine the result of the United States becoming the most business-friendly country in the world.
First – Businesses start flocking to the United States in droves, eager to take advantage of an entire tax-shelter country. The exedous we’ve witnessed from California and New York would now be an exedous from the entire planet TO the United States as a whole.
Second – Employment skyrockets towards 100% as there are so many jobs, and only so many workers to fill them. As someone who has spent the last year trying to land a full-time job, I can’t tell you how nice it would be to hear “yes” at a job interview!
Third – Because of a worker shortage, businesses offer incentives, better workplaces, and better benefits. They are so desperate to get the limited available workforce they will bend over backwards to recruit new workers and do almost anything to keep the workers they already have. They whole idea of ‘taking advantage’ of a workforce would be ludicrous! No company will take a chance at losing even one employee! Quite the opposite, they will offer better benefits, better wages, better hours, more flexibility , onsite daycare and other amenities to attract the best workers.
Fourth – Inflation. Workers are in demand, and can therefore demand higher wages. They also have more disposable income and have no problem paying another five thousand dollars on a car. Many people view inflation in the same light as terminal cancer or homeless individuals… to be avoided at all costs. But just like the homeless person, inflation actually has a great deal to offer. Namely, it makes our astronomical debit easier to pay off. As long as wages rise at the same rate as inflation (which in a worker-friendly environment it would) there really wouldn’t be an inflation rate at all. If the price of a car goes up 10% but your wages also increase by 10%, technically you have 10% inflation, but you personally you haven’t felt any pinch. Along those same lines, I would love to see a study comparing inflation over the past decade with wage increases and standard of living. I would bet that when the realities are compared we would find we have been in a trend of DEFLATION which is even more devastating than INFLATION!
Fifth – Increased tax revenue. “How can that be if you’re cutting all taxes on businesses?” Okay, first of all I think few would argue that businesses are paying their full share of taxes as it is. Tax shelters, legal loopholes, subsidies, federal incentives… they all go to making sure that well-connected businesses bear less of the tax burden than the other guys. That’s why these bills are 2000 pages long, to define who is, and is not, favored by the government. Sure, some get socked with the taxes, but others like GE and others that are in bed with the feds get sweetheart deals. (Countrywide anyone?) Secondly, an unemployed American is an American not paying taxes. In fact that person is being PAID by the government in the form of unemployment insurance, Medicaid, and Social Security. So right there you have a double-hit to government expenditures – you are drawing taxes FROM, and no longer PAYING one individual. Now multiply that by a few million. The increase in productivity that would result from a tax-shelter country drives up production (GDP), growth, investment, and wages… those all bring fresh new revenue to the government.

But these rosy scenarios can NEVER EVER come to pass if we are chasing our companies overseas with higher taxes and regulations. We will become a national version of California, watching our wealth, our jobs, and our investments pour to other countries like rats fleeing a sinking ship!

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