Who Are The Real “Job Creators?”
When I hear Republicans constantly referring to millionaires and billionaires as “job creators,” and therefore people who should not be taxed more in this jobs-poor economy, I find myself a tad mystified. It’s not that I totally disagree with this identification. It’s more like I’m listening to people who just caught the last half of a beginner’s economics lecture, and never came back to hear the first half.
Of course you need capital to get a business off the ground, investments that create jobs. And of course people and institutions with a lot of money have to be induced to part with some of it to support company expansions that create more jobs. But that’s the second half of the introductory economics lecture.
The first part, the starting point, the primary thing needed for job creation is the prospect of customers and sales. If nobody is going to buy what you plan to invest in, why would anyone invest? If there’s an existing business and it doesn’t have sufficient customers and sales or prospects for a lot more them, why would anyone give it money to expand and hire?
If this sounds extraordinarily simplistic, it is. So much so that it’s embarrassing to have to write it. But somehow, Republicans just don’t get it.
They seem to feel that as long as the money is out there in highly concentrated form, the fact that cutting government spending dramatically, which will cost a lot of jobs directly, and pull spending power out of programs that cost more jobs, is a process that will somehow leading to more job creation. Amazing.
So here’s what I’d like to suggest. In the name of honest nomenclature. Republicans shouldn’t drop the job creators rhetoric completely. It’s not totally wrong after all, and they’ve invested a lot of political capital in the phrase. Just make a slight modification.
Millionaires and billionaires should be termed “second tier job creators.” Or maybe “job afterburner creators.” And as a matter of getting themselves up to speed on the subject, before actually attempting serious legislative activities, it might pay to sit in on the first half of that introductory economics lecture.
For the country’s sake.
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23 Responses to “Who Are The Real “Job Creators?””
Because it serves a special interest group that made enough noise. Duh. How else does the government ever allocate money?
Somehow, progressives seem to feel that the proper antidote is to concentrate the money still further. Whence it will be distributed on the basis of politics rather than economics.
Yes exactly.
One does not invest unless there is reasonable opportunity for a return on the investment. Which has nothing to do with taxes because taxes only takes a cut from profit and nothing else. One might say; “well I won’t make ENOUGH profit after taxes”, but taxes will never eliminate profit entirely. It’s a mathematical impossibility. One makes less profit then one pays less tax, more profit more tax, no profit no tax.
For business to want no taxes is an incredibly selfish and greedy stand because it places the nations entire tax burden upon these not in business. There are massive tax deferments, tax incentives, tax loopholes, tax write-offs, risk reduction subsidies, tax moratoriums, low wage laws ect., written into our laws for business, but precious little for individuals.
I think our nation coddles business like some pampered baroque Goddess, giving business whatever it wants in the name of job creation and sacrifice the working classes upon an alter of business appeasement.
Well there no more customers because business has taken all the money. The people cannot seek relief from government either since government now has no more money because business has paid relatively no tax for decades.
I know I am wading into deep water for me, as there are commenters steeped in this subject, but I believe the Reps mean (and they do not make it clear enough to prevent snarky remarks from libs) that most businesses file and are taxed as individuals. That magic $250,000 is pretty low when some small businesses may employ a few workers and barely make that amount. Thinking of only millionaires and billionaires neglects the millions of small businesses that do create jobs. A poor PR job by the Reps.
@Allen
taxes will never eliminate profit entirely
Sorry man but this is just ridiculous. There are several taxes that are not based on profit, ie property taxes, employer match on Medicare and Social Security, unemployment tax, other local and municipal taxes, “special” taxes on certain professions depending on the state, etc, etc.
Da Goat-
You are wrong. All the taxes you mentioned are based on a percentage of income. You have no income if you have no profit. Business does not pay tax on gross income, but net income AFTER the cost of investment. Save for property tax, which is based on property value which is written off as an initial cost of investment.
What kind of business do you operate?
dduck
Uh no. Individual tax is different from business tax. However business tax is higher and you end up paying that higher tax as a business unless you have the ability, as a business, to divert your tax liability in the form of write-offs, incentives, etc.. that are written into tax law.
I never said they were the same. In 2007, there are 32.1 million businesses, and only 5.9 file as corporations paying 1.4 trillion in taxes.
My point is they and the others, non incorporated ones, are the potential creators of jobs.
Thinking of only millionaires and billionaires neglects the millions of small businesses that do create jobs. A poor PR job by the Reps.
No, not at all. The Reps deliberately blur that line. What you are thinking off is S-Corps, where your business income and personal income are the same thing. Because of that provision of the tax code, the Reps can claim (with some justification) that raising income taxes hurts small business. I think that needs to be changed! That one of the first things I would modify as part of tax reform.
I believe DaGoat is right, Allen. Payroll tax is based on payroll expenses, not income or profits.
But no matter how the tax is calculated, it’s consumers who end up paying it. Sales tax, for example, is a tax on business revenue (again, not profit) which businesses have to write a check to the government for. They usually pass the cost explicitly to their customers, so no one can have any illusions about who ultimately pays it. All other business taxes are the same, just less transparent.
Allen I don’t like to get into specifics but I have a consulting business with 7 employees. I don’t know where to begin since I’m not sure how much you know about running a business, but unemployment tax and employer match on SS/Medicare is based on employee’s income, not corporate income. And I guess you’re trying to say property taxes are offset by depreciation on the property, but that ignores the cost of obtaining and financing the property. Property tax is an expense that is not related to income, period.
The county does not care if I make money or not,they just want the property tax. The state does not care if I make money or not, they want the state unemployment tax. The US does not care if I make money or not, I still have to match the SS and medicare taxes and pay the federal unemployment tax.
The whole idea is a joke. Like there is just one thing that creates jobs. Trying to pretend one thing is more valubaul than the other. The GOP may focus on one more than the other but maybe it’s because that one thing is under attack and the others are not! Maybe it’s for other reasons. It’s like idiots arguing about what’s more important to life. Food Air or Water. Taking part in that argument just shows what an idiot you are.
ZZZ, the point I was trying to make is that the Reps do have a point, that there are a lot of smaller businesses out there that can be constrained from hiring if the overall tax burden is too high (real or perceived). But he message is not getting to our ears because they may not be making that clear enough, so naturally, the Dems say millionaires and bill.
DaGoat-
The feds don’t charge property tax. Take that up with your state and local governments. Funny you didn’t differentiate that point.
If your business doesn’t earn enough to cover the meager amounts taken for Medicare and SSI matching, or the cost of property investment required to house your business, after all the deductions, credits etc you get on your business income, maybe there is just not enough market share left over for you and your seven people.
Then again there is your personal salary. Maybe it’s just to high. Have I made my point?
It is not the people of this country’s responsibility to ensure that you have enough market share to support your business. You have to find that yourself. There is a base line you must maintain, called the minimum wage and social responsibility taxes before your profit or even personal income. This ensures that people in this country have enough income to survive and be customers for other businesses. If you can’t cut it, then they go elsewhere to earn an income and the loss of your business frees up market share for your competitors.
Then again there is your personal salary. Maybe it’s just to high. Have I made my point?
Yes you certainly have. What I guess you don’t realize is my salary is what’s left over after everything else is paid. You seem to have a basic misunderstanding of overhead.
DaGoat-
I don’t have a basic misunderstanding. You want the government to subsidies your business because you don’t think you are making enough and you want them to take it out of your employee’s safety net.
How about this: Petition government to stop defining a small business as 500 employees or less and describe small business as 50 employees or less and increase the small business credits. I mean really, 500 employees is a mega million dollar annual enterprise. Do they need such tax credits or do real small businesses like yours need them?
You see, unless you have a lot more employees it’s hard for you to garner much from the small business incentives.
I’m happy with what I make, Allen. I’m just disagreeing with your erroneous statements. You certainly are a good fit for the Democrats.
Yeah, DaGoat, get back to work! You want the subsidies from the government, when it’s your job to provide the subsidies for others. At the very least you should be out there petitioning the government to stick someone else with the bill. Sheesh, no sense of responsibility.
While it’s true that S Corporation taxes are the same as personal income, it’s still net income, not gross, and the overwhelming majority of them are not millionaires after that is accounted for and wouldn’t be affected if taxes are increased on incomes of 7 figures or betters. The big things are fixing things like the technicalities that give extremely wealthy people tax rates significantly lower than typical well off salaried people. Hedge fund managers earn their money by managing other people’s investments. It should be taxed at the same level, not the level of investment income.
I’ve never heard so much lying BS in my life. No wonder conservatives have to be so hard headed. They have to pretend somehow, that they haven’t been totally exposed.
So. explain it to me lucy. a company run privately nets 250k a year but insists on paying personal income tax rates instead of forming a corporation and thereby reducing one’s tax bill from 33% to 15-20%?
Hem, I would like to hear the answer to that also. But not from some egghead or “expert” that has never run anything bigger than a lemonade stand before running off to Harvard.
But the fact is that in 2007, there were about 26 million filing as S-Corps, partnerships and sole-proprietors.
Have no fear though, no less than Geithner, is looking into it:
http://www.bloomberg.com/news/2011-02-25/geithner-says-tax-overhaul-must-address-businesses-filing-as-individuals.html
Hemm I defer to my accountant on this, but my understanding is that if I pay corporate tax and then distribute dividends to myself as an owner, I am then taxed again on the dividends. If I pass through income to myself I just pay taxes once. Basically you file as a pass-through entity in order to avoid double taxation.
Bingo, the accountant said so. One of the top reasons.