Why I'm not hiring

http://online.wsj.com/article_email/SB10001424052748704017904575409733776372738-lMyQjAxMTAwMDAwODEwNDgyWj.html

by cwan • 16 years ago

126 175 16 years ago

online.wsj.com

toxicflavor• 16 years ago

Another explanation for why Bogen Communications is not hiring might have to do with their declining financials:

http://www.bogen.com/aboutus/financials/#historical

ratsbane• 16 years ago

Good observation. The decision to hire comes down to a very simple "will hiring this person cause us to make more money than the person costs us." He's blaming the cost side of the equation for all of the decision to not to hire. He could just as easily blame himself for having failed to streamline his company's old-school high-markup sales network.

mattmaroon2• 16 years ago

I'm sure the author blames that on Obama too.

gahahaha8• 16 years ago

What total utter crap. Taxes is the price you pay for a civilized society, and the US has far less taxes that most western countries, and as a result is arguably less civilized. Millionaires whining to other millionaires in the WSJ. Spare me.

jswinghammer• 16 years ago

He has to make the calculation about hiring people. If he doesn't feel comfortable hiring he shouldn't. Why do you feel as though you're in a position to tell him what his reasons are or should be?

Taxes take money out of the private sector and thus reduce the pool of capital for private sector job creation. Our taxes go to fund bankers and wars. That's why we're in such bad shape. If they went to build roads and bridges no one would care so much.

CodeMage2• 16 years ago

If the problem is how the taxes are being spent, do you really think that not hiring is the correct solution?

davidw4• 16 years ago

He's not just "making calculations about hiring people" - he's engaging in politics, and Hacker News fell for it.

jbooth8• 16 years ago

Yeah, except he's not actually calculating. He's just delivering a pre-scripted rant with a little argument to authority, "I make hiring decisions". Great, I feel better.

He's paying almost as much for his end of the health insurance as the total tax take. What's he whine about? Taxes. Who's providing more bang for the buck, the health insurance company or the relevant federal, state and local governments? Does he have kids in school?

Does this guy even look at his own numbers?

mikeryan• 16 years ago

"Taxes take money out of the private sector and thus reduce the pool of capital for private sector job creation. Our taxes go to fund bankers and wars"

This is a nice bit of sleight of hand but in reality our taxes that go to the gov't go back into the private sector, and according to our national debt do so at a greater rate then we take it in. Bankers and the Defense industry are in the private sector. Tax money doesn't just disappear from our economy. Heck even Mr. Bogen probably doesn't complain when he gets a contract for providing A/V systems for schools.

changhiskhan2• 16 years ago

So a government that collects 100% of your income as taxes would create the most civilized society?

gahahaha8• 16 years ago

No. (See: Laffer, Arthur)

davidw4• 16 years ago

> So a government that collects 100% of your income as taxes would create the most civilized society?

This is the sort of comment that drags down discussions about politics. No one is advocating that sort of thing here.

In fairness, the comment changhiskhan is replying to, that US is "arguably less civilized" is quite a mouthful as well, and is the sort of thing that sets of long, fruitless flame wars that lead nowhere.

anamax5• 16 years ago

> What total utter crap. Taxes is the price you pay for a civilized society, and the US has far less taxes that most western countries,

Actually, it doesn't. US tax revenue per-person is pretty much in the middle of western Europe.

Things look different because US GDP/person is higher and poor workers only pay for their retirement. (SS payouts are fairly progressive, so it's a good deal for the poor and sucks for those near the cap. The cap exists because we don't want rich people to care about SS and we don't want to pay $400k/year to Ross Perot. If you want to remove the cap, please tell us how you're going to deal with rich people caring about SS, which they will if benefits are capped, or if you're going to uncap the benefits as well.)

gahahaha8• 16 years ago

"US tax revenue per-person is pretty much in the middle of western Europe."

Not really. The OECD average is 36%, Americans pay 28% and no western European states pay less. http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenu... In nominal terms the US may be higher, but I don't really see that that proves anything. The main problem is of course that so much has to be paid for by the individual in the US that is efficiently taken care of by the state in Europe, so comparing tax rates misses a big part of the issue.

eru12• 16 years ago

> SS payouts are fairly progressive, so it's a good deal for the poor and sucks for those near the cap.

Don't you mean `regressive' then?

roboneal2• 16 years ago

"What total utter crap" passes for an up-voted "well reasoned" comment on HackerNews. Spare me please.

Unlike many in the political class, this man actually PAYS his taxes and the payroll taxes of his 80+ employees in pursuit of private enterprise.

Considering he has risked his own private capital to create jobs, he has earned some right to "whine" about the current trend of taxation.

endtime2• 16 years ago

>the US has far less taxes that most western countries

I own my own LLC, and lose 45% of my "salary" to taxes (in large part because I pay both 7.5% "halves" of my Medicare tax). Is that far less than it would be in most other Western countries?

middus• 16 years ago

I think you should put "lose" in quotation marks. It is not gone. The money is not gone, it is spend on you for hospitals, police, roads and what not.

jleyank• 16 years ago

That's not bad. 2x social security/medicare and you're a bit under 50%. I'm a wage-jockey in Canada, and I'm paying over 50%. So yeah, US taxes DO look like some of the lowest in the Western World.

abalashov5• 16 years ago

Yep, you're right.

The real problem is that for roughly the same tax burden, you don't get a fraction of what Western European or Canadian counterparts get. No socialised healthcare, no government-subsidised education, a pitiful two weeks of paid vacation at best, joke unemployment benefits, etc.

I'm not necessarily arguing that any of that should be the government's job or that all aspects of it are fundamentally fiscally sustainable. I'm just pointing out that you get quite a bit less for your money; an alarming preponderance of your income tax goes to prosecuting pointless wars, Wall Street bailouts, and other suitably kleptocratic endeavours. Local and state government operations are substantially funded by sales taxes, property taxes, excise taxes, and other taxes not even accounted for by your 45% figure; the income taxes do not yield many practical, down-on-the-ground results apart from the relatively small portion of the federal budget that goes to state-bound block grants.

bryanlarsen• 16 years ago

Sounds like he should move his company to Canada. He could replace $10,000 in private health insurance with $5,000 in extra taxes.

btilly2• 16 years ago

Better yet, Canada has a balanced budget. The US situation gets even worse when you add in unfunded future liabilities each year.

CodeMage2• 16 years ago

Wait, I don't get it. What is he proposing as an alternative? Would he be happier to pay Sally $74,000 so that she herself can do the whole process of paying $30,000 for taxes and health care and stuff like that? Or is he proposing to pay sally $44,000 and let Sally pay $30,000 out of that? Or is he just whining?

forinti2• 16 years ago

Also, what kind of market does he expect to have after he takes away so much disposable income from workers?

noodle2• 16 years ago

just whining. he could, instead, hire freelance or contract workers. he won't have to pay much to the government, he'll just have to pay the contractor double what he pays Sally.

mattm• 16 years ago

I don't know how it works in the US. In Canada, if a business hires someone on contract but they are not in an "arms-length" transaction (ie. the 'contractor' is working in their office, using their equipment for more than a 'temporary' period of time), then the Canadian Revenue Agency can force the business to re-classify them as an "employee" causing both the person and company to pay back-taxes and any penalties.

cdavid• 16 years ago

Those articles are sad. They are the equivalent of the crackpot in sciences, in that they ignore the most basic rules of economics. Discussing about whether taxes are a burden for business or not without taking care of tax incidence is at best totally ignorant. Which part is paid by him and which part is paid by his employee administratively is meaningless - it all depends on the job market, and the elasticiy of demands and supply. Most likely, if he paid less in taxes, he would have to pay sally more.

c1sc0• 16 years ago

Taking home 66% after taxes / healthcare is considered normal in large parts of the world, so why are Americans so much more likely to make a fuss about it? [Edit: jswinghammer enlightened me below: "Our taxes go to fund bankers and wars." That indeed may make a big difference. Over here in Europe I feel most of my taxes do good, not evil. So I'm kinda ok with them.]

Ardit208• 16 years ago

Really? Which country are you from? Because if you are in the EU we gave loads to Greece. We gave much more to banks some 500 billion on EU level, then there is the national level.

And Nato is in Afghanistan so I think loads of EU nations are fighting wars. Many Eu nations joined the Iraq war too, so I do not think any American is taking a moral stance over high taxes which a European needs not because their moral conscience is clean.

The guy, as said in many other comments has an agenda. SO it is hardly "Americans" but republicans, or conservatives, or democrats as they may be called in some countries.

abalashov5• 16 years ago

That's exactly right. We don't get even a tiny fraction of what you get for your ~50%+, or would get for ~35%.

paolomaffei• 16 years ago

$74,000 to put $44,000 in Sally's pocket and to give her $12,000 in benefits.

Employees get to keep more the 75% of what the company spends for them? (56k / 74k) Employees in Italy and Scandinavia countries barely get 50% of what companies pays them...

sciolistse• 16 years ago

Yep, move to Sweden and he'd be shelling out some 90k to put $44000 in his employees pockets (46% payroll tax, 5-15% social security, then 30% income tax on that).. And then there's the 25% sales tax.

jpr• 16 years ago

Coming from Finland, this was my first reaction too.

abalashov5• 16 years ago

Yeah, and employees in Italy and Scandinavian countries get a metric butt-ton more government services for their money.

Not to turn this into an argument about what government should be doing; don't care, irrelevant. The point is simply that you do get a lot for giving up ~50%+ of your paycheck in those countries. Here, you just give up whatever you give up (your figure doesn't take into account sales taxes, excise taxes, use taxes, property taxes, etc.)

kgrin3• 16 years ago

It's interesting how his private insurer raising rates is obviously "ObamaCare"'s fault. Like all businesses, insurers raise prices because they can, thanks to market position, scarcity and all the other usual factors (distorted, as the health insurance market is, by oligopoly-entrenching state regulations that have little to do with the Affordable Care Act).

kgrin3• 16 years ago

To elaborate a bit - it just really struck me as bizarre that he's basically giving his insurer a pass for raising his prices, because it's "business", and business can do no wrong - as a fellow businessman, he understands the plight of the insurance company. But all the money that's collected in taxes, in his mind, goes into the black hole of Washington & Trenton - including not just the somewhat-opaque things like income tax (which indirectly funds his and Sally's roads, schools, police force and wars abroad) but things like disability & unemployment insurance, which it seems like Sally might need if he has a bad day.

jbooth8• 16 years ago

Welcome to the mind of the Republican.

This guy probably spent 8 years defending the Bush deficits and discovered he was a fiscal hawk on January 29, 2009. Until 2016, that is, or earlier if he's lucky.

jdminhbg• 16 years ago

He doesn't get to choose whether to dump money into the black hole of Washington & Trenton.

yummyfajitas4• 16 years ago

Health insurance is a fairly competitive market - narrow profit margins, commodity good, many competitors (in most states, including NJ). If a health insurance company can raise prices, it's probably because costs are going up or are likely to do so in the near future. The calculus is fairly simple:

If I raise prices, my competitors don't, and costs don't go up, I lose customers.

If I raise prices, my competitors don't, and costs go up, I lose competitors.

Insurance companies all seem to be placing their bets on the latter case. If you feel they are wrong, feel free to bet against them.

Ardit208• 16 years ago

I don't quite know the situation in that market, but to provide an alternative, it could also be an oligarchy. That is, there's a number 1 guy with 60% share, a number 2 guy with 20% a number 3 with 10% and some little guys.

It is not hard in an oligarchy to act like a monopoly.

DannoHung2• 16 years ago

How much money does Sally bring in to the company? The unexamined part of the equation.

Roboprog• 16 years ago

Exactly, if Sally only brings in $30K / yr, BYE BYE Sally! Otherwise, if she allows the guy to bring in another $150K, the guy should quite whining and hire a few more.

Never miss an opportunity for a good libertarian rant, though, at the Journal I guess.

Oh, and it should have read: costs 74K to give her 56K in pay and benefits -- 18K in taxes.

wccrawford• 16 years ago

Sally may not bring in enough to cover her own pay. Instead, she might enable someone else to bring that much in. You know, like programmers do.

Tichy2• 16 years ago

Not from the US, but I don't understand his issues with taxes. What does change for his company if Sally has to pay higher taxes? Wouldn't it just mean that Sally ends up with less cash, not with his company having to pay more.

Is it mandatory now to offer health insurance to employees? How has this system of companies arranging for the health insurance emerged? I can only guess: providing health insurance is a way of giving employees a tax free bonus (like a company car, or free food)?

rlpb• 16 years ago

Presumably he is contracted to pay Sally $59,000 gross + some level of benefits. But his costs to pay this are higher ($74,000). Presumably as taxes rise, he will still have to pay Sally $59,000 gross + the same level of benefits, and his own costs will have increased. He is unable to pass on the full cost of a tax rise to Sally.

From what I understand, the health insurance situation has arisen due to buying power. It is impossible for Sally to buy her own insurance at the same rate that her company can do it (even ignoring any tax breaks).

Tichy2• 16 years ago

That could explain it, but it seems weird. In my country salary is usually negotiated pre-tax, and I think in this case it makes sense.

But is there a law to set up salaries that way? He cites it as a reason for not hiring, so presumably he could just negotiate salaries post-tax and do away with the problem.

stonemetal• 16 years ago

In the US the employer shares the income tax burden. So If your boss gives you a raise the company sees its own taxes go up. I am not sure of the tax implications of health insurance.

rskar• 16 years ago

Technically, in the US the employer shares the FICA tax (SS + Medicare) burden.

jcl2• 16 years ago

There is a write-up on the history of US health insurance here: http://eh.net/encyclopedia/article/thomasson.insurance.healt...

As I understand it, employer-sponsored health insurance is not required, but it is expected in many jobs.

According to the history above, health insurance tax breaks originated with Blue Cross and Blue Shield programs in the 1930s (thought to be progressive because it helped lower-income people). Employer-sponsored health insurance became popular during WWII, when companies weren't allowed to compete on wages, but were allowed to compete on benefits. And then, for some reason (parity with BCBS?), laws were passed in the 1950s that made employer-sponsored health insurance enormously tax-advantaged.

kgrin3• 16 years ago

Fair enough; perhaps we should make the system a bit more progressive. Perhaps if FICA weren't capped at ~$100K, we could reduce Sally's share of the burden? Or if we eliminated any number of corporate-tax loopholes, or agribusiness subsidies, or defense spending, we could reduce personal income tax rates?

anamax5• 16 years ago

> Perhaps if FICA weren't capped at ~$100K, we could reduce Sally's share of the burden?

Are you planning to uncap benefits? If you do, Ross Perot gets $400k/year. If you don't, rich people start caring about SS. Those are the reasons why Social Security advocates used to like the cap. Were they wrong?

FWIW, SS payouts are very progressive. Folks on the low end get a reasonable return on their contributions. Folks near/at the cap get a crappy deal. The rich ones don't care because of the cap.

Retric5• 16 years ago

It's not a binary choice, you can have uncapped benefits hand Bill G 5 million a year, and give them exactly as crappy a ROI as I get.

Edit: This would also really help out aging athletes / rock stars / actors who make a lot of money when they are young and then run out.

jsz02• 16 years ago

I believe state & federal taxes existed 3-4 years ago when unemployment was at 5% so I'm not sure how it's relevant to the current unemployment situation. Also as a rule anyone who uses the term "ObamaCare" has an agenda so I just assume he's either lying or misrepresenting the situation with a 28% increase in health care costs. I wouldn't expect anything less from WSJ -- taxes bad, Obama bad. Maybe we'll start hiring again when you elect some Republicans.

CapitalistCartr• 16 years ago

The problem isn't that taxes exist; it's the uncertainty in their change. Uncertainty is an economic killer.

Most business people use the term "ObamaCare"; that has no bearing on the rise in medical insurance this year. I've seen the same rise.

roc• 16 years ago

I bet you a dollar the 28% increase was the opening bid from his health care provider and not that far off the opening bid those previous years they ended up paying 10+%. Because that's almost exactly what I've seen for the last five years. It's just the way negotiations go. And every now and again, you have to switch providers. It's a horrible hassle, but nothing new.

Further, the health insurance reform legislation included a lot of necessary changes to make it viable to sever the employer/health insurance connection. I have a hard time reconciling his clear dislike of the changes with his claimed desire to reduce his own overhead.

Retric5• 16 years ago

Your post is insightful, on topic, informative, and clear. However, I wish it had been posted somewhere else. In the larger context:

We spend 22% of the GDP at the state and local level, 25% at the federal level and transfer 3.5% of the GDP though taxes and have a ridicules debt. To meet those obligations the government needs to take a little over half of everyone’s paycheck. http://www.usgovernmentspending.com/downchart_gs.php?year=19...

At the same time we have a horribly broken healthcare and education systems, aging infrastructure and little will to build for the future AND an ever growing debt. The problem is many people receive huge subsidies from the current system and nobody wants to give up their slice of the pie.

Now, if WE have something constructive to add feel which may be implemented in the real world free to post, until then let’s try and keep politics off of HN.

Edit: Not to single your post out, but I agreed with everything you said, and yet I still felt like I was wasting time by reading it. I guess I need to simply avoid clicking on link bait.

Aaronontheweb3• 16 years ago

Thanks for the Democrat talking points.

jbooth8• 16 years ago

It's "democratic". Grammar!

crystalis• 16 years ago

You claim you try to make "substantive contributions", [http://news.ycombinator.com/item?id=1582396] but really, I'm not sure I'm seeing it.

tici_88• 16 years ago

It is relevant because the economy is obviously not where it was 3-4 years ago. The bubble has burst, margins are getting squeezed all across the board and footing the bill on ever-escalating government-induced initiatives is no longer as easily stomachable for many businesses.

His exposition contains a lot of interesting facts and numbers. Just because he is not in the same political camp as you doesn't make his point any less valid.

ZachPruckowski• 16 years ago

Those taxes didn't just exist back then, they were higher 3-4 years ago when unemployment was at 5%.

lionhearted• 16 years ago

> Also as a rule anyone who uses the term "ObamaCare" has an agenda

Everyone stop and think for a second - do you hold yourself to the same standard of debate as you hold the other side to? Would you, jsz0, call out a user of the word "teabagger" as coming from someone with an agenda? It's the same level of discourse.

A lot of people get upset when their ideal gets hit with a tacky dismissive label while simultaneously trying to slap one on the other side.

jsz02• 16 years ago

I try to. I don't use the term "teabagger"

e404• 16 years ago

And I don't see where he used the word "teabagger", so your directing this to jsz0 was misdirected.

e404• 16 years ago

Well said. I agree the 28% was an opening salvo, but in my experience you can't really knock that much off it. You can posture ("hmm, maybe we'll try another broker") and tweak a few things here and there, but it's mostly done.

We got a big increase last time, too, though I can't remember what it was. I think it was near 20%, but just under. We have an aging employee base, and if the author of the WSJ does, too, that might explain the difference.

sprout2• 16 years ago

The logical conclusion I get from this article is that if the government wants to improve hiring, they should remove all income taxes on people making <$100k a year, and tax business profits to compensate. Also increase taxes on those making >$100k to discourage upper-middle class and uber-rich hiring.

I don't think that's the solution he's looking for, but I didn't hear him offer one.

Lendal• 16 years ago

The solution is for government to cut its spending. But that brings up an interesting question. Has any government in history ever significantly cut its spending and reduced its taxes for the long-term benefit of its people, without a violent revolution?

sprout2• 16 years ago

It's clear that that would benefit the OP, but your assertion that it would be to the long-term benefit of the people is completely opinion. You take any piece of government spending and cut it, there's a rational argument as to why cutting it would cause serious harm in the long term, and many of those arguments are stronger than the reverse.

100k• 16 years ago

"Companies have also been pressed into serving as providers of health insurance. In a saner world, health insurance would be something that individuals buy for themselves and their families, just as they do with auto insurance. Now, adding to the insanity, there is ObamaCare."

Actually, in the saner world, companies don't have to worry about health insurance because it's provided by the government.

_ouxp5• 16 years ago

paid for by ...

forinti2• 16 years ago

...society. If workers pay for it, there's less money to spend on other things (and they might not have the same bargaining power). If companies pay, they'll have less money to invest. If the government pays, it comes from everybody's taxes.

You can't dissociate any player from the others.

It should boil down to the question of finding the most efficient way for society overall.

mkramlich4• 16 years ago

by getting out of Iraq and Afghanistan, and by shrinking the DOD budget by say 30% (by cutting out things not needed to actually defend us), and by eliminating tax exemptions and loopholes for the rich and large corporations. By somehow reducing the spending done on the legal and financial professions, and by making companies pay more of the full share of the costs they impose on externalities like the environment and public health, and by numerous other possible changes to be more efficient economically. Like not having government debt so save money by not having to pay interest payments, etc.

jessriedel3• 16 years ago

Or, alternatively, they don't have to worry about it because there is no health insurance tax deduction to force individuals to get insurance through their employer.

_ouxp5• 16 years ago

There's still a huge group-bargaining incentive, although, I agree, it would be a move in the right direction.

krschultz• 16 years ago

So if we divorced healthcare insurance and employment, how do we garentee that Sally gets the $12,000 the business is currently paying as an increse in her salary?

What stops a business from giving her 75% of the $12,000 they currently spend on her benefits, pocketing the difference as increased profit, and leaving Sally to make up the difference with her dwindling discretionary income (despite a pay raise). I'm not sure how this help Sally.

orangecat4• 16 years ago

Actually, in the saner world, companies don't have to worry about health insurance because it's provided by the government.

Should the government also be providing even more necessary items like food, housing, and transportation?

Ardit208• 16 years ago

Transportation is more necessary than health? I mean if you ill I think you kinda stay in bed.

But yeah, it should provide food and housing for those people who can not get either as it does in Britain and I am sure there too to some extent?

ebiester• 16 years ago

Government does provide transportation. Roads?

fexl2• 16 years ago

Everyone is free to provide goods to other people out of the warmness of their hearts!

mcantelon• 16 years ago

Unlike healthcare, these have been successfully commoditized.

muhfuhkuh• 16 years ago

>Should the government also be providing even more necessary items like food

I guess you've never heard of farm subsidies. Our food prices are almost completely controlled by the government, which is precisely why it is so cheap. No one goes hungry in America, because famine costs about 2 dollars a person at the corner store or McDonald's to completely eliminate. And, for those that can't afford that, we have WIC and food banks/pantries or church-run soup kitchens (also indirectly subsidized due to non-profit or church tax status).

You'd basically have to try really hard to starve in this country.

jamii2• 16 years ago

> food, housing and transportation

Dole money, food vouchers, council houses, roads and subsidized public transport. They pretty much already do and I have no problem with my taxes paying for that.

Think of it from an entrepreneur's perspective. The bigger the safety net the higher you can jump.

Aaronontheweb3• 16 years ago

Or people just pay for healthcare themselves, like every other consumer service on Earth.

mkramlich4• 16 years ago

Spoken like someone who has never had a parent have a health emergency and then get a bill for $200k for the hospital's services. Go free market! Yay capitalism! Every man, woman and child for themselves! Especially those little old ladies. If they can't afford to pay for a health service to save their life, that's just too bad. But thankfully every old woman is rich, or has rich children.

jamii2• 16 years ago

This is what the USA looks like from socialist-land (aka Britain):

http://www.youtube.com/watch?v=vLfghLQE3F4

Whilst the idea of the government paying for healthcare may seem ridiculous to you it seems just as ridiculous to us that you might be ill and not be able to afford treatment.

shin_lao• 16 years ago

The huge problem they have in the USA is not that health care is private, it's that health is incredibly expansive.

eru12• 16 years ago

It's also expensive.

DrJokepu2• 16 years ago

The OECD publishes an extensive comparison of tax burdens on wage income in various OECD countries: http://www.oecd.org/dataoecd/44/2/1942506.xls

Some key numbers, at average wage: US 34.4%, UK 38.8%, Germany 63.3%, France 52.0%, Japan 34.2%, Hungary 71.5%

Ardit208• 16 years ago

You get free health care in the UK though. Also, you pay much less for university, well for now anyway. It used to be free only 4 years ago!

DrJokepu2• 16 years ago

Health care, etc. are indeed covered by taxes here in the UK, but the bottom line adds up the same anyway.

Obviously, the services different countries "provide" for your income tax vary by country; some countries provide "free" healthcare, some offer high (perhaps sometimes too high) unemployment benefits, while others decide to wage wars instead to protect their interests overseas.

doki_pen3• 16 years ago

It's worse then outlined in the article. Sally also pays other taxes with her "net" income. If she rents, her rent is certainly higher because of the landlords property taxes. If not, she pays it herself. Then there is sales taxes and excise taxes to may. Truth be told, of the money that the employer pays to keep her employed, only a little more then half of it ends up in her pocket.

Here is a huge opinion that could be incorrect. Most people work for what they need to live. If it becomes more expensive to live, Sally will want a raise. If it's cheaper to live, she won't be so pissed when she doesn't get a raise. The bottom line is all that matters to most people. Therefore, no matter what taxes are created, purported to be income tax and what not, are paid by businesses.

What does this mean in practice? It means that by having incoming taxes at all, we are encouraging business to hire people outside of the US. The only way to level the playing fields, as far as I can see, would be to shift the taxes from income to sales. I don't know if that is plausible or not, but it's the only way I can see the US government really encouraging job growth here in the US. It would mean that no matter where your company does it's business, if it uses the US market, it has to pay the piper, and would give a real shot to US workers at competing with other world-wide workers.

rwl4• 16 years ago

Shifting taxes to sales, especially in a significant way, will just dampen aggregate demand, and push us into a deeper and longer recession. (See a comment I made here, on an article that didn't get any front-page time about states looking to raise revenue by taxing online sales: http://news.ycombinator.com/item?id=1513784)

An alternative solution is to tax the unused value of illiquid capital like land. Unlike income and sales taxes, which act as disincentives on economic exchange, this kind of tax acts as an incentive for exchange, production, and employment: if you own capital which is not being put to use, this tax is either an incentive to put it to use or to sell it to someone who will.

This isn't a new idea. It was put forward by Henry George in Progress and Poverty in 1879: http://en.wikipedia.org/wiki/Progress_and_Poverty (Disclaimer: I haven't read the book, but I did buy it recently and it's on my to-read list.)

Retric5• 16 years ago

This is actually the economic argument for low levels of inflation.

doki_pen3• 16 years ago

But how does that avoid rewarding companies for moving overseas? It basically gives a huge competitive advantage to foreign companies. You have to tax the use of our market if you want to be fair. How else can we do it with a fair law that isn't protectionism?

Also, is there data to back up sales taxes in relation to dampening demand? It's the same tax, just taken from a different place. I find it hard to believe that the common consumer would hold on to money. They just don't do that.

eru12• 16 years ago

An interesting continuation to this idea is the German Freiwirtschaft movement (http://en.wikipedia.org/wiki/Freiwirtschaft). Or see http://www.finanzcrash.com/english/aberrations.html for an introduction.

eru12• 16 years ago

I agree in general. Also many economists at least thought about tax systems based on mostly consumption taxes, not taxes on income or production.

> If she rents, her rent is certainly higher because of the landlords property taxes.

But here I disagree, at least somewhat. Property prices and rents are---to some degree---determined by how much people bid them up. Taxes on real estate influence how much of the rent goes to the owner and how much to the state. But the absolute level of rent won't be affected much.

(This is more the the more fixed the supply of real estate happens to be.)

doki_pen3• 16 years ago

I'll cede that point. I wasn't thinking clearly.

eru12• 16 years ago

> (This is more the the more fixed the supply of real estate happens to be.)

Correction: (The more fixed the supply of real estate happens to be, the more pronounced this effect will be.)

marcusbooster• 16 years ago

You can read all about Michael Fleischer and his "re-building" of Iraq by removing government subsidies to state owned businesses: http://www.guardian.co.uk/theguardian/2004/jan/17/weekend7.w...

He's a neo-con of the highest order, so take his "Joe Biz" spiel with a grain of salt, he certainly has an agenda.

btilly2• 16 years ago

The author has an agenda. However he also has a point.

During the Bush recovery there was much complaining about how salaries didn't go up. Well it turns out that the amount spent by employers on employees did go up at normal rates for a recovery. However increasing health care costs absorbed that surplus, and employees did not directly see more. In fact employees got moved to crappier plans and so saw less income.

It is too early to tell whether Obama's plan is going to cost us all more or less than the distorted market has been costing. But it is certain that the USA cannot long afford to let current cost trends continue unchecked.

seasoup• 16 years ago

This seems like a lot of whining to me. 33% does not seem high for total taxes for employment. That's the total that both the employee and employer pay together. Sure, they could do more without having to pay that, but they also wouldn't have, I don't know... roads, police, fire department, public education, an army to protect them, etc. What percent do they think they should be paying? Sounds like they think they should be entitled to get it for free.

mattmaroon2• 16 years ago

This is little but a thinly-veiled attack on Obama.

thentic• 16 years ago

Poll - How many of you who have written comments have 1 or more employees?

jmcentire2• 16 years ago

This is a ridiculous article. By ignoring the reality and focusing on only a small aspect of the economy, the author attempts to covey the idea that the current tax structure is not only bad for business, but bad for employees.

The author suggests that his company pays $74,000 to get $44,000 into his employee's, Sally's, pocket. The tone used implies that the other $30,000 is purely a waste. The key point conveniently ignored, however, is where that $30,000 goes. He mentions the abstract ideas of state and federal taxes, unemployment insurance, disability insurance, Medicare, and Social Security.

If we assume the author would be happy eliminating all taxes and insurance payments, we're left with a range of possibilities; he wants Sally to have between $44,000 and $74,000. Considering the article's purpose is to suggest he's not hiring because he doesn't believe Sally is worth $74,000 and we can eliminate the high-end (let's take of the top 10% and put Sally's max at about $66,000).

Starting from the $44,000 figure. $7,322 of that would have to go toward a supplemental system for Social Security. It's not government backed and Sally has to spend time managing her investments. As we've all recently learned, even without making any mistakes herself, she stands to lose a lot of money if the stock market fails. $1,712 would be spent on supplementing Medicare. The $12,000 in benefits would have to come from somewhere, in this worst-case for Sally, we'll take it out of her pocket. Without paying taxes, Sally must pay however much the privatized school charges her. She must pay the privatized police force to protect her. She must pay the privatized fire station in case there is a fire. She'll pay tolls for every road she uses to get to and from work. I'm sure the author enjoys the ability the company has to lay off workers, so Sally will have to put back some money in case she becomes suddenly unemployed or temporarily disabled. That's $275 for the author today -- but Sally wouldn't have the benefit of a collective pool of funds, so she'd have to build up a buffer very quickly. So far, we're well above $21,309 not counting the costs to which we've failed to attributed any value (police, fire, roads, schools, et cetera). Let's assume those and associated services currently provided by the government are a very reasonable $8,691 per year (many private schools would be beyond Sally's reach). Whereas the author would save $30,000 to put the same $44,000 in Sally's pocket, just to maintain her standard of living today, she would need to easily spend that $30,000 out of her own pocket. Whereas the employer might then be willing to hire someone, Sally wouldn't be willing to work. Well, actually, she wouldn't have any choice but to work or die.

What about the magnanimous author who'll now pay Sally $66,000? Well, she'd bring home $66,000 and immediately spend $30,000 to pay for all the gaps that taxation left. Which means she'll effectively receive $36,000. That sucks for Sally and distills the author's argument down to: he wants to place the burden squarely on the shoulders of the workers so he can save money.

Obviously any employer will only spend as much on an employee as they make from having hired that employee. So, either Sally creates $74,000 in wealth or more OR she doesn't. That's the bottom line. Stop trying to blame taxation when the reality of the proposed system merely punishes the employee to the additional benefit (beyond the value already created by the employee for the company) of the employer.

Also, please note the multitude of public services I failed to mention which are supported with taxation. Research, universities, military, postal services, social services, public health, water, sewage, oversight and regulation... Without these, Sally's standard of living would likely be much worse than it is today.

jmcentire2• 16 years ago

By the way, you ~could~ argue that Sally could get by with less money for Social Security, Medicare, and benefits. It wouldn't work, though, as it would be predicated on the idea that individual endeavors would be more sustainable than large-scale investments among an aggregate population. Even if we opened these services up for private enterprise, it's unlikely that they would operate as efficiently or more than the government bodies. Some people take that as a maxim, but they don't evaluate the services currently offered with the appropriate considerations. The most notable of which is "Caveat Emptor." Private enterprise can cut corners and save money, sure -- but someone's paying the cost. In no research that I've seen do private industries significantly out perform government institutions without a lot of cajoling and numerical torture.

The postal service is a frequent scapegoat here. Yet, the price of a stamp has been nearly constant when evaluated based on purchasing power and inflation. Further, try doing a cost comparison between FedEx, UPS, and the USPS for the same package. I've worked in shipping and receiving and both FedEx and UPS have more than their fair share of delivery issues and damages. Yet, I get bills and letters in the mail _very_ regularly and reliably. Go figure.

mkramlich4• 16 years ago

He lost credibility with me somewhat when he threw out the term Obamacare. I think it's a tactic by the Right meant to be derogatory by implying that somehow only Obama wanted it or designed it. In reality, many people contributed to it and shaped it, and the majority of Americans polled wanted major health care reform and the majority of Congress passed it.

That said, the OA author made points I agree with that it seems unfair and inefficient to require businesses to perform tasks and provide services which are unrelated to their core business, and arguably should be the responsibility of individuals or the government. I hate the fact that businesses are involved in providing health care for employees, it seems horribly inefficient and out-of-place. Businesses should only pay cash to employees, ideally, since that is most efficient and the most transparent and ungameable. Employees should then get health care from the market and/or from the government.

abalashov5• 16 years ago

Perhaps due to my incessant optimism about people's reasonableness, the way I understood the argument seems to me to be primarily about the regressive character of the tax system. $59k/$44k just isn't that much anymore, especially in a relatively high-cost area, and especially considering the sources of cost inflation he identified.

But okay, $59k/44k is one thing. You want to talk about regressive taxes, tell me why I have to pay nearly $2k to employ a part-time person who nets just a little shy of ~$1400 (roughly ~$22k annual gross), and that's without any benefits. Talk about a disincentive for job creation! I'd much rather pay my part-time employee more of that ~$2k, and if I could, I would.

If I give him a $300 bonus one month, he's going to see about $180 of it if it's run through the normal payroll withholding mechanisms. At that level of income, that really is ridiculous.

locopati• 16 years ago

Point and counterpoint...

http://motherjones.com/kevin-drum/2010/08/wall-street-journa...

Why I'm not hiring

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