550 billion tax cut=1,000,000,000 jobs by 2004

Great Debates
41

Well, that’s way-cool and all but it doesn’t come close to addressing my point. My point was simply that I think you are double-counting by trying to claim that this sort of job growth is in addition to the numbers that the Administration has come up with for net job growth due to the tax cuts. I.e., I’m saying their numbers already include this; you are saying that they don’t.

To me, your claim that these effects were not included seems rather perverse and, furthermore, seems out-of-line with the fact that the Administration estimates of the effect of the tax cut are among the most optimistic. I assume that all of these folks are running their numbers through macroeconomic models that are supposed to account for all these effects.

Well, I am glad you’ve beat the averages, but we need to base tax policies on how they affect the whole economy, not one business.

As kimstu points out, these numbers are meaningless without the context of what share of the total income each of these groups earns. This source provides that context. (The Tax Foundation is, if anything, a right-of-center organization, by the way. Their numbers are, however, basically right from the IRS tax returns.) If you look here, you see that the top 10% now pay 67% of the federal income taxes; however, their share of the adjusted gross income is 46%…so the actual progressivity of the tax is much less than one might conclude if one ignored the share of income data. Another interesting fact is that, while the top 1%'s share of the federal income taxes has almost doubled in the last 20 years, from ~19% to 37.5% (a fact that the WSJ editorial page laments), this is not because of increasing progressivity in the tax code but rather because their share of the adjusted gross income has increased by an even larger factor…almost 2.5…from ~8.5% to 21%.

However, an even more important point is that the federal income tax is much more progressive than the tax code as a whole. Once one considers the somewhat regressive payroll taxes and other federal taxes, the federal tax system as a whole is only mildly progressive. And, as this cite points out, the state tax systems are on the whole regressive (i.e., the poor pay a higher percentage of their income than the rich), mainly due to the large reliance on very regressive sales taxes. Thus, overall, the idea that the tax system in the U.S. is very progressive is in fact a myth. It is very mildly progressive at best. If we instituted a flat federal income tax while keeping everything else the same, it would likely be fairly strongly regressive.

42

Furthermore, those taxes will almost definitely be raised in a more regressive manner than the federal income tax is. We are not really talking about cutting taxes in net as much as we are talking about transferring taxes from the rich to the poor and middle class.

43

Because hiring more employees is not necessarily a good thing if it can’t be justified in strictly efficiency terms in the end. While most theories of recessions hold that something in the chain of signals in the macro market is breaking down, even the most diehard Keyensian wouldn’t suggest that it makes sense to add a lasting distortion to the signals in a market. Encouraging firms to hire workers past the point where they really add marginal gains to the production of the firm is bad. And it’s also bad relative to all other markets, which now have to bear more of the brunt of the remaining taxes. The question to ask, in any major policy decision is not “does this plan acheive some good things that Bush can trumpet?” but “does this plan do more good things than bad things?”

Worse, tax credits like this are notoriously hard to get rid of, leaving us with a built-in recipe for overemployment: which may mean inflation than we’d want or need.

Indeed, taking state and local taxes into account, many studies actually find that the various income levels do pretty much pay the same percentage of their incomes in taxes. That does, of course, include Social Security as a tax, to which some people object, since it specifically qualifies one for benefits instead of just generally (though it is not not not a form of retirement investment, because the amount you “invest” is still not closely connected the amount you’ll plausibly be taking out).

44

Immediately suspending the H1-B and L-1 federal visa programs, would employ nearly 2 million out of work americans in just one week.

An additional 2 million americans put back to work in one week, would really help bush to get re-elected, and would be a big boost to our economy with immediate effects.

Temporarily suspending immigration would increase jobs by another 57,000 each week - it adds up.

45

Yeticus, I will happily take your words at face value but I will only say that you are very different from the small businessmen that I and my wife have worked for over the years. They’re generally quite wealthy. They pay themselves very well, have plenty of money salted away in various forms, and generally manage their money so they pay the least taxes possible, a project in which they have MUCH more leeway than their employees.

Their employees generally work at very low wages, so low that it is not unsual to find that some employees, though working, are bankrupt, destitute, on welfare or some combination of the above. The small businessmen typically have more than one home, invest in the stock market, own current model cars, etc. They never have to make decisions about whether to buy food or medicine in a given week.

I would tend to not to take any statements made by a small business owner at face value – I and my wife have been lied to far too often by such people. Especially when they are speaking about something that might get them more money.

But as I said, I happily will extend to you the benefit of the doubt.

46

God, how they love the myth of “entreprenuership”.

Yes, it is a good thing to foster the development of small businesses. But most “small businesses” are more like a Mom and Pop Korean grocery than they are a tiny MicroSoft.

It used to be, in the Bad Old Days, that monopolies strangled all competition. Boy, good thing that’s over with, huh?

Want to prove the importance of small business as it affects the employment picture? All you need do is define all franchises…McDonalds, Starbucks, Taco Belle…as small businesses!

Out of all the people you know, how many have started a small business that prospered and hired more employees? And how many do you know work for GM, Wells Fargo, Enron, MicroSoft…

47

Do you have a cite for any of these numbers you throw out? Are you really saying 57k immigrants get jobs each week in the US?

48

yeticus . Could you specifically cite me some numbers on how Bush’s tax cut would allow you to expand your business and relocate to a larger building? I just don’t get where the amount involved would allow you to build a new building.

And when you said

I don’t understand how Bush’s tax cut preposal would make or break a small business. Can you give me some figures? It’s not like it would increase their profit margin by 50%. If they are gonna have to close without the tax relief, then they are a marginal business and are probably gonna close anyway.

49

That would be “proposal.”

50

Explain to me, please, where the money expenditure comes from. “Taking less” does not equal “spending”.

51

God, how they love to misrepresent the opposition.

It has nothing to do with “entreprenuership” and everything to do with “risk”. If a business owner is strapped for cash and barely scratching by, he’ll be less willing to take the risk of taking on a new employee (which could potentially improve his business, thus raising more revenue, but also could potentially damage the business).

However, if monetary demands aren’t quite so tight, he’ll be less timid about such a venture.

I find it surprising that I have to spell this out in such excruciating detail, Elucidator. I would be quite disappointed to discover that you’re merely naysaying for the sake of being contrary and difficult.

52

The problem with this argument is that if a business owner is “barely scratching by”, a tax cut is useless.

If she’s “barely scratching by”, taxable income is small, and the tax cut doesn’t help, because there was little tax payable in the first place.

If she’s raking it in big time, rather than “barely scratching by”, then the tax cut is a huge bonus.

Will she employ more people? Who knows? She’s already raking it in. The tax cut will free up cash in non marginal businesses.

It’s just as likely to stimulate employment at the Ferrari factory or the Dom Perignon factory as at her own factory.

53

This is beyond ignorant. Those visas are given to qualified applicants for specialized jobs for which American candidates cannot be found. How can an illiterate American do the job of a computer analyst? What you propose would mean a huge loss for American companies and would result in a disaster for the economy. I can’t believe anyone would propose getting rid of the brightest people who contribute the most to the economy with their work and with the taxes they pay.

54

You left out the bit about “at a wage the employer is willing to pay.” FYI, we grow plenty of our own computer analysts.

55

Squink, Why would American companies go through the mess of hiring foreigners if they could hire an American much easier? H1B employees have to be paid the same wages as Americans. It is part of the visa requirement and has to be documented. Maybe our resident expert, Eva Luna, can confirm and expand this. The fact is that the USA can use more specialists in some fields than it currently has and importing them is a good thing for everyone. If you stopped that then American companies would be less competitive and that would ultimately hurt the entire economy, including those who flip burgers and those on welfare.

56

Supply and demand man. Importing them drives down the price. This is not good for the skilled american. Once the market is saturated with $30K/year imports, there’s a disincentive for americans to train in the field. This creates an artificial dependence on foreign labor.
I’m not claiming that the visa programs are entirely a bad thing, but they’re not the unabashed win-win for America that you’ve described either.

57

Squink, I guess you did not read the part where I said that to get the visa you have to justify you are paying a salary which is not lower than what Americans are being paid in similar jobs. Add to that the delay and hassle and expense of getting the visa and why would a company want to do it?

Show me an American computer scientist who claims he is out of a job due to H1B imports and I’ll show you someone who is either lying or delusional about his skills and capacity.

the fact is that the dot com boom was very largely driven by foreigners. Go to silicon valley or other high tech places and you will see thousands of foreigners from programmers all the way up to CEOs. there is no way to replace them with Americans and America would lose if they were kicked out of the country.

58

They have to prove that the supply/demand curve for a set of skills is flat in order to get into the country ? That’s the collective implication of your claim. How is that ever going to be true ?

59

You are very obviously playing games with what I said and I am not going to play games. H1B visa holders are require to be paid competitive salaries. Anyone can go to the INS site and see the requirements for an H1B and a competitive salary is one of them. I will let Eva Luna confirm or deny this.
Again, why would a company go through the trouble and expense of getting H1B workers if it could hire Americans? It makes no sense. There is a real shortage of people in some professions. Nursing is one of them. Computers another.

Generally it is the ignorant and the incompetent who complain about competition. Competition is good for every one. Trying to protect the US economy and US workers with protectionist measures would be a disaster in the long run. Whoever you are trying to protect wil be at the expense of the rest of Americans. If it would not be because of foreign competition you would have expensive and badkly made American cars. Foreign competition is what makes industry more efficient. Hiring incompentent American programmers becauseyou cannot hire competent foreign ones only means America will lose productivity and Americans will pay more for lower quality products. Only the incompetent fear competition.

60

Of course they are. Their presence in the market has no effect whatsoever on what those competitive salaries are, nor does it affect the rate at which americans train in those specialties, and, oh yes, the earth is flat. Trotting out catchphrases like “Only the incompetent fear competition” does not change the underlying economic reality that imported labor reduces the value of the training of skilled americans. That’s not a game, but pretending that everyone who objects to seeing their skills devalued is incompetent, anti-capitalist, and either delusional, or a liar, is a very gamelike fantasy.