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

Great Debates
61

I think it might be helpful if we all understood that the “cost” of a tax-cut is nothing but a forecast/estimate. The OMB, or whoever is providing the estimate, is saying “ten years down the road, it is possible that the Federal Government will collect X less dollars due to reductions in various tax rates, or increases in various tax credits, than it would if such measures were not enacted.” These numbers are extremely difficult to forecast. To start with, you’ve got to prepare a ten year forecast of tax revenue. Personally, I think any economic forecasts over twelve months are garbage. Then, you’ve got to figure out what revenues would have been if the tax rates were enacted, and there is at least some effect between the rates and the revenue, of course!

Age Quod Agis provided a very useful cite, a report from the president’s Council of Economic Advisors. It summarizes the actual changes proposed in the tax code as such:

  1. Accelerate to January 1, 2003 features of the 2001 tax cut currently scheduled to be
    phased-in: the reductions in marginal income tax rates, additional marriage penalty
    relief, a larger child credit, and a wider 10 percent income tax bracket.
  2. Eliminate the double taxation of corporate income, whether paid to individuals as
    dividends or retained by firms. Dividend income will no longer be taxable on the
    individual level, while a step-up in cost basis will reflect the effect of retained
    earnings on share prices.
  3. Increase to $75,000 from $25,000 the amount that small businesses may deduct from
    taxable income in the year that investment takes place.
  4. Provide $3.6 billion to fund Personal Reemployment Accounts. These accounts
    provide up to $3,000 to assist unemployed workers who are likely to need help in
    finding or training for a new job. If a new job is found quickly, the unspent balance in
    the account can be kept as a “reemployment bonus.”

I think it would be helpful if, instead of looking at the estimated cost of the tax cut and what that dollar value means, to look at what these changes would mean to the economy. There’s been a lot of talk about the effect of this tax cut on “small business” and it seems to me the only parts that could directly affect them would be #2 and #3, primarily #3.

There’s also been some talk of “state and city taxes” going up. It would be very helpful if it were clear just which of these taxes we’re talking about… as has already been mentioned, these taxes are fundamentally different from the federal income tax, and in many cases are extremely regressive in nature.

62

If you say the INS does not enforce the requirement of equal salary, I’ll let Eva Luna deal with that. My field of work is high tech electronics and in my experience if you go to high tech companies you will see American and foreign engineers working together and you will not hear the Americans complaining about their jobs being devalued, rather you will hear about the huge contribution being done by the foreigners. In my experience the complaints come from people who could not do the job anyway.

There is the case of that Palestinian guy from Intel who has been arrested by the US government and there has been a tremendous support for him from his co-workers. Does not seem like his co-workers at Intel resent foreigners who work alongside them.

In any case I find it sad that some people think having an American passport should entitle them to be protected from the competition of foreign workers at the expense of the rest of the Americans who would have to pay more for inferior work.

63

Why is it so hard to understand that cuts in the tax rate would change people’s behavior on the margin? Why is that so impossible to concieve?

If immigrant workers want to work, and companies want to hire them, that’s great. If they are willing to work for less, that’s great too, and the law shouldn’t prevent them from doing so. Why should we be forced, by law, to employ parasites that can only get by through laws designed to reserve jobs to people of a certain national origin? How can that sort of behavior possibly be justified ethically when it harms both consumers and firms all to benefit a worker that can’t even compete with other save by bending coercive rules in their favor?

64

If there were more tech employees available than jobs, then yes, importing more would tend to drive down wages.

The difference here is that H1B employees are generally brought into the country because of shortages of labor. If there just aren’t enough employees available to do the jobs, then the market’s response is to raise prices to attract more employees to the field. The problem is that for people like engineers and computer scientists, there’s a BIG lag between the input of higher wages and the output of new, trained employees for those jobs. As in, years. In the tech world, that’s an eternity, and it puts you at a permanent disadvantage.

Also, this is not good for the country as a whole, because it raises the cost of IT. Importing foreign workers to make up shortages keeps the price of labor lower in the long run, and improves productivity in the short run.

The other thing that will happen if you don’t allow the employees into the country is that wages will rise relative to wages in other countries, and that will force U.S. companies to outsource development. I’m a Canadian software developer, working for an American company in Canada. Half of our development team is in India. The math is pretty easy here - An American programmer makes $75,000 US. A Canadian programmer in the same job might make $55,000 Canadian, or about $37K U.S. The same programmer in India probably makes half again that amount.

So are you SURE you want to maintain shortages in order to drive up the cost of labor? Are you sure you want American products to be higher priced that equivalent products made in other countries?

H1B may, in the long run, CREATE jobs for Americans. By allowing the U.S. industry to maintain competitiveness, it helps keep companies in business in the U.S.

65

Conversely, if you rely too extensively on foreign expertise to make up for your labor shortages, you end up discouraging the locals from training in needed specialties. That situation holds the danger of becoming a slippery slope, as visa depressed hiring rates discourage new people from entering the field, thus increasing the need for more imported skills. If that feedback is allowed to continue too far, you end up with a situation where the majority skilled labor is imported, and America becomes a nation of executives, and burger flippers. If an economy like that ever turns turtle, who will be left inside the country with the skills needed to rebuild ? Better to keep the H1B’s under some control, pay slightly higher prices, and have some insurance that if everything goes to shit, we’ll have the homegrown skills required to dig ourselves out.

66

Many of the people here are justifying H1B by demonizing unemployed American IT workers, calling them “parasites” who “don’t have the skills” to get the job done, implying that the rest of us are “carrying them” – dirty, stinking unemployable loafers that they are. Their kids are probably rotten, too … right?

Pathetic, when you let your sick little ideology make you lose sight of the humanity of the people whom you are so ready to discount for its sake.

67

Where are the “unemployed American IT workers” and who has called them parasites? Competent American IT workers have productive and well paid jobs. And if one can’t find a job it is probably because he is not as good as he claims to be, not because some foreigner took his job. And while we are talking about the children (will some one think of the children?) what about the children of the H1B workers? Why 'should their parents be deprived of making an honest living? Who is losing the sight of the humanity? Those people have a much harder life than your average American worker. Are they not human? Why should they be denied the opportunity?

68

When people try to use the legal system to force themselves into a job that a company thinks a foriegn worker would be better for, how is that not being a parasite? sailor makes exactly the right point: your appeal to humanity is utterly empty: EVERYONE involved has basic humanity, mouths to feed, and so on. The principle you’re supporting is that only the people on one side of a imaginary line should have their humanity considered. That may be a political reality, but if you want to make an appeal based on people’s humanity, then you commit yourself to a moral position that does not allow for such arbitrary subterfuge.

69

What do you mean, “where are they?” Living next door to you, maybe? Are you implying that there is no unemployment problem in the American IT sector?

Apos called 'em parasites, to wit:

**. Why should we be forced, by law, to employ parasites that can only get by through laws designed to reserve jobs to people of a certain national origin? **

And while we are talking about the children (will some one think of the children?) what about the children of the H1B workers?

I am not advocating chasing existing H1B workers out of the country. I do agree that given high unemployment in the IT sector, it seems dumb to import workers, thus forcing existing workers into permanent unemployment or partial employment. Frankly, I don’t like to see human resources going to waste, this strikes me as a classic example of it.

Still, I applaud your ambition of feeding all the world’s hungry kids. I’d like to see that happen, too.

Would you advocate ending all immigration restrictions and letting anyone who wants to move to the U.S. do so, so their kids can eat? Lotta hungry kids in the the Third World, I hear. What’s your plan? I’m dying to hear it!

70

So where do you draw the line? Why would it be wrong to advocate giving preference to whites over blacks? There are many unemployed whites.

How about giving preference to people from the same state? the same city?

And another question I have asked repeatedly and you have not answered: Given the hassle and delay involved in obtaining an H1B visa, why would an employer choose to hire an H1B worker rather than an American when he has to pay them both the same salary? Could it be that he can’t frigging find qualified American workers? Could it be that those who claim they are unemployed due to foreign workers are really only qualified for flipping burgers?

71

Well, why not? If companies think that they are good bargains as workers (both cheap and not unacceptably lower skill wise), why shouldn’t companies be allowed to employ who they want?

72

Do you really believe that? If all Americans lose their jobs to immigrants who is going to buy the product? Don’t say the immigrants. Most of their money gets sent home.

73

Let us not drift too far. What started this was this gem:

which is plain ignorant nonsense.

74

Why would you think that all Americans would lose their jobs?

When thinking about macro issues, it’s not enough to just think about one or two events. You have to think about the ENTIRE chain of events throughout the economy and at the very least use some sort of general model (you can’t just do it all in your head). Start here: when a company finds a way to employ cheaper workers who can operate at the same level of productivity, then what happens in a competative market? If there are gains in efficiency, where does the extra “welfare” go and what effects might it have on inducing more bussiness in general?

75

Ah, so now the things which Americans spend their money on are superior to things that other people in other countries spend their money on?

I guess you COULD be making some sort of strategic argument here, with only “American” interests (whatever THAT would really mean) in mind. Though if so, you’ve yet to suggest anything convincing. But you cannot possibly be making a MORAL argument here, not when you are unwilling to count everyone’s interests as of equal importance.

76

The fallacy in your thinking is that you treat ‘IT’ as a monolithic industry. As in, “There’s an IT job, and there’s an unemployed IT guy. How DARE that company bring in a foreigner to do it!”

But the thing is, the IT industry has many needs. Just because there is unemployment among people with MCSE diplomas and one year of experience maintaining an SQL Server doesn’t mean that a company will have an easy time finding someone who can design and build Oracle Databases for use in a data warehouse.

And that’s the problem, you know. The tech bubble made a whole bunch of people think that they could run out and take a 6-week MCSE course and make $70K a year. And some of them did. Over a fairly short period of time, this caused a massive oversupply of such people. In the meantime, a lot of people who would otherwise have gone into computing science or engineering were drawn into the ‘easy way out’ of rapid training in applied IT.

So now the chickens have come home to roost. There is a shortage of people who can do serious software development and people skilled in building enterprise architectures in IT, and a glut of people who know which dialogs to open to set security options in IIS and SQL Server 2000.

77

Lordy - I leave one thread unopened and it degenerates into uninformed xenophobic nonsense.

I am way too intimately familiar with the H-1B debate, as I draft H-1B petitions and employment-based labor certifications (the first of several steps in the green card process) for a living. Believe me, no law-abiding employer is going to hire an H-1B for a job if there is a qualified American worker to fill it, for a variety of reasons, not the least of which is that my services are quite expensive. Reasons:

  1. Employers are forbidden, BY LAW, from paying an H-1B worker less than the prevailing wage for that specific occupation and that specific geographic area (generally within commuting distance of the metro area where the person will be working). If they do, they are subject to thousands of dollars in fines per offense, as well as debarment from use of the H-1B program for up to 3 years.

  2. What Sam Stone said about the lack of interchangeability of skills. Most of my oldest and closest friends are IT workers, and none of them think they are being undercut by H-1B workers with equivalent skills. They are far more worried about knowledge jobs like theirs being taken offshore entirely, and I sure as hell don’t see any practical way to prevent the offshore outsourcing of most IT work. If wages are cheaper in India, and India has qualified workers, well then that’s India’s competitive advantage.

A good friend of mine has been trying depserately to hire a network admin and a programmer for his small IT consulting business; they’ve been around for over 20 years and have some excellent, stable, essentially recession-proof long-term clients. He is pulling out what little remains of his hair, because if he puts an ad in the paper, he gets 400 resumes, maybe 2 of whom are from qualified people with the level of experience he requires. He is willing to hire anyone with the skills, but what he gets are, as he put it, “punk-ass kids” fresh out of school with unrelated degrees and 6 months of some programming certificate program, or older workers, who are seasoned, but in areas which are now obsolete. Believe me, he’s an open-minded guy, but it’s a small business; he simply doesn’t have the downtime to train someone who doesn’t already have 90% of what he’ll need on a daily basis. They can’t afford the dwontime.

  1. Believe me, as the system is currently structured, no employer in his right mind is going to sponsor someone for a green card without damn good reason. (For one thing, it’s expensive; a good ballpark figure for an average case is about $10k in legal fees, not including the cost of any advertisements they are required to place by the state labor dept., which can be another couple thousand or more, depennding on the number of ads and the publications they are placed in.)

I can give more info on the permanent labor certification ooptions if anyone wants it, but basically, employers need to go through a very strict and time-consuming vetting process at both the labor department of the state where the job is located, and then with the U.S. Dept. of Labor. The process ensures that a) all applicants were contacted and screened (this is why sometimes you’ll see a blind ad with instructions to contact a P.O. box at a state labor dept.); b) no qualified U.S. workers were rejected for unlawful reasons; c) the incumbent of the job is being paid the prevailing wage for the occupation and geographical area, as determined by the state Labor Dept. according to a very complex set of statistical criteria; and d) the forieing national gained all experience that qualified him to apply for the permanent job BEFORE commencing employment with that employer on the temporary work visa (as is usually the case).

The whole green card process can take 3-5 years and up, IF there are no problems, and can cost $5-7,000 in nonimmigrant work visa fees, and another $10k or so in permanent labor certification/green card legal fees, plus advertising costs and other miscellaneous expenses. And keep in mind this is ON TOP of salary; the employer is required by law to pay the foreign national the same as similarly situated U.S. workers.

If we want the U.S. to produce enough tech workers to meet internal demand, then by all means, I’m all for it. How to do that? Well, that’s a whole separate debate, but I note that when I graduated high school, Illinois state law required graduating seniors to have ONE YEAR each of math and science credits. The level was not specified, so that meant the one year could consist of remedial arithmetic and "The Earth and You, " respectively. By the time you have a 50-year-old dislocated worker, it’s a little late to be teaching remedial math and make the person into a computer programmer in most cases.

(BTW, the H-1B legislation includes a $1,000 additional filing fee, which goes to a fund to provide grants for training U.S. workers, if that’s any comfort. But $1,000 still won’t turn anyone into a computer programmer.)

More questions, anyone? I can provide cites tomorrow from work, if anyone’s curious.

Eva Luna, Immigration Paralegal

78

I read that between Bush Sr & Bush Jr, that neither have not created one new job. Thus, if they were the first president(s), no one would have a job?

“make that 1,000,000 jobs.”

That would be nice, but it appears that since Bush Jr became president that we are down 2,000,000 jobs. Thus, he would still be down make 1,000,000 jobs, right?

79

Well, I think Eva Luna has made it clear that H1B is not degrading the price of American workers too much.

I still have problems with the notion that workers cannot be retrained, that only these foreign workers possess some kind of magical grasp of various IT slots that can’t possibly handled by the idiot good for nothing but burger flipping Americans who are already in IT but unemployed.

I still sense a rush to devalue the unemployed here. Is IT kinda like pro football now – you train for years for a career that lasts maybe a decade, except without the glamour and the high pay?

80

I think it’s more an issue of experienced workers who are already in well-paying and rather demanding jobs not keeping up with the latest technical developments in their fields, so when they get laid off, they are simply not marketable without some intensive retraining. So it’s hard for them to compete with people who are already up to speed because their education is fresher.

Obviously, not all experienced IT workers are in this boat, but I’ve long thought that IT salaries were ridiculously hyperinflated given the amount of education that many jobs actually require. My friends in the field agree with me, and have pretty much accepted that the boom is over and they probably won’t make $100k again anytime soon. They made their hay while the sun shined. An IT career can last a good, long time, but you have to keep your skills fresh, and $70k for someone fresh out of college was just ridiculous. I don’t make that now, after 10+ years in the workforce. It just wasn’t proportionate. Some people, though, have been reluctant to take huge pay cuts, and well, there’s always the issue of hiring someone at a job of much lower pay/status and being worried that he’ll leave in 6 months if he finds something better, or that he’ll be resentful and not do a good job. It’s a messy issue.