On Taxes And Jobs

Our governmental policies and tax laws reflect an earlier, simpler time Back then more income meant more employees. Now not so much.

I’m not an economist. Duh!

Still some of what I hear over the federal budget battle seems a little hard to swallow. Specifically I’m talking about raising taxes and how that affects job creation. The mantra from Republicans is lower taxes go directly into more jobs.

As it turns out there was a tax decrease on airline fares this weekend. When the FAA charter wasn’t refunded the taxes and fees it collected expired. Let’s see how that worked out.

Airlines are tossing consumers aside and grabbing the benefit of lower federal taxes on travel tickets.

By Saturday night, almost all the major U.S. airlines had raised fares to offset taxes that expired the night before.

That means instead of passing along the savings, the airlines are pocketing the money while customers pay the same amount as before.

American, United, Continental, Delta, US Airways, Southwest, AirTran and JetBlue all raised fares, although details differed. Most of the increases were around 7.5 percent. – San Francisco Chronicle

Maybe the airlines looked at this tax decrease as too temporary to use as a hiring trigger, but using it as an opportunity to charge more seems unconscionable.

Unfortunately, I also understand why it happened.

Businesses are there to make money. I can’t say I blame them. They’re doing what they’re supposed to do. But we can’t look at them as what they are and through rose colored glasses simultaneously.

Our governmental policies and tax laws reflect an earlier, simpler time Back then more income meant more employees. Now not so much.

One of the major reasons for a spike in unemployment is fewer people are needed to produce the same work product. When you call a company for service or help and have your problem fielded by computers (or lower paid workers somewhere halfway around the world) you’re seeing a cause for unemployment firsthand. Companies are benefiting from this increase in productivity. They’re keeping that gain all to themselves.

A company’s interest is best served by producing a good or service for the minimum price. Maybe their interests and our society’s interests aren’t aligned anymore?

If we want more employment we’re going to have to add incentives that recognize full employment isn’t the employer’s natural goal. Certainly we’re going to have to take another look at incentives that actually work against full employment.

When banks swallow banks or AT&T swallows T-Mobile will layoffs follow? Unemployment costs our economy. Who’s paying for it? I sense it’s not the swallowing bank or AT&T. In the end our economy picks up the tab. The cost is shifted from them to us.

I agree with Republicans who say we shouldn’t penalize job creators. We shouldn’t. So maybe it’s time job creation itself was part of the equation in who got tax breaks. Not everyone deserves a break.

Prove you’re a creator and I’ll do what I can to help you. Otherwise, pound sand.

Like I said, I’m not an economist. However, I recognize BS when I see it.

11 thoughts on “On Taxes And Jobs”

  1. The only issue I have with the incentives, Geoff, is that the business then turn around and “pocket” the incentive instead of investing it in jobs…maybe I’m naive…

    1. Which is why I say, “Prove you’re a creator and I’ll do what I can to help you. Otherwise, pound sand.”

  2. I totally agree, This is why I am Really looking into Ron Paul. I am intrigued about his economic idea’s. What do you guys think. Am I being Naive too ?

  3. Geoff, you’re on the mark: Stimulating employment has been my mantra for the past two years.

    You know, when I studied economics back at the reformatory (!), consumption was the biggest part of the American economy not war and its resulting debt service. Now people won’t consume if they don’t have jobs so it seems prudent for the US government to focus on helping the American worker than to continue hurt the nasty Taliban and helping governments that don’t really care for our help or to help themselves.

    The sooner the government stimulates employment (and gets out of the wars we’re needlessly fighting) the sooner our economy will get back on track.

  4. Allen:

    Why do the two have to be mutually exclusive? It’s not a pre-requisite that we “get out of the wars we’re needlessly fighting” in order to create jobs here. As a matter of fact, how many people would lose their jobs if there weren’t a war? Who do you think makes all the ‘stuff’ used by the military? How many of those people would lose their jobs if they weren’t making said ‘stuff’ anymore?

    In my view, America needs to get back to making all kinds of ‘stuff’ again. When we stopped manufacturing all the things we used to make, we immediately put ourselves behind the 8-ball (sorry, Geoff – didn’t think about using that nasty number here!)

    One last snippet regarding the original topic here. If the airlines are going to add jobs, they have to first be making more money (in response to the whole ‘increased fares/FAA tax” issue)…..meaning, those dollars have to first go into their coffers before they can spend it on ‘more jobs.’ Did anyone expect the airlines to run right out and start hiring over the weekend??

  5. No mention of Wall Street and corporate America exporting jobs … reportedly 42,000 factories closed and 10,000,000 jobs exported in just the last 12 years. All of the manufacturing is gone to feed the gold-lust of the ruling class.

    And you know what? That American car (made in Mexico) subsidized by DC and built by labor forced to take 50% pay cuts cost more today than before all of the changes. GM is making a lot of profit, and that’s supposed to make us feel good while employees and their families struggle to stay afloat? And the tax code favors Exxon-Mobil while our blessed elders have to decide if they will dine on Alpo or store-brand dog food.

    The system is completely inverted. When Chris Murphy offered a bill to penalize off-shoring of jobs, it only got 22 co-sponsors and never made it out of committee. Proof that DC is NOT working for the Bottom 98% … yet we keep electing them.

    As long as we do politics like a team sport, we’re doomed.

  6. Since 47% of the inhabitants of this country do not pay taxes at all, and they are not all poor by the way- i would like to propose a constitutional amendment that only people who pay taxes can vote. i believe we will see quite a few changes in this country and i think it would be for the better.

  7. Small businesses (read “Millionaires” that take in $250 g a year) are hit hard by taxes, just ask any owner. The more they pay in taxes, the less they have to invest in their business. Less investment = slower growth = less hiring. Even if they do not hire anyone, what do they do with there money? They invest it in other businesses (stock market or bonds), give to charity or buy things (which need to be made by people – albeit perhaps elsewhere..) or services. I never knew a rich guy who kept his money under his mattress. Taxes are punitive, simple. We have to pay some, but excess taxes kill business and innovation. Russia had 100% taxation, how did that work out? No incentive to work or to innovate.

    Major problem with our tax code is the way it works – it rewards some and punishes others. Build electric cars, hit the jackpot, build trucks, get nailed. Even though, electric cars are not economically feasible and trucks literally run this economy! The tax system chooses the winers and losers – that’s why there are thousands of lobbyists in DC. There should be a flat tax – everyone pays the same. Or a federal sales tax with no income tax – again, buy something , pay the tax – period. But then, what would the politician do – no way to pay off campaign donors!

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