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It's not the promise of regulation and higher taxes--it's the uncertainty of it. Planning and stability is everything to business, especially when you're trying to make the decision on whether or not you make the investment to expand.
The difference in taxes that were being discussed were a difference of 35% vs 39%. So how does knowing which it was going to be change an investment decision? You obviously think the investment to expand is worthwhile or you wouldn't consider it at all. So, how does keeping 61% on the profits instead of 65% of the profits change anyone's mind to expand? It doesn't. As Warren Buffett said,
"I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation."
On regulations, apart from what you may have heard, the number of regulations issued by the Obama Administration are fewer than his predecessor.
The difference in taxes that were being discussed were a difference of 35% vs 39%. So how does knowing which it was going to be change an investment decision? You obviously think the investment to expand is worthwhile or you wouldn't consider it at all. So, how does keeping 61% on the profits instead of 65% of the profits change anyone's mind to expand? It doesn't. As Warren Buffett said,
"I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation."
On regulations, apart from what you may have heard, the number of regulations issued by the Obama Administration are fewer than his predecessor.
When talking about future taxes, we aren't talking about a rate going from 35% to 39%. We are talking about the uncertainty of how to pay for an ever growing national debt as well as what taxes will be enacted to fund Obamacare's promised benefits. Not only that, but given Obama has dramatically raised the debt as well as promised future tax increases by enacting Obamacare at a time where the federal reserve has no buffer to curb inflation, there is an unbelievable amount of uncertainty in what the future will hold.
It has nothing to do with a 35% to 39% increase. If the current administration would come out with a plan for how to fund Obamacare as well as a plan of graduated debt reduction in addition to the fed showing a plan to unwind its balance sheet, then we would start to see a slow uptick in investing and unemployment.
A favorite GOP talking point is that a slew of regulation and taxes are preventing employers from creating jobs, which explains the stubbornly high unemployment rate. “By pursuing a steady repeal of job-destroying regulations, we can help lift the cloud of uncertainty hanging over small and large employers alike, empowering them to hire more workers,” said House Majority Leader Eric Cantor (R-VA). “Business owners are reluctant to create jobs today if they’re going to need to pay more tomorrow to comply with onerous new regulations,” claimed Sen. Susan Collins (R-ME).
But a new study from the San Francisco Federal Reserve finds that this line of thinking is largely bunk:
Figure 3 shows there was almost no correlation between job growth in a state from 2008 to 2011 and the increase in the percentage of businesses citing regulation and taxes as their primary concern. In fact, if anything, the correlation is positive.
States in which businesses increasingly cited regulation and taxes experienced higher job growth, although this correlation is not statistically significant. The lack of correlation is not a matter of the timing we choose. For example, there also is no strong correlation if we examine the 2009–11 period or the 2010–11 period instead.
As this chart shows, there is basically no relationship between businesses citing increased regulations and taxes and higher unemployment rates:
In fact, some studies show that far from killing jobs, regulations help create them and help boost economic growth.
Instead, the San Francisco Fed shows that lack of job creation is tied to a lack of demand — customers don’t have any money to spend, so businesses have no reason to expand. “U.S. counties with high household debt levels coming into the recession are the same counties with depressed levels of employment in the nontradable sector today,” the study said.
Well great, then. Let's have more taxes and government regulations to 'stimulate' the economy and job creation! Makes perfect sense [NOT!].
Actually, the study does not confirm anything. It shows a lack of correlation between businesses "citing" things and job creation? That doesn't confirm that there is no relationship between taxes/regulations and job growth. Get real. People complain about all kinds of things all the time. That's complete junk methodology.
Quote:
Originally Posted by aaauger
Hiring is based on profit.
Quote:
Originally Posted by aaauger
To get an accurate picture of how businesses are really affected, segmentation is required: ex. by location, sales, industry, employees, etc. Then trend the jobs offered by those segments with the heaviest burdens.
Quote:
Originally Posted by hnsq
So essentially what you are saying is that you are going to blindly trust the spin put on the article by ThinkProgress and not actually look at the source information? If you actually read the base survey instead of blindly trusting one of the most liberal websites that exists, you would find that on a year over year basis, the combination of increasing threat of regulation and taxes leads to a much lower employment to population ratio. This chart is from the exact same base study as the one ThinkProgress cherry picked out of context.
Freaking excellent.
@hnsq
You mentioned the E-Pop Ratio. You're exactly right. Loon at the E-Pop Ratios of the Euro-States. All of them are low, a lot lower than the US. That's the result of taxation and regulations...the trade-off is jobs lost.
Note that you'll see a few outliers.
Norway comes to mind, with an E-Pop Ratio of ~63%. You'll see that the Netherlands and the UK also have higher E-Pop Ratios than the US.
One thing you'll notice is that all of those countries are oil producers. The US is an oil producer. Indeed, and if the US had a teeny tiny population of 4.9 Million people then its E-Pop Ratio would be ~63%, too. Norway also has an higher military to population ratio (as a percentage of population, more people in Norway are in the military than in the US).
Anyway, you need to look at factors such as that when assessing E-Pop Ratios in other countries.
Pleased...
Mircea
Quote:
Originally Posted by mb1547
That doesn't even make sense.
If you don't understand Economics or Business it wouldn't.
Quote:
Originally Posted by mb1547
Increased sales don't magically appear just because you add more staff.
Yes, they do, if you're expanding your market.
Quote:
Originally Posted by Old Gringo
If the tired old argument that "tax cuts and deregulation result in more jobs and greater revenue" then the period from 2002 to the present would have seen balanced budgets and record job numbers.
Anyone want to try to make that argument?
Anyone?
Bueller?
Wages and household income were declining over that period. Tax revenues would have decreased no matter what and deregulation is ineffective if not done properly.
I don't pay attention to opinion pieces that come out of obviously biased sources, but to simply write off research conducted by a neutral source and quoted in a biased one is either really lazy thinking, or you just don't want to accept anything that doesn't fit your agenda.
Quote:
Originally Posted by MTAtech
That's all you got? The OP produces an economic study written by smart people and you counter that with a two line assertion backed up by no evidence at all.
What further undercuts your theory, such as it is, is the assertion that we are highly taxed. We aren't. Taxes are around the lowest they've been in modern history.
Smart people do not make stupid comments like this....
"Understanding the large and persistent decline in employment in the United States during the Great Recession of 2007–09 remains one the most vexing challenges in macroeconomics."
It's real easy to understand. You were bleeding jobs, due to the fact that you cannot compete globally, and your wages were steadily declining.
Table B–47. Hours and earnings in private nonagricultural industries, 1965–2011
On top of that, you've had technology creeping into labor as labor Capital for at least the last 15 years.
That creates a surplus of labor.......and there is no place for it to go.
See how easy that was? And I told everyone this way, way back in 2007. Recession 4th Quarter 2008. 5+ Million jobs permanently lost....as in those people would never work again...perennial high unemployment.
You just have to read the data.....without any bias.
"While there are many potential explanations, three have garnered substantial support among economists:
The aggregate demand channel, in which job losses were driven by a sharp decline in consumer spending due to high debt levels and the housing crash (Mian and Sufi 2012)."
Aggregate demand in the US is a symptom of a greater problem, but not the root cause. Aggregate demand globally was one of the root causes...due to the fact that the US can no longer compete, and that has to do with tax and regulations.
Government-induced uncertainty, in which business uncertainty about taxes and regulation fostered reluctance to hire (Baker, Bloom, and Davis 2013; Leduc and Liu 2012a, b). For example, Hubbard et al. (2012) write that “uncertainty over policy—particularly over tax and regulatory policy—limited both the recovery and job creation.”
Government-induced uncertainty is a current factor, and that was created by Obama.
Gosh, it took the Big Brain Smart People 2 whole freaking years to figure out what I knew in 2010....
08-28-2010, 07:05 PM
Quote:
Originally Posted by Mircea
There's no spin.
Look, there's a great deal of uncertainty. The Bush Tax Cuts expire at midnight December 31, 2010.
10-15-2010, 05:11 AM
Quote:
Originally Posted by Mircea
I couldn't agree more, not because I said the same thing in another thread on companies hoarding cash, but because it's true.
Uncertainty, and that's what we have here, is never good.
If we had a leader in the White House, a leader would say "yea or nay" on the extension or expiration of the tax cuts.
Instead, that has become a political tool. I think we know the answer, sort of.
Obama intends to let the tax cuts expire, but he won't publicly say that for fear that it will harm the Democrats in the elections.
Businesses are content to sit and wait until after the elections. A definitive answer on the tax cuts is incredibly important, because it will determine a company's revenues for the year.
And then Obamacare is a real issue.
And just think...I gave you that info for free.....your useless government "you-Harvard" economists were too stupid to figure it out.
How sad is that?
Business financing problems, in which businesses were unable to get credit because of continued troubles in the banking sector. Credit-starved businesses can’t pursue potentially profitable projects, reducing their hiring.
That's nonsense.
Yes, the ethanol industry was briefly thrown for a loop because of the credit crunch at a time when corn crops were setting record prices, but your entire economy is not ethanol production.
So where's that 5% unemployment rate for October 2012 everyone was predicting....except me?
Hahahaha.
Some people.
Your economy will suck, but pick up a bit in the 2nd Half. Too bad Obamacare will suck money out of your economy and send it to the Netherworld. Everything is pointing a recession 2nd Quarter 2014 (it might actually start late 1st Quarter 2014).
And then you still have the issue of Medicare and Social Security.
You can give Medicare the tax increase the Trustees suggest without harming your economy, but you're going to have to raise the FICA tax rate to the 9.0%-9.2% range and the price you will pay for that is the loss of jobs. And if Obama plays it off and passes the buck to the Unfortunate Soul in 2016, it will be that much worse for your economy.
Quote:
Originally Posted by MTAtech
Taxes are still lower today than they were forty years ago.
Federal tax revenues to GDP. Another irrelevant graph.
What about State and local taxes?
Aren't you going to take into consideration the fact that wages in the US have been declining?
Obviously neither you nor the idiots at Federal Reserve or the CBO read the Economic Report of the President (2012).
Almost everything you need to see how FUBAR your economy is right here...
You mentioned the E-Pop Ratio. You're exactly right. Loon at the E-Pop Ratios of the Euro-States. All of them are low, a lot lower than the US. That's the result of taxation and regulations...the trade-off is jobs lost.
Note that you'll see a few outliers.
Norway comes to mind, with an E-Pop Ratio of ~63%. You'll see that the Netherlands and the UK also have higher E-Pop Ratios than the US.
One thing you'll notice is that all of those countries are oil producers. The US is an oil producer. Indeed, and if the US had a teeny tiny population of 4.9 Million people then its E-Pop Ratio would be ~63%, too. Norway also has an higher military to population ratio (as a percentage of population, more people in Norway are in the military than in the US).
Anyway, you need to look at factors such as that when assessing E-Pop Ratios in other countries.
Pleased...
Mircea
I have to spread it around before repping you again, but thanks for taking the time to put together posts like this. I realize not everyone has an education in economics or finance, but anyone should be able to read the source information instead of relying on commentary...
When talking about future taxes, we aren't talking about a rate going from 35% to 39%. We are talking about the uncertainty of how to pay for an ever growing national debt as well as what taxes will be enacted to fund Obamacare's promised benefits. Not only that, but given Obama has dramatically raised the debt as well as promised future tax increases by enacting Obamacare at a time where the federal reserve has no buffer to curb inflation, there is an unbelievable amount of uncertainty in what the future will hold.
It has nothing to do with a 35% to 39% increase. If the current administration would come out with a plan for how to fund Obamacare as well as a plan of graduated debt reduction in addition to the fed showing a plan to unwind its balance sheet, then we would start to see a slow uptick in investing and unemployment.
So, the talk about future taxes isn't about the taxes that President Obama has actually proposed, but instead is some new unknown tax increase in sometime in the future?
LOL, that thinking makes sense to you?
Also you say you want a plan from the current administration to pay for Obamacare. LOL
The plan to pay for Obamacare was the bill that passed both houses of Congress.
Why do conservatives ask for things they won't believe no matter the reality.
I'm glad you're pleased with yourself, but I'm not quite sure why. Understanding that business thrives with stability and declines with uncertainty is Business 101. It wasn't particularly clever when I said it--it was simply a statement of fact. I'm so glad that you stated the obvious two years ago? As for the rest--I don't discount data just because a secondary source that I don't care for rehashes a story reported by major media. That was my point--if that individual doesn't like Think Progress (or FOX) that's fine, but don't discount data just because you found it there--go to the source. I wasn't agreeing or disagreeing with the research--only with her immediately discounting it.
It really must suck to be a supply-sider austerian. Just imagine the mental gymnastics you have to play in order to validate your defunct worldview.
I adhere more to a synthesis model between Keynesian economics (which obviously doesn't work in part due to the lack of price stickiness) combined with a new classical model to explain the gaping assumptions made in Keynesian. Neither Austrian nor Keynesian economics work in practice.
Quote:
Originally Posted by Iamme73
So, the talk about future taxes isn't about the taxes that President Obama has actually proposed, but instead is some new unknown tax increase in sometime in the future?
LOL, that thinking makes sense to you?
Also you say you want a plan from the current administration to pay for Obamacare. LOL
The plan to pay for Obamacare was the bill that passed both houses of Congress.
Why do conservatives ask for things they won't believe no matter the reality.
I want the current administration to show a plan to pay for Obamacare. There has yet to be one.
Do you want me to show you the math to prove it from an economic modeling standpoint? We are still uncertain as to how to pay for Obamacare. We are still uncertain as to how to pay for the increased national debt. We know that this health care as well as increased interest payments on national debt will be financed by future taxes on earned income. This will mean that we expect the household to have less money in the future due to an increased tax liability with no decrease in current. This means that, as we expect this future tax to exist, we will expect future output and employment to fall as well. A household will not work as much if they don't expect to have as much income to spend. This means that now, the household expects to spend less money in the future. If the household assumes it will have less income to spend in the future, they will save more today to try and stabilize their current and future life styles adjustments. As we save more today, we spend less money today on consumption.
So now, because future expected taxes increase (on offset in future expected spending cuts), we save more now, expect to consume less in the future, expect to work less in the future, this leads to interest rates falling given the fact that less depositories are willing to lend in a situation where future prospects are not greater than current prospects. Now, we have deflated interest rates in an economy where the household wants to save more today, and given real interest rates being negative when accounting for inflation, the average household (and bank for that matter) will be less likely to invest those savings and more inclined to sit on the cash until the future looks more positive.
Which will not happen until a concrete plan as to Obamacare funding as well as national debt paydown is agreed upon. Which is why you should stop reading ThinkProgress or trash like that and actually study economics or finance instead.
When talking about future taxes, we aren't talking about a rate going from 35% to 39%. We are talking about the uncertainty of how to pay for an ever growing national debt as well as what taxes will be enacted to fund Obamacare's promised benefits. Not only that, but given Obama has dramatically raised the debt as well as promised future tax increases by enacting Obamacare at a time where the federal reserve has no buffer to curb inflation, there is an unbelievable amount of uncertainty in what the future will hold.
It has nothing to do with a 35% to 39% increase. If the current administration would come out with a plan for how to fund Obamacare as well as a plan of graduated debt reduction in addition to the fed showing a plan to unwind its balance sheet, then we would start to see a slow uptick in investing and unemployment.
Obama flattened the growth in expenditures.
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