One of the responses to yesterday's "Stimulate Me" post, was what I would consider the standard conservative Republican answer:
"Only long term fixes that do not add to debt can change consumer sentiment which in turn stimulates the economy. Examples are permanent tax incentives and pro business legislation."
First of all, I question how "pro-business legislation" and "permanent tax incentives" would affect "consumer sentiment," and aren't instead just further giveaway corporate welfare.
But even more, it got me to thinking about how all these hard political positions -- frankly on both the right and the left -- seem to have little real world effect on my business.
I try to envision just what 'tax incentives and pro business legislation' would actually help or hinder my everyday business, and I'm damned if I can come with anything significant.
Admittedly, I'm a pretty small business, but I can scale up 5 or 10 times and still see little or no effect from legislation of any kind. Most of what I read about are Economy of Scale measures, that -- when you get right down to it -- benefit BIG, BIG corporate entities.
I'll tell you what, I'll feel sorry for corporations when they start paying the same rate of taxes that I do. But as far as I can see, while corporations have the legal rights of individuals they sure don't pay the same rate of taxes as individuals.
Sure, it would dramatically contain their growth. Maybe they'd have to charge the same prices as me. Maybe they'd have to try harder to get their workers, if the playing field was more level, and they'd have to offer higher wages and benefits.
I know, I know -- they'd send even more of their work overseas...but what kind of fucked up answer is that? Not that it seems to matter -- they have been doing that as fast as they possibly can already.... If that is their answer, then tax them out of existence.
But it seems to me that many of those "pro business legislation" and "tax incentives" helped enable corporations to move their workforce over the borders, instead. We're broke, and we can't buy the damn goods, and the conservative answer seems to be -- "let's do more of that, because it's worked so well for the average citizen...." Average citizen being someone who earns more than 100k a year.
I'm not just slamming just the Republicans here. Both parties are enabling big corporate interests above all else -- who have returned the favor by buying influence. I haven't seen much trickle down in the way of wages and benefits for the working class. They're completely arrogant about management bonuses and wages. But they've managed to frame the argument in a way that the little guy -- small business owners and blue collar voters -- have often chosen a side that if they would just think about it a little more -- has absolutely no benefit to them.
None.
Tax increases? 3% more for people who earn five times what I earn? As a small business owner, I'm supposed to be concerned about that?
The argument against the local and state measures that supposedly drive away 'business' don't really apply to the vast majority of businesses -- even businesses five or ten times my size. (Or if they do, those businesses are so shaky from other factors, that the legislation is the least of their problems.) Which is why they probably aren't crucial for a business staying or leaving, growing or shrinking.
I'm just saying, I wish that voters would take a step back, and instead of solidifying into hard political positions would ask themselves -- do these measures actually affect my position in any way? Or are they scaled at a much higher level of income and size? And why the hell am I voting for a position that -- if anything -- probably detracts from my own best interest?
I say this as a liberal -- but I think most voters on all sides of the political spectrum ought to try to look past dogma and look at what's actually happening on street level.
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32 comments:
Outstanding post, sir.
One thing to bear in mind when we talk about "small business" is that the federal government's definition of "small business" can include businesses that employ up to 500 people. You and I probably would call that a "pretty big business."
Froma Harrop has a good column in The Bull today explaining how Tea Party "populism" is a perversion of real populism as practiced by William Jennings Bryan, Theodore Roosevelt and other leaders of the Progressive movement of the late 19th and early 20th centuries. The Tea Party movement, under a false banner of "populism," is conning middle-class and working-class people into fighting against their own self-interest.
And it's not the "spontaneous grassroots uprising" it pretends to be -- those grass roots have been carefully fertilized with the money of the Koch family and other right-wing billionaires. For the straight skinny on the Koch brothers, I recommend this New Yorker article: http://www.newyorker.com/reporting/2010/08/30/100830fa_fact_mayer.
Now last time looked Corporate (C) income tax was at 34% at income levels of 75,000 and settles in around 35% (with some ranges hitting 38% and 39%)
Now considering that personnel income taxes are at 25% around 75,000 and max out at 35% explain your comment about when they pay as much tax?
Now I suspect you are talking about various deductions. Of course individual tax payers also get various deductions.
Blackdog, just as MoveOn.Org and other such organizations get a lot of funds from Left wing billionires such as George Soros.
Housing Woes Bring a New Cry: Let the Market Fall
By DAVID STREITFELD
*
I thought this was a good one on NYTMES. LET THE FUCKING HOUSING MARKET COLLAPSE. ITS COMING FOLKS.
Regarding the rhetoric the PUG&DEM are the same OREO-OBAMA is an AIPAC whore.
The bend-bubble billions were largely funneled to Israel for the cause of zionism by Bend's christian fronts from CACB to MDU to S1031. Even Suterra is zionist front. The owner of Suterra is one of the richest zionists in the world.
It's all going down folks because AIPAC has destroyed their cash-cow ( USA ), now Israel will bomb Iran, and some CHRIST_ZION burns the quran in FL, ...
Bend is fucked. Long live Singapore. :)
hbm has never seen the inside of a small biz in his life, a life long whore for the 4th estate largely the group responsible for most of our modern problems.
Yes hbm everybody hates the tea party, because the truth is they don't have a leader, and that scares the shit out of the status-quo.
Yes, its financed by billionaires, but as RDC points out, everything is financed by billionaires, so fucking what.
I used to love this quote when I published, "Behind every paper is a rich man".
Depending upon the type of business the SBA defines the size limit from 100 (merchant wholesalers, durable goods) to as high as 1500 (scheduled air transportation) with most being around 500 as mentioned by Blackdog.
If you want to grow jumps you need to make it as easy as possible to start new businesses and to add new employees.
Now as far as impact on small business. The impacts can be quite substantial. Lets take for example a single person tryig to start a business. The impacts on that person range from license fees, construction permits, the various paperwork and accounting records that must be maintained, etc. as well as impacts from legislation such as ADA (Duncan is your store ADa compliant with appropriate aisle widths, counter heights?)
Duncan - if you did not currently have your business and wanted to start it from scratch today with the regulations and costs at the state, county and city level, as well as trying to raise funding to buy stock, etc. Do you think you would be successful starting up your store today?
Now how about a slightly larger company. One that has 40 employees or so and are looking to make the jump to the next level. They now have a higher hurdle to jump because once they cross over 50 they trigger the need to provide health insurance. That makes it more difficult for them to add a few employees because it triggers a whole new level of costs and complexities. Would you have your employees if you had to pay for health insurance for them?
Lets take a look at the the impact changes in tax structures have. Lets look at the larger end of small business and take a company with 1000 employees, that has a billion dollars in revenue, with a 5% profit margin. In this case the company is private and has 10 owners (this is a real company). Now the profit is 50 million, now the company is growing and in investing in new plants and has doubled in manufacturing capacity over the last five years. A 2% change in taxes is a reduction in return to the owners of one million dollar per year, just for that change. Now if you have a federal corporate tax rate of 35%. They are paying 17.5 million dollars in federal income tax. Now in California they pay 8.84% or another 4.42 million. So after tax they have 28.08 million left. On a capital investment in plants of approximately 600 million dollars or a return on investment of 4.6%. If you impact the tax rate by 3% that takes another. 1.5 million out and drops their return to 4.43%. They are still building new plant capacity, but it is not in California.
"Blackdog, just as MoveOn.Org and other such organizations get a lot of funds from Left wing billionires such as George Soros."
Yes, the righties ALWAYS bring up Soros.
How many "left wing billionaires" can you name BESIDES Soros who contribute heavily to liberal causes and candidates? You guys have the Koch Brothers, the Waltons, Phil Knight, Richard Mellon Scaife, Rupert Murdoch et al., and we've got ... Soros. Big deal.
Another thing: Soros operates out in the open. Right-wing moneybags like the Koch Bros. generally operate sub rosa. Why is that? Are they ashamed?
No -- it's because they don't want it known that most right-wing "grassroots" organizations are Astroturf operations financed by plutocrats like them. It would be kinda tough for those organizations and the politicians they support to rant against "liberal elitists" if that became generally known.
Thats because billionaires tend to have a better grounding in reality so of course more of them are conservative.
Now you can drag out a list, usually ones that are out of Hollywood or affiliated with large law firms (Tort law).
I don't see Soros putting his name in an open public fashion on most of the 527 groups he supports. For that matter he did not put his name out as being related to moveon.org until the press dug it up.
Herb Sandler
Peter Lewis
Mort Zuckerman (though I think he has publicaly recanted his prior support for Obama)
Ted Turner
For a few
and if you drop slightly below one billion you can get a pretty large list including Tim Gill and others.
It doesn't take a genius to figure out that the two-headed, one party system of America works for corporate America first, and the common man only as an after thought for re-election.
But it does take a stubborn and self-delusional person to believe what they feed you on tv and the rest of the mass media. Government serves the rich, because it's the rich that put them into power. No sir, it is not the common people.
You only have a slim chance in hell of being elected unless you have a war chest to start your election campaign. You get funded by the rich if you tow the line, if you don't, no funds for you.
There is such a thing as corporate warfare. It's just shrouded and deliberately distorted by the media... who we know are owned by the rich. No coincidence, that.
"Thats because billionaires tend to have a better grounding in reality so of course more of them are conservative."
LMAO!!!! You're a hoot, RDC, I gotta hand it to ya.
I believe any minimum-wage worker in America or anybody who runs a small business like Duncan's has a better "grounding in reality" than the Koch boys, who have lived inside a bubble of wealth and privilege since birth.
Self-made billionaires, of course, are different, but there are damn few of those. Larry Ellison of Oracle is the only one who comes immediately to mind.
Must be a very narrow mind.
Going down the list of billionaires the following are self made:
Gates, Buffett, Carlos Slim, Larry Ellison, Ingar Kamprad (IKEA), Armancio Ortega, Li Ka-Shing, Michael Bloomberg, Michael Dell, Donald Bren, Sergey Brin, Larry Page, Steven Ballmer, George Soros, Paul Allen, Ronal Perelman, Mikhail Prokhorov, Jack Taylor, Carl Icahn, George Kaiser, Lee Shau Kee, Roman Abramovich, Phillip Night, James Simons.
This was just out of the top 55 billionaires. Basically half are self made.
While the Walton family today inherited, Sam Walton was clearly self made.
Even Murdoch is mostly self made (he inherited two newspapers in Adelaide in 1954 and built that into a very large empire)
Since you mention the Koch brothers so much here is the blurb about one of them from Forbes
Charles Koch
Fortune: self made
Fortune of one of America's richest men down more than 25% in past 6 months as fertilizer, oil, chemical markets all collapsed. Still, sales at his Koch Industries topped $100 billion in 2008; company now America's second-largest private company. Father, Fred C. Koch (d. 1967), invented method of turning heavy oil into gasoline. Sons Charles, David, Frederick and William inherited Koch Industries after father's death. Charles and David bought out William and Frederick for $1.1 billion in 1983. Today company has stakes in pipelines, refineries, fertilizer, fibers and polymers, forest and consumer products, chemical technology. Employs 70,000 workers in 60 countries. Purchased Invista, maker of Lycra and Coolmax fabric, in 2004 for $4.2 billion. Dropped $21 billion on paper and building-supply vendor Georgia-Pacific the following year. Brothers each own 42%. Charles is chief executive. Studied nuclear and chemical engineering at MIT; cofounder of conservative think tank Cato Institute.
Basically they built the company that they inherited from their father (which was rather small at the time), into something in the 2 billion range (they purchase the other half from their brothers in 1983) up to something where they are now worth about 18 billion dollars each today
"Thats because billionaires tend to have a better grounding in reality so of course more of them are conservative."
I was thinking it was more that they're just bigger bastards.
"There is an increasing amount of evidence that the rich are a vicious tribe of people...
From yesterday's Bloomberg:
"Ultra-Rich in Finance Are Meaner Than Rest of Us: Matthew Lynn."
By the way, last year General Electric not only didn't pay taxes, they were given a credit.
Yes, RDC, you paid more in taxes than General Electric.
Uh Duncan,
That is one year with losses and a special law (you know that little stimulus act thing) that basically allows losses to be taken against previous year taxes. Try taking their 5 year average, not just a one off exception.
I assume that you are a sole prop as your corporate structure so guess what if you had sufficient losses in a year such that you had no income you would not pay any taxes either.
From the most recent GE 10-k
GE and GECS file a consolidated U.S. federal income tax return. The GECS provision for current tax expense includes its effect on the consolidated return. The effect of GECS on the consolidated liability is settled in cash as GE tax payments are due.
Consolidated U.S. earnings (loss) from continuing operations before income taxes were $(498) million in 2009, $2,659 million in 2008 and $9,078 million in 2007. The corresponding amounts for non-U.S.-based operations were $10,842 million in 2009, $17,123 million in 2008 and $18,450 million in 2007.
Consolidated current tax expense includes amounts applicable to U.S. federal income taxes of a benefit of $886 million and $723 million in 2009 and 2008, respectively, and expense of $64 million in 2007, and amounts applicable to non-U.S. jurisdictions of $2,416 million, $3,060 million and $3,042 million in 2009, 2008 and 2007, respectively. Consolidated deferred taxes related to U.S. federal income taxes were a benefit of $2,423 million and $827 million in 2009 and 2008, respectively, and expense of $776 million in 2007.
Now if you look at the taxes the consolidated GE filing for 2009 showed a credit because of GECS.
2007 Taxes 4.155 Billion
2008 Taxes 1.052 Billion
2009 Taxes -1.090 Billion
Now of the 2009 Figure GE had taxes of $2,739 Billion, While GECS had a credit of $3,829 Billion.
THe tax situation is described in note 14 of the 10-Q
Now from an article in April 2010
From an Article in April of this year
GE, Exxon Paid No U.S. Income Taxes in '09
GE Capital Lost Money, Exxon's Tax Dollars Went Overseas
26 comments By Christopher Helman, Forbes.com
April 6, 2010
It's GE Capital that keeps the overall tax bill so low. Over the last two years, GE Capital has displayed an uncanny ability to lose lots of money in the U.S. (posting a $6.5 billion loss in 2009), and make lots of money overseas (a $4.3 billion gain). Not only do the U.S. losses balance out the overseas gains, but GE can defer taxes on that overseas income indefinitely. The timing of big deductions for depreciation in GE Capital's equipment leasing business also provides a tax benefit, as will loan losses left over from the credit crunch.
But it's the tax benefit of overseas operations that is the biggest reason why multinationals end up with lower tax rates than the rest of us. It only makes sense that multinationals "put costs in high-tax countries and profits in low-tax countries," says Scott Hodge, president of the Tax Foundation. Those low-tax countries are almost anywhere but the U.S. "When you add in state taxes, the U.S. has the highest tax burden among industrialized countries," says Hodge. In contrast, China's rate is just 25%; Ireland's is 12.5%.
Now I included this because of a very key item. Because the US has a higher tax rate and because it does not pay US tax on foreign earnings, it benefits GE to keep as much of its expense as it can in the US. Considering that GE has 302,000 employees a lot of that expense is in US jobs. If the law was changed and GE had to pay US tax rate on all earnings, even those not brought back into the US (as some in the government propose) then it would nolonger benefit them to keep their expenses (say jobs) in the US and would instead be in their interest to move those expenses to where ever they could execute the functions the lowest.
Duncan,
If you really wanted to quote that opinion piece the point was that many of the new ultra rish are coming out of financial services where they did not really need people skills or interaction. As compared to other ultra rich, such as Gates that got wealthy from building a company where they had to interact with others. As such the title was pointing to a subset.
RDC: To call Charles Koch "self-made" when he inherited a multimillion-dollar corporation from his father is ludicrous. He made his pile bigger, but he had a pretty damn big pile to begin with.
I mentioned Ellison because he's the only contemporary billionaire I know of who actually started out poor -- his was a classic rags-to-riches story. Gates's father was a successful lawyer; Buffett's father was a successful businessman and a congressman; Phil Knight's father was a lawyer and newspaper publisher; etc.
I guess it depends how one defines "self-made." If somebody starts life with a hundred million dollars and runs it into a billion, I don't consider him "self-made."
Oh, and as you have mentioned, Soros is a liberal -- and self-made. You might think he has a shaky grasp of reality but he seems to have done all right for himself.
Uh, most of the people that were self made did not start out with several million. While Gates father was a lawyer, Bill Gates did not use funds from his father, nor any inheritance in creating Microsoft. Warren Buffett also did not have a trust fund or inheritance when he started his business.
So I guess your view is that for someone to be self made they had to come from a family that was indigent.
Forbes clearly disagrees with your view about being self made.
More people that have been handed a million dollars have taken it to zero then the number that have started with a million and taken it to a billion dollars.
If you check out the forbes list several not classified as selef made are listed as inherited and growing. Others are listed as merely inherited. Clearly forbes views that he has built his fortune of his merits.
Duncan,
As far as the rich are concerned it is interesting how such mean people are donating significat amounts of money to Charity. In addition to Gates and Buffet, both of whom are donating the majority of their fortunes, you are have Eli Broad donating 75%, Gary Lenfort who has already donated 65%, John Doerr and John Morgride who have committed to donate over 50%.
Interesting that George Soros, who was at the same dinner has not made such a committment.
You're faith in the rich is touching, RDC.
In some cases, I wouldn't be surprised if they are donating money to their own non-profit organizations.
In most cases, corporations donate so they can deduct it from their taxes, thereby, allowing them to enter into certain tax brackets, which in turns help them save or make more money...
hmm... funny how that works
I think that they (as do I) have far more confidence in the amount of good they can deliver by directing how it is used (such as what Gates is doing with his foundation) then if they put it into the governments hands.
there are a lot of government jobs out there... a lot.
Number one employer.
Too many government jobs
I think partisan politics is funny, but I think the typical Republican stance against government is even funnier. And strangely, a lot of these folks work for the government!
What would you do without schools for their kids? What about those nice paved roads they use for their off-roading 4x4's? How about those policeman and firefighters? What about some of the health clinics? How about the water and sewer system they enjoy so much? What about that army that protects their country? What about those court buildings and those involved in legislation to help manage and coordinate the law so they don't have to?
Sure there's excess in spending, but a lot of it is spent on really good things that benefit us all.
One of things anti-government folks don't realize, is that if they took government away, or severely crippled it, it would allow something else to come in and take its place. And IT would be the new government! In this case it would be the corporations. As it is, they already run government. Take government away, and corporations would be your new head figure to hate. And if it wasn't corporations, it would be something or someone else.
When you have a gargantuan populace in the world, government is a natural consequence. You can't escape it. You can only hope to change what it looks like and how it behaves. Getting rid of "government" only allows for someone else to step in.
Attitudes like this will never be satisfied.
I have also seen lots of ways the government wastes money. I was a memeber of an DOE environmental sampling team that was testing areas that could not get cleaned up because a certain Senator that was ranting in public that the DOE was doing nothing to clean up the problems was chairing a committee where he was blocking the funds necessary to clean it up. I represented the FDA in international negotiations on the development of drug submission guidelines.
The fact is that the government continues to grow. Projects, once started with the best of intent, are hardly ever weeded out. Departments once created exist for ever. Today much of the government spending is pass thru. The government collects taxes and then passes it through to state and local governments, while collecting its cut along the way. By the time it reaches its end user you get may 50-60 cents on the dollar use of it, the rest is skimmed of to support the bloated bueacracy.
The government controls much by those pass through programs, but they are tremendously inefficient. Better to let the money stay at those levels and fund directly.
The government needs to get pruned back periodically, departments that have not been successful needs to be eliminted and the role of others needs to be challenged. While the % of employees vs US population is not at a peak, the pass through programs mean that the in terms of percent of GDP the government is the highest in history.
I agree with you on that aspect of government. Once they get money, its hard for it to let go. With all the dismantling that republicans say they've accomplished since Reagan, you'd think it'd be better of today. Not a lot to show for all the effort. That too, is probably not just a coincidence.
Dang right, every government needs pruning. But it should also be realized that in this day an age of world economics, you'd have no chance in hell of dismantling any government, let alone the U.S.A.'s. You dismantle it completely, and the corporations would step in and have a blood bath. No innocents spared. Just look the third world countries for your proof.
You can always tell who's in power by the height of the buildings. First it was the castles representing the Lords or Kings. Back in the old old days it was the churches that were tallest. Then later on it was the government buildings. Now it's the corporate skyscrapers. I think the only one it doesn't apply to is the military. I think the military has more influence than most could imagine.
Your Corporate Conspiracy view is a bit much.
Corporates are by law responsible to their share holders and have a fudiciary responsibility to maximize their returns.
I have dumb behavior by some corporations, and some criminal behavior. I have also seen dumb behavior and criminal behavior on the part of individuals. Considering that populations are staff by people you will see similar issues.
Our system allows lobbying by corporations, as well as all kinds of other special interest groups (unions, environmental, immigration advocates, etc.). Having participated in that process, I can say that Corporations do not have the power you are indicating.
Meant to say since corporations are staffed by people you see similar results
RDC, I think you're living in a world that exposes your naiveté. And more to the point, you had less of rebuttal in your last post and more of a typical "cook labeling" response to try and discredit my views. Seems like you're following a formula to me.
Here's a quote from George Carlin:
"The limits of debate in this country are established before the debate even begins. And everyone else is marginalized and made to seem either to be communist, some sort of disloyal person, a cook, and now it's conspiracy. They've made something that should not even be entertained for even a minute. That powerful people might get together and have a plan! Doesn't happen, you're a cook, you're a conspiracy buff."
I honestly don't care if it's the corporations, government, the rich bankers, the pope, your teddy bear, whatever. People are in power that have only their interests in mind. And you and I are only an afterthought. Even then, I might be being too generous.
The problem with the us vs. them mentality is that's what they want you to do. It's something the Roman's learned a long time ago. It's called Divide and Conquer. If we're too eager to fight amongst ourselves, we can't unite to solve our singular problems. Sure, go ahead and keep on believing it's a republican or democrat thing.
You are the one with the Us VS THEM mantality. Hate to tell you but Corporations are filled with people. They have the same strengths and weaknesses that all other people do. Corporations have a purpose, that purpose is to make a profit while runing their business. They are no more evil then people running small business or for that matter individuals. Do they make some bad decisions, yep. But they make far more good ones. Do they have some negative impacts - yep. But they have far more good ones (suhc as the hundreds of thousands of people that they employ).
Do they try and impact the rules, sure. Do they test the limits - yep. Individuals do the same thing. In most cases they do operate within the rules and are good contributors. Of course one can be a good contributor and play by the rules and still be thought of as being bad depending upon the philosophy of those judging them.
We live in a dynamic world where there is not black and white, single view. Things change by the dynamics of competing forces. Corporations are part of those forces (often you have different companies of different sides of the same debate)
Is the Corporate system perfect - no. But it has been a lot better then any other system out there.
I have served as an officer of a company. I have been on the BOD for others.
Corporations do not this unlimited power you are assigning to them. They are very much limited and walk a very fine line, especially the multinationals that need to follow different laws in different countries. The bigger you are the more people you have looking at every action. The more competing interests that take interest in you. You must deal with those conflicts and at the same time return value to your shareholders.
I see you miss my point entirely.
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