Monday, August 15, 2011

Tax Rates & Job Creation

Three things happened this morning that prompted me to write this post. First, a friend of mine commented on my previous post by stating that raising taxes during a recession is a bad idea. Sounds like common sense. Then I read in the Tribune about an interview with Michele Bachmann.  "We have to lower tax rates considerably on job creators. And with everything from the death tax to alternative minimum tax to 100% expensing immediately for small business,” she said on Fox News Sunday. When asked about extending unemployment benefits to regular people she replied: “I don’t think we can afford it.” OK, so we know where her priorities lie. Then I read the article about Warren Buffet. He said that we need to stop “coddling” the mega rich. He claimed that higher tax rates will have little effect on investment and job creation.
I decided to do a little digging to see if I could find some numbers and see if there’s any correlation between top marginal tax rates and unemployment. I googled “tax rates by year” and clicked the link to the National Taxpayers Union (www.ntu.org). Their tagline: “America’s independent non-partisan advocate for overburdened taxpayers.” I might have agreed with the non-partisan part if they had left out the “overburdened” part, but I’m guessing their numbers are good. I also googled “unemployment by year” and got the Bureau of Labor Statistics (data.bls.gov). Their website shows unemployment by month, going back quite a ways. Here’s what I found:

Year(s) Top Marginal Tax Rate Average Monthly Unemployment Rate
1954 - 1963 91% 5.4%
1964 77% 5.2%
1965 - 1967 70% 4.0%
1968 - 1980 70% or more 5.9%
2001 39.1% 4.7%
2002 38.6% 5.8%
2003 35% 6.0%
2004 35% 5.5%
2005 35% 5.1%
2006 35% 4.6%
2007 35% 4.6%
2008 35% 5.8%
2009 35% 9.3%
2010 35% 9.6%
2011 (so far) 35% 9.0%
Does this mean that if we raise taxes we’ll lower unemployment? NO! It means that Buffet is right – that the relationship between taxes on the richest and jobs is non-existent. The rich aren’t big job creators anymore anyway. Hedge fund managers don’t employ many people. Most of the industries that employ enough people to make a difference have decided that manufacturing is best done outside the United States – and taxes had little to do with that decision.
Next time you hear a candidate talk about the evils of raising taxes on “job creators” ask for some proof! Conversely, when a politician says that we must raise taxes to create jobs – ask for proof! Don’t just take the sound bites at face value – politician talking points usually have little substance. Demand more!

Monday, August 8, 2011

Congress: Please Stop Being So Dysfunctional

The United States government owes too much money. Standard & Poor’s (the same folks who told us the mortgage backed securities were A-OK) has downgraded the US to AA+. This is a proud moment, isn’t it? And, is the amount of the debt the reason S&P downgraded us? Not really. It’s political dysfunction. It’s the apparent inability of the Congress to deal with the debt. It’s partially because a chunk of our elected officials were dumb enough to sign a pledge saying they would NEVER raise taxes, under any circumstance. Stupid. Problem-solving 101 says you don’t block potential solutions right off the bat. And, it gets worse. According to this morning’s Marketwatch.com: “Mitch McConnell is already sabotaging the new Congressional “Debt Super-Committee,” vowing to appoint only Republicans who have signed Grover Norquist’s ‘no new taxes’ pledge”. So, by Republican tea-party design, that committee is doomed to stalemate and ultimate failure. Why not temporary tax increases? The Bush tax cuts were enacted with an expiration date. Why not do the same thing with tax hikes? Make them effective long enough to get us out of the hole (with substantial spending cuts, of course). For those of you who say they’ll end up being permanent: hogwash. Taxes go up; taxes go down. Reagan reduced them. Bush reduced them too.

I’d also like to remind Congress that their actions have consequences. My retirement funds are sinking as I write this. Their dysfunctional, pig-headed, obstinate stupidity is costing the populace dearly. Of course they don’t care. They’re already wealthy and have a great taxpayer-funded pension program. Little of this affects them.

Thursday, July 14, 2011

The Asteroid is Coming!

Remember those movies about asteroids hitting the earth? Deep Impact? Armageddon? Do you remember how people acted when our attempts to deflect the asteroids were thought to have failed? That’s how I feel about this debt ceiling issue. It seems all I can do is watch and fret.

If our elected officials screw this up, it’s going to adversely impact almost everyone – except them. The vast majority of them are really rich, thus insulated from a lot of the harm they will cause. They won’t lose their jobs. They have great health care coverage.

I think that the tea party Republicans will be the ones to blame if this all goes bad. Their intransigent stance on increasing revenues is not reasonable. Taxes have been higher in this country during better times. A modest tax increase, or closing loopholes (which is also a tax increase) will not kill the economy. I find the Republican rhetoric laughable: “tax increases on job creators…”. Please. Most of the increase will go to people who head companies that are sitting on trillions in cash, but still not hiring. Closing loopholes on corporate jets will influence their hiring decisions? Don’t treat us like we’re idiots. They aren’t hiring now, and the reasons have nothing to do with taxes at their level. It has to do with demand. Not enough people are working (and I do NOT think that government, through stimulus or other means, can employ enough of the unemployed to make a difference). If we can figure out a way to get more people working (no easy task), demand will increase and hiring will start. Wait – that’s circular isn’t it? Exactly. If they wait for demand, it will never happen. They’re going to have to do what Henry Ford did years ago – take a risk. He more than doubled the pay of his workers because he realized he had to create demand for his vehicles. Today’s CEOs are spineless or too stupid to realize this common sense fact. Hire more people – stimulate demand. Simple. Right?

Sunday, June 12, 2011

Difficult to be Gloomy and Doomy Today

I really want to write something gloomy and unpleasant, but it's so darn nice out today I just can't do it. Low 70s. Dry. Blue skies. Light breeze. Even yard work might seem pleasant today. Perhaps that is pushing it, but it's REALLY nice out.

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Wednesday, June 1, 2011

Book Review: The Informationist by Taylor Stevens

I just finished a great book by a new author: Taylor Stevens. The Informationist introduces an intriguing character: Vanessa "Michael" Munroe. She's an information broker with some unorthodox methods to achieve her goals. The plot is fast paced and set in exotic locations. I finished the book satisfied with the plot resolution, but really wanted to know more about the protagonist - what makes her tick, what she's going to do next. According to Ms. Stevens' website, this will be a series. The next Munroe novel is due out December 27th. I'm looking forward to it. Pick up The Informationist if you want a good mystery / spy / not-sure-how-to-categorize-it novel.

As some of you may know, I was in the business intelligence software business for almost 15 years. Occasionally we would receive a resume from someone thinking we were in the same business as Vanessa Munroe in The Informationist. These resumes were interesting reading: CIA and military backgrounds, foreign languages spoken, exotic locations mentioned, and expertise with equipment that I had no understanding of. The resumes themselves could probably form the basis for a novel or two. Strange world we live in.

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Wednesday, May 4, 2011

In Retrospect: Which Worked Better?

Hindsight is 20 / 20, but maybe there's a lesson here.

Which worked better for us? Patient, well-executed intelligence combined with a relatively small-scale effort? Or, "shock and awe"?

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Monday, March 14, 2011

THE LAST TIME (Fiction)

"I swear this is the last time I come running when she calls," Dave said.

"Yeah. I think I've heard you say that before," I replied.

Dave had called me a few hours ago and asked for my help. I didn't ask for details; I owed him.

"I know. I know. I can't help myself when it comes to her."

"Tell me again - what she said."

"She thought she was being followed. She was going to stop in Lena at a gas station and wait for me. But, the call ended abruptly. You know how crappy the reception is out this way."

We were driving west on highway 20. He was right. Cell phone service was spotty out here at best, as was security. There just wasn't enough money out in the rural areas to make it worthwhile. It was dark. The trees were thick, overhanging the road in many places. A light from one of the few farmhouses would occasionally break through the dense growth. It had been a long time since anyone had trimmed back the trees and bushes alongside this road.

"Is that her car?" I spotted a Chevy on the side of the road. Something didn't look right about it, but I couldn't tell exactly what from this distance, this late at night.

"Crap, I think it is. It's the right color and model," Dave said.

I pulled up behind it. It was Dana's car. Dave dove out the passenger side, leaving the door open. I reached behind my seat and took the Mossberg pump action out of its case. I reached over and closed Dave's door. We didn't need the van's interior light drawing attention. I got out and shut my door quietly. I approached Dana's car, flashlight shining the way.

"How did this happen? How does a car burn like this?" I asked. The car's interior was a burned steel skeleton, but the outside of the car appeared almost perfect. "It was an intense, but very controlled, fire. Someone knew what they were doing. They wanted to destroy the inside, but not burn the whole car and draw attention. But, why?"

"Footprints," Dave said "They lead into the woods over here."

We followed the prints and saw a faint trail. Dave was in the lead making enough noise to warn anyone ahead. But, I knew he was not going to slow down or quiet down and be more cautious. We came to a clearing.

"No" Dave started moaning. Dana was in the middle of the clearing, tied to a cross. Dave walked slowly toward her. Her naked body hung from the cross. Her torso and legs were crisscrossed with deep, ragged cuts. Blood streaked down her stomach and thighs and way more blood than you would think possible lay pooled beneath her. Dave stared at her, crying uncontrollably. I understood his feelings for her, perhaps better than he did. But, he was making too much noise.

"Dave."

"DAVE." He turned toward me.

"Go get a body bag from my van." Dave turned toward the woods, still crying, and walked to the van. I looked around the clearing, straining for a glimpse, a scent, a sound - anything that would tell me I wasn't alone. Satisfied, I set the Mossberg down and gently cut Dana down from the cross.

There was no one to call. No CSI team was going to be working the crime scene. Illinois government and most county governments had collapsed in the great tax revolt of 2012. Only the populated areas had services like that anymore, where there was enough people for some company to make a profit providing it. Dave showed up with a body bag. We carried her to the van.

"Dave, talk to me," I said.

"What I'd give for just one more time. One more time to hear her voice on the phone asking me for another favor. I always thought I'd have a lifetime of last times."


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