A question for economics experts...

[Lone_Wolf_Moderate]

I keep hearing this spin from the Right that the joblessness and overall economic malaise is due to overtaxation and overregulation. Is this true? Certainly the argument that corporation pay too much taxes is specious, but don't frivilous lawsuits and excessive red tape increase the costs of production? Wouldn't targeted tax credits for businesses that refuse to outsource jobs help raise incentives? Surely their must be a balance. Any thoughts?

[Nite Owl]

1. Targeted tax credits might help but the reason for

outsourcing is lower costs for businesses. Salaries are lower and they don't have to pay heathcare costs which are so high in the US. Even moving to developed countries is a savings. As far as frivilous lawsuits that is really a myth and companies deserve to be sued for making products that are harmful or defective.

[Lone_Wolf_Moderate]

2. Good point.

Right-wingers always use that line about lawsuits, missing the point. Frankly, it seems to me that the whole argument from the Right is that businesses are right to screw over their employees, because they're supposedly overtaxed. In their mind, if we don't appease them, they'll be justified in their outsourcing, etc.

[cliss]

3. It's true that taxes are an expense

to a company. They can be between 25% and 50% of a company's earnings - a huge chunk. But that's not the only criteria. A company will look at many factors before deciding to hire more people. Here's my take on the situation:

Company X is doing OK during 2004. They are expanding a little bit (at least they're not going belly-up!). Management is in a meeting, wringing its hands. "Should we hire a few more people, or do we try to cover the work ourselves by adding in overtime, or just cracking the whip a little more?"

In my opinion, here's what the company will consider before it hires more people:

1) business outlook for the short term. What's the opinion on the street? Do people feel that things are looking better? Politics, terrorism, general sign of the times. If people are really pessimistic then the company will decide not to hire because they are pretty sure things are not going to get better. Instead, they start looking at who will be next to get the axe.

2) Cost of the next employee hired. Things like wages, health insurance, perks, benefits, payroll taxes, 401(k), the entire cost of the employee will be factored in.

3) Interest rates, to some extent. If they're low, it means increased production. If they're high, business can't expand and they don't do as much hiring. But - look at today's interest rate. Go figure.

3) Taxes are only one part of the cost of production. Just because the stupid Rat-publicans lowered them in some categories, doesn't make them Superman.

[orwell]

4. A Few Points

GDP is growing rather strongly so your characterization of malaise is overstated.

As far as over taxation, corporations are paying one of the lowest portions of the total tax bill since the 30's. What is out of control are health care costs, both for employers and employees.

I am no fan of over regulation, but the term as bandied about is somewhat meaningless. I'm sure there is some over regulation and red tape in some areas and not enough regulation in others. You can't have a market without regulations. The key is in making them effective and fair to all the market participants.

I don't know enough about the level of lawsuits. I'm sure some are frivolous and many are not. What many fail to mention is that most lawsuits involve one company suing another. By a large margin, the courts exist for large economic interests, not small grievances among individuals.

As far as Kerry's tax plan for so-called Benedict Arnold companies, it seems fair on its surface. However I must say that I am very weak when it comes to tax policy analysis so I may not understand if this approach has some unintended consequences.

O

[leftyandproud]

5. taxes and regulation..

are most definately a burden on businesses...They are an expense, and if this expense can't be passed on to the worker or consumer to maintain profitability, the only option is to move overseas. Too much govt interference with business can easily kill the goose that laid the golden egg. Most on the left will eventually acknowledge this..and the debate seems to be on what degree we can push this envelope before the negative results happen.

[yella_dawg]

6. Bullshit

Plain and simple.

Business profits are at record levels in many sectors. I don't know what big business expects to gain from all their whining, but suffering grievously they ain't.

[swinney]

7. History is best rebuttal

1950's-1960's-1970's were great growth years for wealth and for jobs for all with growth spread more evenly.

Taxes and regulations did not deter growth.

Best cure is give Democrats the power to make decisions. Here is proof.1.from Harding in 1921 to Bush in 2003
2.Democrats held the White House for 40 years and Republicans for 42.5 years.
3.Democrats created 75,820,000 net new jobs and Republicans 36,440,000.
4.Per Year Average—Democrats 1,825,200---Republicans 856,400.
5.Republicans had 9 presidents during the period and 6 had depression or recession.
6.DOW—Gained by 52% more under Democrats.

[swinney]

8. Here is big "taxer-spender" Clinton vs "conservative" Reagan

Comparing Democrat’s hero-CLINTON—versus Republican’s hero--REAGAN
-----------------------------------------------------------------------------------------------------------
1.JOBS—grew by 43% more under Clinton.
2.GDP---grew by 57% more under Clinton.
3.DOW—grew by 700% more under Clinton..
4.NASDAQ-grew by 18 times as much under Clinton.
4.SPENDING--grew by 28% under Clinton---80% under Reagan.
5.DEBT—grew by 43% under Clinton—187% under Reagan.
6. DEFICITS—Clinton got a large surplus--grew by 112% under Reagan.
7.NATIONAL INCOME—grew by100% more under Clinton.
8.PERSONAL INCOME—Grew by 110% more under Clinton.
SOURCES—Bureau of Labor Statistics (www.BLS.Gov)--Economic Policy Institute (EPI.org)—Global & World Almanacs from 1980 to 2003 (annual issues)
www.the-hamster.com (chart taken from NY Times)
National Archives History on Presidents. www.nara.gov

Please submit comments to [e-mail] or P.O. Box 3411-Burlington NC-27215

[swinney]

9. Outsourcing has only one bottom line-Profits.

buy at lowest and sell at highest.

buy America is past history.

You cannot compete.

Sad. Hurts like heck. But true.

What can John Kerry do? Darn if I know. Carrot and stick.

It will not change unless consumers refuse to buy made outside USA.