Weekend Reading: Economics Edition

Society-Wide Benefits of Raising The Minimum Wage
The Puzzle In The Labor Data
The Trump Tax Reform, As Seen In The U.S. Balance Of Payments Data
Why The 'Free-Market' Economy Is A Myth And How To Rebuild Public Power
The Failures of Neoliberalism Are Bigger Than Politics
What Kansas's Rebounding Economy Tells Us About The Farce of Republican Tax Cuts
How The Federal Government Rigs The Game Against Small Businesses
Make Corporations Pay For The Green New Deal
Rich Get Richer, Everyone Else Not So Much In Record U.S. Expansion
Unions Did Great Things For The Working Class

Sunday Reading

The Personal Finance Industry Is A Scam
What's Wrong With Modern Buildings? Everything, Starting With How They're Made
The Old Japan Disaster Horror Story
Andrew Yang Is Wrong
The Military-Industrial Virus
Does Trump Deserve Credit For The Economy? The Numbers Say No
The Misunderstood Brilliance Of The VA
How The Federal Government Rigs The Game Against Small Businesses
Robin Vos Insults The Intelligence Of Wisconsinites
Real Estate Owners Give Republicans Millions
When Socialists Swept Milwaukee
Colorado Has Generated Over $1 Billion In Marijuana Revenue
Study Finds Trump Tax Cuts Failed To Do Anything But Give Rich People Money

Corporate Consolidation

Economy

Closer Look At Obama's "$90 Billion For Green Jobs"
The Failure of Supply-Side Economics
Most Small Businesses Would Not See Tax Hit

Weekend Reading

Foreclosure Inventory Levels Still Declining
GE's Jack Welch Knows About Cooking The Books
Paul Ryan Wants U.S. To Be A Tax Shelter
The Outrageous Attack On The BLS
The Romance Of Start-Up Businesses
Romney Told 27 Myths During The Debate
Wall Street Pay Too High

Weekend Reading

Do Small Businesses Create Jobs?
Fiscal Therapy
Fix Income Inequality With $10 Million Loans For Everyone!
Romneys Were Able To Give Sons $100 Million Tax Free
Social Security in U.S. Less Generous Than Other Countries
The Rich Are Different Than You & Me...They Pay Lower Taxes
Why Do Half Of All Americans Pay No Federal Income Taxes?
Why You Should Care That 70% Of Antibiotics Go Into Animal Feed
Will The Exurbs Ever Make A Comeback?

Weekend Reading

Death Of The Fringe Suburb
Double Taxation Of Corporate Profits & Other Fairy Tales
George Will Confused By Numbers At The Post Office
Mining Bill Rushed Before Governor's Office
Myth Of Profligate Euro Zone Countries
No New Drugs? Blame Wall Street
The Obama Spending Non-Surge
Skilled Jobs Go Begging? Not Quite
Small Business & The Millionaire Surcharge
The Squeeze On State Workers
Top 0.1% Of The Nation Earn half Of All Capital Gains
Walker's Union-Busting Bill Challenged In Court
Who Does Not Pay Taxes? Kimberly Clark, Brunswick, Rockwell, & Snap-On

The Creation Conundrum

At one turn, the Republicans are extolling small business as the engine of job creation. (Remember hearing this oft-repeated line during the 2008 and 2010 elections?) Small here obviously implies these "job creators" are not part of the top 1 percent. These are everyday people, playing by the rules, working hard, and trying to build a business of their own.

At the next turn, the Republicans are claiming we can't tax the top 1 percent because they are job creators. The richest amongst us are rich due to deserved rewards for their risk, innovation, and efficient allocation of capital. These are very special people with keen insights and understanding (that layperson can't process) and therefore deserve their rewards.

Hmmm, if that's the case - if all (big or small) are job creators - where are all the jobs? If small business owners and the rich are all job creators, why are so many people unemployed?

Do the Republicans have a platform? Any kind of belief system anymore? Or have they become the party of intellectual somersaults, continually rolling into whatever position best riles the rabble?

Weekend Reading

American Troops Under the Formal Control of Another Nation

Distressed Real Estate: Yet To Hit Bottom

Falling Dollar Phobia

Inside the GOP's Fact-Free Nation

Job Creation by the Wealthy is Mostly a Myth

9 Things the Rich Don't Want You To Know About Taxes

Only Little People Pay Taxes

Small Biz No Job Machine

Super Rich See Federal Taxes Drop Dramatically

10 Epic Failures of the Bush Tax Cuts

The True Price of Auto Labor Costs

Three Most Important Health Care Graphs

What Determines the Price of Gas?

Wisconsin's Wolf in Sheep's Clothing

Discredited Proposal

Scott Walker thinks his business tax credit proposal is going to ignite job creation throughout the state. We should, we're told, lower the tax burden on small businesses, allow them more of their earnings, let them reinvest in their companies, resulting in job creation. Sounds pretty good. Superficially, at least.

The Business Journal details the plan, "The proposal calls for a 15 percent tax credit, to be applied to future tax payments, for small businesses making $250,000 a year or less. The credit would fade out for businesses making $250,000 to $500,000 a year." The Journal Sentinel elaborated, "Businesses with gross sales of less than $500,000 a year and an income tax liability could qualify for the proposed tax credit." Although, PolitiFact has found Walker's claim that 98 percent of small businesses will be able to take advantage of the tax credit is "false".

Growing business, in general, is a laudable goal. But isn't this the "picking winners" game that Republicans abhor whenever Democrats try to make such programs or initiatives more effective and/or more heavily invested? Plus, comparatively, isn't this really, in the greater scheme of things, ineffectual trifle which will barely make a dent into unemployment? And, relative to the subsidization provided to our "too big to fail" entities, the $40 million per year statewide tax credit (obviously inflated for appearance), amounts to a spit in the bucket. This amounts to about .0002 percent of Wisconsin's gross state product.

This isn't a "game changer." This is merely another giveaway to the select few who will take advantage of the credit. Yet another loophole in the tax code. And this from a Republican administration that supposedly hates taxes and wants them simplified.

As Madison's Channel 3000 discovered, for most businesses able to participate in the tax credit, the savings would range from a few hundred dollars up to $2,000. It's nice to have a few extra bucks. Yet, no business owner is going to hire staff due to an extra $2,000.

Come on, Scott. 250,000 is a large number of jobs. The clock is ticking. Thus far, your suggestions are real stinkers. If you're serious about creating that many jobs in your first term, you really need to lose the partisanship and your party line. You could have had billions of dollars of investment - trains and wind turbines - flowing into the state creating jobs, but you had to settle old political scores and push through bills that pat your party brethren on the back rather than accomplish job creation for Wisconsin.

Young Companies: Biggest Job Destoyers

John Torinus (conservative, business-shill of the Journal Sentinel and CEO of tax-avoiding Serigraph Inc.) is pushing his 'entrepreneurialism, small business creates jobs' contention, yet again.

Doug Henwood elaborates, "The small business myth is probably the most durable and pervasive of all. It holds appeal across the political spectrum, from corporate lobbyists trying to sell tax breaks to postmodern New Agers trying to sell their vision of decentralization and local self-reliance...Small firms pay less than large ones, are less likely to offer health, pension, or child care benefits, and are often more dangerous to workers. With few exceptions, they're not all that innovative technologically."

I have tried to put this "idea" to bed many times. See below for more.

For Further Reading:
Job Creation
Legalized Bribery
Small Business

More Corporate Tax Evasion

Edward Lump [what a fitting name], president and CEO of the Wisconsin Restaurant Association, in a recent Journal Sentinel article, rants against a proposed Wisconsin bill which he feels will threaten small business.

He throws out some small business stats, regurgitating the discredited idea whereby small business will save the day. "Small business employs more than 53% of Wisconsin's workforce and creates 75% of new jobs nationally," Lump claims without reference.

And then there is this dubious and confused claim, "Now more than ever, Wisconsin needs government that recognizes small business is a vital part of the local economy, not a bank from which it can withdraw seemingly endless funds. Instead of creating new taxes, shouldn't we look for ways to cut taxes so businesses can add jobs?"

Wisconsin government doesn't recognize the importance of small business? Where's the proof for this claim? Because small businesses are required to pay taxes, that supports the notion that Wisconsin doesn't appreciate small businesses role in our economy? Even if we cut taxes and save a small business, let's say, $5,000-annually, does Mr. Lump think that would really ignite a hiring flurry?

If that were the case, we'd never have recessions, nor would we ever experience anything other than full employment...since we've been cutting taxes since the '80s. Shouldn't the miracle market, combined with the elimination of so much taxation, have produced a Utopian wonderland by now?

But we know this 'full employment, stable economy' scenario has not been the result of the tax cut frenzy we've seen over the past few decades. So how can these hucksters, with a straight face, always claim cutting taxes is the answer.

Now we get to the bill - Assembly Bill 215 - which has made Mr. Lump so limp. The bill regards the valuation of billboards for assessment purposes and property taxation. Lump sees this as a threat to all small businesses. That's quite the leap of paranoid irrationality. [I found it very odd there were no citations nor even the name of the bill Mr. Lump finds so vexing in his article. But then one would be able to go read the bill and see the tenuousness of Mr. Lump's claims...and there would be no reason to print his article.]

He completely leaves out an explanation as to why valuation of billboards is an issue. He doesn't mention that if billboard owners pay their fair share of taxes on their property, the rest of us pay a little less. And, somehow, "There is nothing that would prevent cities from applying the same rules to other small businesses, such as restaurants."

The bill applies to, "...permits issued, leasehold interests, or other intangibles with regard to the outdoor off−premises advertising sign. In this subsection, “off−premises advertising sign” means a sign that does not advertise the business or activity that occurs on the site where the sign is located."

The State already has the ability to tax. If they wanted to tax restaurants more, they would. To paint this legislation as some type of nefarious, backdoor bill aimed at (in a very roundabout way) a tax increase on all businesses is fantasy. Again, if the state wanted to increase taxes on business they could. They wouldn't want the arduous legal battles involved in such assembly bills just for the fun of it.

To support his paranoia, Lump equates billboard valuation with valuing liquor and hunting licenses. He sarcastically squawks, "How would the value of a liquor license be determined? Would the assessment take into account the myriad variables that affect the profitability of a licensed establishment, or would it be one-size-fits-all? ... Think about how ridiculous it would be for the state to tax you on the "value" of your hunting permit...Or on the "value" of the deer you could potentially take home, whether you actually get a deer or not. Who knows what other licenses cities will decide to tax, once the state gives them this power?"

A billboard's value is in the income stream it can generate by exposing whatever it's advertising to more and more people. The reason for the bill - more specific legal language to capture the true value of billboards - is because they are quite different from the much simpler licenses Mr. Lump incorrectly, and purposefully misleadingly, tries to compare them to.

A hunting license doesn't produce an income stream to it's holder. It allows them to shoot a deer (catch a fish, etc.). A liquor license allows its holder to ship, manufacture, and import liquor. The hunter will pay taxes when he has the butcher process his deer. The liquor will be taxed when it is sold. These are direct links along the chain of commerce for these two examples which can be traced and taxed accordingly. When Clear Channel, CBS Outdoor, or Lamar (a few of the largest billboard companies) obtain an outdoor advertising permit for $175, this cost nowhere near reflects the income stream these companies expect to profit from such advertising.

As Dennis Hathaway comments at the Scenic America Blog, "The billboard companies fight tooth and nail against tax assessments that account for the value of anything other than the structure itself, but if one of their billboards has to be removed for a highway widening or other public works project, they will seek millions in compensation based on the value of the sign as a 'revenue' generator. This is a classic case of wanting it both ways, and hopefully governments will point that out in defending against these inevitable lawsuits."

And, maybe both of the fees on hunting and liquor licenses are too cheap, also. Granted, there is a point where costs become too prohibitive and potential users will stop buying the licenses. With the current value of billboards abysmally low (compared to their true market value), we're nowhere near the tipping point. Even with an increase in the taxes billboard owners will pay, not one of them will stop advertising on billboards...because they are all making more than enough money to justify the cost.

Just shut up and pay your fair share in taxes. So residents, workers, home-owners, and those not as fortunate can pay less.

All Things Economic

Dean Baker on:
Defense Spending
Government Spending
Small Business
Social Security & Medicare
Underwater Mortgages

Job Creation

Pandering to small business (along with every other interest group) seems the politicos present modus operandi. They promote small business as a massive engine of job creation.

But, as Dean Baker notes, "There had been some debate in the 90s about whether small businesses were responsible for a disproportionate share of job creation. While this is true, small businesses are also responsible for a disproportionate share of job loss. Most small businesses only survive a few years. As a result, small businesses on net, create new jobs at roughly the same rate as larger businesses."

For Further Reading:
Corporate Tax Dodging and the Myth of Job Creation
Small Biz No Job Machine
Small Business Are Big Job Losers

Dispelling Campaign Myths

Obama's tax plan is more likely to help economy; McCain's plan would hurt the economy.

The tax code is not more progressive than it has been.

What is means to be classified a "small business."

Only 1% of taxpayers would be affected by Obama's proposed increase in the Social Security payroll tax.

Capital gains and dividends tax cuts primarily benefit the well-to-do.

Less than 1% of estates pay the estate ("death") tax.

Thanks to Citizens for Tax Justice for this timely research.