I believe state & federal taxes existed 3-4 years ago when unemployment was at 5% so I'm not sure how it's relevant to the current unemployment situation. Also as a rule anyone who uses the term "ObamaCare" has an agenda so I just assume he's either lying or misrepresenting the situation with a 28% increase in health care costs. I wouldn't expect anything less from WSJ -- taxes bad, Obama bad. Maybe we'll start hiring again when you elect some Republicans.
"Companies have also been pressed into serving as providers of health insurance. In a saner world, health insurance would be something that individuals buy for themselves and their families, just as they do with auto insurance. Now, adding to the insanity, there is ObamaCare."
Actually, in the saner world, companies don't have to worry about health insurance because it's provided by the government.
Or, alternatively, they don't have to worry about it because there is no health insurance tax deduction to force individuals to get insurance through their employer.
Whilst the idea of the government paying for healthcare may seem ridiculous to you it seems just as ridiculous to us that you might be ill and not be able to afford treatment.
Wait, I don't get it. What is he proposing as an alternative? Would he be happier to pay Sally $74,000 so that she herself can do the whole process of paying $30,000 for taxes and health care and stuff like that? Or is he proposing to pay sally $44,000 and let Sally pay $30,000 out of that? Or is he just whining?
just whining. he could, instead, hire freelance or contract workers. he won't have to pay much to the government, he'll just have to pay the contractor double what he pays Sally.
Those articles are sad. They are the equivalent of the crackpot in sciences, in that they ignore the most basic rules of economics. Discussing about whether taxes are a burden for business or not without taking care of tax incidence is at best totally ignorant. Which part is paid by him and which part is paid by his employee administratively is meaningless - it all depends on the job market, and the elasticiy of demands and supply. Most likely, if he paid less in taxes, he would have to pay sally more.
What total utter crap. Taxes is the price you pay for a civilized society, and the US has far less taxes that most western countries, and as a result is arguably less civilized. Millionaires whining to other millionaires in the WSJ. Spare me.
He has to make the calculation about hiring people. If he doesn't feel comfortable hiring he shouldn't. Why do you feel as though you're in a position to tell him what his reasons are or should be?
Taxes take money out of the private sector and thus reduce the pool of capital for private sector job creation. Our taxes go to fund bankers and wars. That's why we're in such bad shape. If they went to build roads and bridges no one would care so much.
> What total utter crap. Taxes is the price you pay for a civilized society, and the US has far less taxes that most western countries,
Actually, it doesn't. US tax revenue per-person is pretty much in the middle of western Europe.
Things look different because US GDP/person is higher and poor workers only pay for their retirement. (SS payouts are fairly progressive, so it's a good deal for the poor and sucks for those near the cap. The cap exists because we don't want rich people to care about SS and we don't want to pay $400k/year to Ross Perot. If you want to remove the cap, please tell us how you're going to deal with rich people caring about SS, which they will if benefits are capped, or if you're going to uncap the benefits as well.)
>the US has far less taxes that most western countries
I own my own LLC, and lose 45% of my "salary" to taxes (in large part because I pay both 7.5% "halves" of my Medicare tax). Is that far less than it would be in most other Western countries?
It's interesting how his private insurer raising rates is obviously "ObamaCare"'s fault. Like all businesses, insurers raise prices because they can, thanks to market position, scarcity and all the other usual factors (distorted, as the health insurance market is, by oligopoly-entrenching state regulations that have little to do with the Affordable Care Act).
The author has an agenda. However he also has a point.
During the Bush recovery there was much complaining about how salaries didn't go up. Well it turns out that the amount spent by employers on employees did go up at normal rates for a recovery. However increasing health care costs absorbed that surplus, and employees did not directly see more. In fact employees got moved to crappier plans and so saw less income.
It is too early to tell whether Obama's plan is going to cost us all more or less than the distorted market has been costing. But it is certain that the USA cannot long afford to let current cost trends continue unchecked.
$74,000 to put $44,000 in Sally's pocket and to give her $12,000 in benefits.
Employees get to keep more the 75% of what the company spends for them? (56k / 74k)
Employees in Italy and Scandinavia countries barely get 50% of what companies pays them...
Yep, move to Sweden and he'd be shelling out some 90k to put $44000 in his employees pockets (46% payroll tax, 5-15% social security, then 30% income tax on that).. And then there's the 25% sales tax.
Yeah, and employees in Italy and Scandinavian countries get a metric butt-ton more government services for their money.
Not to turn this into an argument about what government should be doing; don't care, irrelevant. The point is simply that you do get a lot for giving up ~50%+ of your paycheck in those countries. Here, you just give up whatever you give up (your figure doesn't take into account sales taxes, excise taxes, use taxes, property taxes, etc.)
It's worse then outlined in the article. Sally also pays other taxes with her "net" income. If she rents, her rent is certainly higher because of the landlords property taxes. If not, she pays it herself. Then there is sales taxes and excise taxes to may. Truth be told, of the money that the employer pays to keep her employed, only a little more then half of it ends up in her pocket.
Here is a huge opinion that could be incorrect. Most people work for what they need to live. If it becomes more expensive to live, Sally will want a raise. If it's cheaper to live, she won't be so pissed when she doesn't get a raise. The bottom line is all that matters to most people. Therefore, no matter what taxes are created, purported to be income tax and what not, are paid by businesses.
What does this mean in practice? It means that by having incoming taxes at all, we are encouraging business to hire people outside of the US. The only way to level the playing fields, as far as I can see, would be to shift the taxes from income to sales. I don't know if that is plausible or not, but it's the only way I can see the US government really encouraging job growth here in the US. It would mean that no matter where your company does it's business, if it uses the US market, it has to pay the piper, and would give a real shot to US workers at competing with other world-wide workers.
Shifting taxes to sales, especially in a significant way, will just dampen aggregate demand, and push us into a deeper and longer recession. (See a comment I made here, on an article that didn't get any front-page time about states looking to raise revenue by taxing online sales: http://news.ycombinator.com/item?id=1513784)
An alternative solution is to tax the unused value of illiquid capital like land. Unlike income and sales taxes, which act as disincentives on economic exchange, this kind of tax acts as an incentive for exchange, production, and employment: if you own capital which is not being put to use, this tax is either an incentive to put it to use or to sell it to someone who will.
This isn't a new idea. It was put forward by Henry George in Progress and Poverty in 1879: http://en.wikipedia.org/wiki/Progress_and_Poverty (Disclaimer: I haven't read the book, but I did buy it recently and it's on my to-read list.)
I agree in general. Also many economists at least thought about tax systems based on mostly consumption taxes, not taxes on income or production.
> If she rents, her rent is certainly higher because of the landlords property taxes.
But here I disagree, at least somewhat. Property prices and rents are---to some degree---determined by how much people bid them up. Taxes on real estate influence how much of the rent goes to the owner and how much to the state. But the absolute level of rent won't be affected much.
(This is more the the more fixed the supply of real estate happens to be.)
Fair enough; perhaps we should make the system a bit more progressive. Perhaps if FICA weren't capped at ~$100K, we could reduce Sally's share of the burden? Or if we eliminated any number of corporate-tax loopholes, or agribusiness subsidies, or defense spending, we could reduce personal income tax rates?
> Perhaps if FICA weren't capped at ~$100K, we could reduce Sally's share of the burden?
Are you planning to uncap benefits? If you do, Ross Perot gets $400k/year. If you don't, rich people start caring about SS. Those are the reasons why Social Security advocates used to like the cap. Were they wrong?
FWIW, SS payouts are very progressive. Folks on the low end get a reasonable return on their contributions. Folks near/at the cap get a crappy deal. The rich ones don't care because of the cap.
Exactly, if Sally only brings in $30K / yr, BYE BYE Sally! Otherwise, if she allows the guy to bring in another $150K, the guy should quite whining and hire a few more.
Never miss an opportunity for a good libertarian rant, though, at the Journal I guess.
Oh, and it should have read: costs 74K to give her 56K in pay and benefits -- 18K in taxes.
The logical conclusion I get from this article is that if the government wants to improve hiring, they should remove all income taxes on people making <$100k a year, and tax business profits to compensate. Also increase taxes on those making >$100k to discourage upper-middle class and uber-rich hiring.
I don't think that's the solution he's looking for, but I didn't hear him offer one.
The solution is for government to cut its spending. But that brings up an interesting question. Has any government in history ever significantly cut its spending and reduced its taxes for the long-term benefit of its people, without a violent revolution?
Taking home 66% after taxes / healthcare is considered normal in large parts of the world, so why are Americans so much more likely to make a fuss about it? [Edit: jswinghammer enlightened me below: "Our taxes go to fund bankers and wars." That indeed may make a big difference. Over here in Europe I feel most of my taxes do good, not evil. So I'm kinda ok with them.]
Really? Which country are you from? Because if you are in the EU we gave loads to Greece. We gave much more to banks some 500 billion on EU level, then there is the national level.
And Nato is in Afghanistan so I think loads of EU nations are fighting wars. Many Eu nations joined the Iraq war too, so I do not think any American is taking a moral stance over high taxes which a European needs not because their moral conscience is clean.
The guy, as said in many other comments has an agenda. SO it is hardly "Americans" but republicans, or conservatives, or democrats as they may be called in some countries.
Not from the US, but I don't understand his issues with taxes.
What does change for his company if Sally has to pay higher taxes? Wouldn't it just mean that Sally ends up with less cash, not with his company having to pay more.
Is it mandatory now to offer health insurance to employees? How has this system of companies arranging for the health insurance emerged? I can only guess: providing health insurance is a way of giving employees a tax free bonus (like a company car, or free food)?
Presumably he is contracted to pay Sally $59,000 gross + some level of benefits. But his costs to pay this are higher ($74,000). Presumably as taxes rise, he will still have to pay Sally $59,000 gross + the same level of benefits, and his own costs will have increased. He is unable to pass on the full cost of a tax rise to Sally.
From what I understand, the health insurance situation has arisen due to buying power. It is impossible for Sally to buy her own insurance at the same rate that her company can do it (even ignoring any tax breaks).
As I understand it, employer-sponsored health insurance is not required, but it is expected in many jobs.
According to the history above, health insurance tax breaks originated with Blue Cross and Blue Shield programs in the 1930s (thought to be progressive because it helped lower-income people). Employer-sponsored health insurance became popular during WWII, when companies weren't allowed to compete on wages, but were allowed to compete on benefits. And then, for some reason (parity with BCBS?), laws were passed in the 1950s that made employer-sponsored health insurance enormously tax-advantaged.
In the US the employer shares the income tax burden. So If your boss gives you a raise the company sees its own taxes go up. I am not sure of the tax implications of health insurance.
Perhaps due to my incessant optimism about people's reasonableness, the way I understood the argument seems to me to be primarily about the regressive character of the tax system. $59k/$44k just isn't that much anymore, especially in a relatively high-cost area, and especially considering the sources of cost inflation he identified.
But okay, $59k/44k is one thing. You want to talk about regressive taxes, tell me why I have to pay nearly $2k to employ a part-time person who nets just a little shy of ~$1400 (roughly ~$22k annual gross), and that's without any benefits. Talk about a disincentive for job creation! I'd much rather pay my part-time employee more of that ~$2k, and if I could, I would.
If I give him a $300 bonus one month, he's going to see about $180 of it if it's run through the normal payroll withholding mechanisms. At that level of income, that really is ridiculous.
This seems like a lot of whining to me. 33% does not seem high for total taxes for employment. That's the total that both the employee and employer pay together. Sure, they could do more without having to pay that, but they also wouldn't have, I don't know... roads, police, fire department, public education, an army to protect them, etc. What percent do they think they should be paying? Sounds like they think they should be entitled to get it for free.
[+] [-] jsz0|15 years ago|reply
[+] [-] 100k|15 years ago|reply
Actually, in the saner world, companies don't have to worry about health insurance because it's provided by the government.
[+] [-] jessriedel|15 years ago|reply
[+] [-] jamii|15 years ago|reply
http://www.youtube.com/watch?v=vLfghLQE3F4
Whilst the idea of the government paying for healthcare may seem ridiculous to you it seems just as ridiculous to us that you might be ill and not be able to afford treatment.
[+] [-] orangecat|15 years ago|reply
Should the government also be providing even more necessary items like food, housing, and transportation?
[+] [-] shin_lao|15 years ago|reply
[+] [-] Aaronontheweb|15 years ago|reply
[+] [-] _ouxp|15 years ago|reply
[+] [-] CodeMage|15 years ago|reply
[+] [-] noodle|15 years ago|reply
[+] [-] cdavid|15 years ago|reply
[+] [-] forinti|15 years ago|reply
[+] [-] gahahaha|15 years ago|reply
[+] [-] jswinghammer|15 years ago|reply
Taxes take money out of the private sector and thus reduce the pool of capital for private sector job creation. Our taxes go to fund bankers and wars. That's why we're in such bad shape. If they went to build roads and bridges no one would care so much.
[+] [-] roboneal|15 years ago|reply
Unlike many in the political class, this man actually PAYS his taxes and the payroll taxes of his 80+ employees in pursuit of private enterprise.
Considering he has risked his own private capital to create jobs, he has earned some right to "whine" about the current trend of taxation.
[+] [-] anamax|15 years ago|reply
Actually, it doesn't. US tax revenue per-person is pretty much in the middle of western Europe.
Things look different because US GDP/person is higher and poor workers only pay for their retirement. (SS payouts are fairly progressive, so it's a good deal for the poor and sucks for those near the cap. The cap exists because we don't want rich people to care about SS and we don't want to pay $400k/year to Ross Perot. If you want to remove the cap, please tell us how you're going to deal with rich people caring about SS, which they will if benefits are capped, or if you're going to uncap the benefits as well.)
[+] [-] endtime|15 years ago|reply
I own my own LLC, and lose 45% of my "salary" to taxes (in large part because I pay both 7.5% "halves" of my Medicare tax). Is that far less than it would be in most other Western countries?
[+] [-] changhiskhan|15 years ago|reply
[+] [-] kgrin|15 years ago|reply
[+] [-] btilly|15 years ago|reply
During the Bush recovery there was much complaining about how salaries didn't go up. Well it turns out that the amount spent by employers on employees did go up at normal rates for a recovery. However increasing health care costs absorbed that surplus, and employees did not directly see more. In fact employees got moved to crappier plans and so saw less income.
It is too early to tell whether Obama's plan is going to cost us all more or less than the distorted market has been costing. But it is certain that the USA cannot long afford to let current cost trends continue unchecked.
[+] [-] paolomaffei|15 years ago|reply
Employees get to keep more the 75% of what the company spends for them? (56k / 74k) Employees in Italy and Scandinavia countries barely get 50% of what companies pays them...
[+] [-] sciolistse|15 years ago|reply
[+] [-] abalashov|15 years ago|reply
Not to turn this into an argument about what government should be doing; don't care, irrelevant. The point is simply that you do get a lot for giving up ~50%+ of your paycheck in those countries. Here, you just give up whatever you give up (your figure doesn't take into account sales taxes, excise taxes, use taxes, property taxes, etc.)
[+] [-] jpr|15 years ago|reply
[+] [-] doki_pen|15 years ago|reply
Here is a huge opinion that could be incorrect. Most people work for what they need to live. If it becomes more expensive to live, Sally will want a raise. If it's cheaper to live, she won't be so pissed when she doesn't get a raise. The bottom line is all that matters to most people. Therefore, no matter what taxes are created, purported to be income tax and what not, are paid by businesses.
What does this mean in practice? It means that by having incoming taxes at all, we are encouraging business to hire people outside of the US. The only way to level the playing fields, as far as I can see, would be to shift the taxes from income to sales. I don't know if that is plausible or not, but it's the only way I can see the US government really encouraging job growth here in the US. It would mean that no matter where your company does it's business, if it uses the US market, it has to pay the piper, and would give a real shot to US workers at competing with other world-wide workers.
[+] [-] rwl|15 years ago|reply
An alternative solution is to tax the unused value of illiquid capital like land. Unlike income and sales taxes, which act as disincentives on economic exchange, this kind of tax acts as an incentive for exchange, production, and employment: if you own capital which is not being put to use, this tax is either an incentive to put it to use or to sell it to someone who will.
This isn't a new idea. It was put forward by Henry George in Progress and Poverty in 1879: http://en.wikipedia.org/wiki/Progress_and_Poverty (Disclaimer: I haven't read the book, but I did buy it recently and it's on my to-read list.)
[+] [-] eru|15 years ago|reply
> If she rents, her rent is certainly higher because of the landlords property taxes.
But here I disagree, at least somewhat. Property prices and rents are---to some degree---determined by how much people bid them up. Taxes on real estate influence how much of the rent goes to the owner and how much to the state. But the absolute level of rent won't be affected much.
(This is more the the more fixed the supply of real estate happens to be.)
[+] [-] bryanlarsen|15 years ago|reply
[+] [-] btilly|15 years ago|reply
[+] [-] kgrin|15 years ago|reply
[+] [-] anamax|15 years ago|reply
Are you planning to uncap benefits? If you do, Ross Perot gets $400k/year. If you don't, rich people start caring about SS. Those are the reasons why Social Security advocates used to like the cap. Were they wrong?
FWIW, SS payouts are very progressive. Folks on the low end get a reasonable return on their contributions. Folks near/at the cap get a crappy deal. The rich ones don't care because of the cap.
[+] [-] marcusbooster|15 years ago|reply
He's a neo-con of the highest order, so take his "Joe Biz" spiel with a grain of salt, he certainly has an agenda.
[+] [-] DannoHung|15 years ago|reply
[+] [-] Roboprog|15 years ago|reply
Never miss an opportunity for a good libertarian rant, though, at the Journal I guess.
Oh, and it should have read: costs 74K to give her 56K in pay and benefits -- 18K in taxes.
[+] [-] sprout|15 years ago|reply
I don't think that's the solution he's looking for, but I didn't hear him offer one.
[+] [-] Lendal|15 years ago|reply
[+] [-] c1sc0|15 years ago|reply
[+] [-] abalashov|15 years ago|reply
[+] [-] Ardit20|15 years ago|reply
And Nato is in Afghanistan so I think loads of EU nations are fighting wars. Many Eu nations joined the Iraq war too, so I do not think any American is taking a moral stance over high taxes which a European needs not because their moral conscience is clean.
The guy, as said in many other comments has an agenda. SO it is hardly "Americans" but republicans, or conservatives, or democrats as they may be called in some countries.
[+] [-] DrJokepu|15 years ago|reply
Some key numbers, at average wage: US 34.4%, UK 38.8%, Germany 63.3%, France 52.0%, Japan 34.2%, Hungary 71.5%
[+] [-] Tichy|15 years ago|reply
Is it mandatory now to offer health insurance to employees? How has this system of companies arranging for the health insurance emerged? I can only guess: providing health insurance is a way of giving employees a tax free bonus (like a company car, or free food)?
[+] [-] rlpb|15 years ago|reply
From what I understand, the health insurance situation has arisen due to buying power. It is impossible for Sally to buy her own insurance at the same rate that her company can do it (even ignoring any tax breaks).
[+] [-] jcl|15 years ago|reply
As I understand it, employer-sponsored health insurance is not required, but it is expected in many jobs.
According to the history above, health insurance tax breaks originated with Blue Cross and Blue Shield programs in the 1930s (thought to be progressive because it helped lower-income people). Employer-sponsored health insurance became popular during WWII, when companies weren't allowed to compete on wages, but were allowed to compete on benefits. And then, for some reason (parity with BCBS?), laws were passed in the 1950s that made employer-sponsored health insurance enormously tax-advantaged.
[+] [-] stonemetal|15 years ago|reply
[+] [-] thentic|15 years ago|reply
[+] [-] abalashov|15 years ago|reply
But okay, $59k/44k is one thing. You want to talk about regressive taxes, tell me why I have to pay nearly $2k to employ a part-time person who nets just a little shy of ~$1400 (roughly ~$22k annual gross), and that's without any benefits. Talk about a disincentive for job creation! I'd much rather pay my part-time employee more of that ~$2k, and if I could, I would.
If I give him a $300 bonus one month, he's going to see about $180 of it if it's run through the normal payroll withholding mechanisms. At that level of income, that really is ridiculous.
[+] [-] unknown|15 years ago|reply
[deleted]
[+] [-] seasoup|15 years ago|reply