As for the point about small business not hiring due to extra costs. I'm sure it's true but this isn't something that was put in place in the last 2 years. This was true in all the recessions and booms we've had sine world war 2 and FDR if not before.
You are paying for employees what they cost, that is, what the market determines. What are you doubling? (The taxes and whatnot are simply part of the total cost).
I'm not saying his logic is correct but it's not hard to understand
So the author is either a total idiot or willfully dishonest. Hence, the article was poop.
Of course it would be better if taxes were lower, but since they are a real cost, it makes no sense to say "I pay double". Maybe it costs 0.70$ to grow the apple, so it simply isn't possible to sell the apple for 0.50$. Taxes are the costs for growing employees. What good is it to complain that you would buy an apple if only it cost just 0.50$, if it already costs more than 0.70$ to grow the apple?
The op-ed is a trite political attack piece (not out of character for the WSJ). Your comments, well, they seem directed towards the half-brained. That is, if you're smart, what your saying is obvious: Obviously Right if you're a conservative, Obviously Wrong if you're a progressive.
If you're a true neutral centrist and you care most about lowering taxes, I can point you in the direction of a gigantic defense budget that could be cut.
But in my experience, people who think Obama is an evil business killer also think that we mustn't cut a cent from the defense budget.
Finally, saw something interesting yesterday.. apparently annualized corporate profits hit 1.2 Trillion recently, the highest ever recorded.
Yes, socialist Obama is certainly proving himself the nemesis of prosperity for America's business community. Clearly.
Further, there's another massive flaw in your argument: You're not going to hire twice as many people unless you have excess work even after the first hire. There are a few companies in that enviable situation, but for the most part, demand is lagging right now. So at best those companies would hire one worker at half-price and then keep the money saved.
What services and level of service would this provide? Is it inefficiency or uncessary services that makes taxes too high? Or something else?
Re health care benefits : that's not something you HAVE to give your employees. Why do you choose to offer them?
Just because the cost of an employee is not the "sticker" price, and is somehow more complicated, doesn't mean that you're being punished to hire people.
1) On the first day/week/month, the employee is probably not going to contribute much, and in general you are taking a risk. The lower the sticker price on that risk, the more people are likely to take it.
2) If your business is making 250K and spending 240K on employing 4 employees @ 60K each and you want to stay net positive, you need to wait until you reach 300K before you hire the next person[1]. So there are these gaps in ramping up a business which can only be overcome with growth. When salaries are lower, these gaps are smaller. Looking at the broader labor market and assuming growth, lower taxes would mean smaller gaps and potentially less unemployment.
[1] Note that because of their opportunity costs, its harder to hire professionals for part-time.
The government takes way to much for each employee hired. 33%! The author would realize this is a HUGE problem for employers, but I forget he is only a political blogger.
Thus when you hire 3 and a tax rate of 33% + 33% + 33%, you are really paying for 4 people and getting 3. That makes it hard to hire more employees.
Then comes the health care, which drives this 33% even higher. As the wsj author states
"Every year, we negotiate a renewal to our health coverage. This year, our provider demanded a 28% increase in premiums—for a lesser plan. This is in part a tax increase that the federal government has co-opted insurance providers to collect. We had never faced an increase anywhere near this large; in each of the last two years, the increase was under 10%."
28% is a HUGE increase..
Don't turn this into a political "I must defend/attack obama/bush" article. He stated everything with facts to defend why. 33% per employee and rising quickly in just a years time is a huge reason not to hire someone new.
It's irrelevant if my apples are 50 cents or a dollar. What's relevant is what everyone else is selling apples for.
If we moved those taxes off income into sales, then you'd have to pay your workers 25-33% more for them to be able to buy the same stuff. If we moved healthcare and other benefits onto the employee, you'd be paying that money as extra salary, or else they're getting effectively less compensation. If we went with a libertarian model, you'd just be paying higher wages so that your employees could buy their current stuff and also hire their own police and fire companies (and you'd need to pay for your business's protection).
That's not to say you couldn't trim some fat with other methods, but the only real ways to eliminate paying that 33% involve cutting your employees' standards of living. I'm not saying it's your job to care about that, but let's call a spade a spade here. That money isn't dead weight loss, it's money that straight up improves the quality of life of your employees, and is therefore compensation.
oh wait.
My biggest issue with your argument isn't that its wrong on its face - its that in the last ~20 years I've never seen a fiscal conservative in gov't both A. reduce taxes and B. reduce spending.
Also he is only blaming Obama for the health care price raise not the previous amount.
Which is dumb. First, because he buys his health care form a private company, and second, because he's not required to buy it at all.
It's also true that these things add together. And I believe the reasons he states to be a true indicator of why he's not hiring.
When somebody explains to you why they are not hiring -- and gives you the numbers to back it up, arguing about his politics or opinions of your pet causes is total idiocy. Who cares? Just assume that all those things on his balance sheet are wonderful goodness from above. Assume he's a bigoted moron. Whatever works for you.
Numbers still add together to make totals. And people make decisions (and form opinions) based on those numbers. Arguing about his politics doesn't change any of that. You can't argue yourself into a profit margin.
Next year there will be a new pet cause and a new item on the balance sheet. Maybe these are all great things, maybe the inmates are running the asylum. Probably a great discussion for somewhere else. None of that political stuff is relevant here, no matter how strongly you feel about it. This is the cost of doing business, and this is why he is not hiring. It would have been an entirely different piece without the numbers, but the numbers are true indicators of the nature of his business decision. Ignoring them or having a snit about them is just so much noise.
The guy's numbers were ridiculous. The changes to his cash flow, year over year, regarding employees, are dominated by healthcare costs. That's not a government problem (although it arguably should be). To the extent that his cash flow is affected by taxes, Obama cut them.
No wonder he can't run a business.
Round number from memory, paying someone 59k, gov't takes 20k, and healthcare costs 12k, so everything is 100% government's fault. And Obama's fault. Even though he cut the taxes for that employee.
EDIT: Hi downmodders. 100% factual post here. Obama cut your taxes. Sorry.
Similarly, knowing someone's background is pretty crucial for an op-ed. If the piece is being sold as "I'm a typical businessman, and Obama's policies are keeping me from hiring people", then it's important to know if the businessman in question is typical, or if he's politically connected.
Edit: Typo'd "solid" for "sold".
In that respect, I think Michael Fleisher's background is a good indicator that his piece has a bias, but pointing it out doesn't necessarily negate what he wrote.
But at the same time it makes sense. Blaming the government for your inability to afford employees is just a blame game. You can afford and employee or not. If you're a moderate veteran in business you know the burdened costs so you factor that in.
The article has good detail about how he's blaming the government for his own failing business. He's just trying to egg on the government for more breaks or he won't hire and supposedly the recession will continue.
Maybe he'd like to turn off the HVAC system in the offices to save some money too.
Taxes exist, get over it.
The ostensible reason the op-ed was crap was that Micheal Fleisher is related to someone who served in the Bush Administration. Now, while I agree that not divulging that information was a mistake on the Journal's part, I hardly think that shores up MJ's argument. It is necessarily fallacious-- his point is wrong because he was wrong in the past, because he was associated with people we don't like, and because his business is in trouble. It is certainly possible that these things might be true, but they have little bearing on the (equally bad) arguments in his op-ed, which are: taxes are slowing job growth-- see, just look at my business!
MJ notes that the original article wasn't worth much comment. Why they decided to then ignore their own conclusion and comment on it anyway is a mystery to me.
The least they could have done was try to raise, rather than lower, the already miserable tone of the debate.
Why did the WSJ publish it? Perhaps it was a poor choice, perhaps it was a slow news day, or perhaps it was a double-cross to destroy Michael Fleischer's credibility with his own words.
Actually, I'd call that 'more proof that he's incompetent', personally. I read that yesterday and shook my head at disbelief that a CEO could say such a thing seriously.
