TCS Daily


How to Create More Jobs, America

By Steven Selengut - September 14, 2009 12:00 AM

My recent survey produced a variety of ideas, but most of them had these common elements: replace the Internal Revenue Code with a simpler model, encourage businesses to increase employment, and insist upon tort reform everywhere.

It also brought two disturbing realities into focus: We are painfully apathetic (less than 1% of the people I contacted took the time to respond) and, although we have great problem-solving ideas, few to none of them are included in any of the reforms being considered by congress.

For those who participated, thank you again. I hope that you will appreciate how I've synthesized your thoughts and suggestions into the commentary. I also hope that you will find the time to address some of these issues more aggressively with blogs, networks, and elected officials.

Major changes are being proposed in six inter-related areas. All the dots cannot be connected in one article. Government revenue is cut in this article and the next without a hint about a replacement plan. I'll get to that later, and painlessly for all of us.

So how do we create more jobs?

Perhaps the first step in creating more jobs is to take a giant step backwards and define what a job is. In the simplest of terms, your job is the principal moneymaking activity in your life.

The more qualifications and skills you have (physical, technical, intellectual, etc.) the more valuable you are to employers, customers, and clients. Thus, more practical, job specific, education becomes a vital part of the jobs picture.

For the self-employed, the amount of effort expended, marketing skills, and the product or service itself is as important as the qualifications. But the objective of the job, the career, and the company, is to make money.

Government jobs are of a service, regulatory, and social problem solving nature--- unquestionably necessary, but the primary motive is not to create personal wealth or economic gain, hence the thousand-dollar toilet seat scenario. These jobs are paid for by taxes collected from all employed people--- except our friends in the "underground economy", who pay virtually no taxes at all.

The more government jobs, the more taxation; the more government regulation, the more need for cost analysis of the regulations spewed forth. Consumers ultimately pay all of the costs of compliance, everywhere.

Most self-employed people start off working for others; large or small really doesn't matter. What matters is that employers hire these people to make the enterprise more productive, safer, more efficient, and more profitable.

In theory, employees must contribute to profitability, and each is compensated based on his or her contribution, as determined by the owners of the enterprise. In larger organizations self-serving executives are able to pillage the profits of the enterprise, to the detriment of both owners and employees.

Employee benefit programs (health & dental insurance, pension & savings programs, investment education plans) were originally implemented to attract and retain the best employees. Today, employers are reluctant to create jobs because the mandated non-productive "overhead" associated with each worker adds significantly to the cost of running the business--- worker's compensation, unemployment insurance, OSHA compliance, liability insurance, social security contributions, minimum wage/union pay scales, etc.

No job deserves to exist economically if it doesn't add to the profitability of the business. The more costs per employee, the fewer jobs get created. So how do we create more jobs in this environment?

Corporate Income and Nuisance Taxes

Politicians have succeeded in demonizing the large corporation by exploiting the greed of obscenely overpaid executives and employees, while ignoring their own complicity in the conflicts of interest and lobbyist graft that steer the legislation they produce.

What Congress, a long line of Presidents, and much of the population have lost sight of is the fact that even the dirtier businesses are job providers. They must be pampered, not pummeled; supervised and reined in but not tethered and broken.

Business income taxes are 100% inflationary; costs associated with employees (yes, even the minimum wage, which some suggest is the cause of our illegal alien problems) result in fewer employees hired. Period. Capitalism is not broken--- its success formula has been compromised.

Repealing the corporate income tax, and prohibiting any and all levies, fees, charges, and taxes on any form of business could instantly produce millions of job openings, lower prices, and create new business opportunities throughout the economy.

Repealing business income taxes would instantly make export products more competitive in world markets, as businesses reduce prices while maintaining profit margins. Greater profits should translate into growth in economic activity.

Finally, the elimination of these taxes would make all businesses run more effectively because there would be no need to spend money (or create losing transactions) just to cut the tax bill.

Government Programs

Tax dollars can create jobs when they are used to: protect consumers and businesses from fraudulent and disruptive forces, fund infrastructure repairs and improvements, protect shareholders from greedy officers and directors, provide free education to the most talented students in all fields, and provide seed capital for new public interest development projects.

I'm still looking for your ideas on: growing consumer spending, lowering health care costs, helping the environment, reducing the size of government, and producing a fairer tax environment.


Steve Selengut is the President of Sanco Services and the author of The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read and A Millionaire's Secret Investment Strategy.
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23 Comments

How to create more jobs? Do the following four things:

1. Impose term limits on Congress, backdated for each Congresscritter;

2. Repeal the Art. 1 ยง 8 powers of Congress per the U.S. constitution by amendment, which should also redefine them very narrowly;

3. Repeal the 16th amendment and the entire tax code and replace it with one that only allows a flat income tax on natural persons at 15% of gross income after $18,999.

4. Repeal Medicare, Medicaid and all Social Security programs, transferring their mandates and obligations to the 50 states.

Do these four things, and the American economy will be booming in no time.

It takes time
Right now there's not a lot the government CAN do to help create more jobs. Those among us who still have them have to finish paying down their debts for a while. And in time they'll start buying things again. Once consumer confidence returns, the private-sector jobs will begin to come back.

But if they wanted to be helpful, they could level the business playing field by terminating their tilt toward the largest corporate donors. Once these big dogs began paying their fair share, the burden would be lessened on small business to carry their extra load.

What other policies would be helpful to assist small businesses in expanding? I would submit that a push to increase basic, government-sponsored research-- public science-- would be a good start. That would put more new ideas out into the public domain, where small businesses could use them and get going on the development end. And we have been lagging behind woefully in recent administrations in the funding of honest, useful public science.

The money could come from research grants now being funded through the Defense Department and Homeland Security. It's possible to go overboard on their notions of national security while the little people's view of the economy becomes ever more insecure.

The other thing we could do would be to try to woo back all the international students that used to fill our grad schools, making us pre-eminent the world over in the field of advanced education. The day after 9/11 we chased them all out-- and few have come back yet.

We need them. They are nothing less than the best and brightest of the entire world. And they were a central factor in giving us our technologic edge-- back when we still had it.

That would do for a start. And see? It wouldn't cost as much as the savings we'd gain by dumping all the funding we do for high tech surveillance toys and Big Brother assets for our National Security State to deploy.

Repealing Article I, Section 8
Robert, you're a source of political humor that's richly needed in this mostly humorless forum. Your brand of conservatism comes straight out of 17th century dynastic Europe. Complete with powdered wig.

I love it. Now that I've pointed out that our own sacred Constitution rather inconveniently defines the twin purposes of public funds as being the protection of the realm and the promotion of the national welfare, you find that this outrage must be stamped out immediately!

The very idea, taking money the government has taken from the people's pockets and putting it right back in the same place. Why, we might as well not be taking their money at all! Everyone in power knows that the name of the game is to take from the employees and give it back to the aristocracy. Right?

And your suggestion number 3 is a riot. The federal tax burden now stands at a third or so of total income. To cut that back to 19% you'd have to cut out things like military spending, and interest on the national debt. Good luck with that. The day we welsh on the Debt, the dollar economy collapses and the world turns to some other currency.

As for number 4, if you turned over Medicare and Social Security to the states you'd have to turn over the cash in the lock box as well. And that sum (the sum Congress has borrowed from those two programs) currently stands at $4,344,000,000,000. Those two programs constitute America's largest creditor by far.

I don't think they have the money. So the Feds will continue administering those programs for the time being. And at any rate that's just a shell game. Whether we pay through the federal level, the state level or some combination of the two, costs are costs. We have to pay the same amount to maintain the programs.

Glad you got a good laugh ...
... which just goes to show that people really aren't serious about creating jobs or avoiding the fiscal disintegration awaiting America.

Regarding your first three paragraphs, I honestly haven't got a clue what you're talking about. Please rephrase.

Regarding my number 3, I don't believe your figures are accurate. Even if they were, wouldn't the expanded tax base significantly increase tax revenues? Why should over 40% of all American taxpayers have no income tax liability, as is true today? Is it good for able bodied citizens to pay or do nothing for their government goods and services? Doesn't the reportedly godlike One scold us ad nauseum that we all have to contribute our share to this, our Great Society? Then why is it best for almost half of America's taxpayers to avoid income tax? I don't get it.

Re my number 4, there is no Social Security lock box and there is no cash. There are only IOUs in favor of Congress and against American taxpayers representing not only the money that isn't there but the money that the taxpayers must refund to their own pillaged coffers. You know this, rb, but you continue to perpetuate a myth that there's an account or accounts in D.C. full of all of the cash that American workers have contributed over their careers. Why do you perpetuate this myth? Are you unable to distinguish the way things really are from the way you'd like them to be?

What is more, the future obligations are just as mythical as the past savings: They are figment of belief and laws, which is to say that they only exist in the voters' minds. This is why I say turn the programs over to the states. Government that is closest to voters is the most accountable, and price transparency encourages frugality. The converse being true explains why the federal government is poised to ruin us all.

'Free' education?
Government now provided 'free' education from k-12 and they can't read or write or do arithmetic.
Community colleges across the country have dozens of remedial programs so these 'graduates' can learn how to read and write.
How will providing more 'free' education be of any benefit to job creation?

People value what they pay for.

good stuff
"Why should over 40% of all American taxpayers have no income tax liability, as is true today?"

Two reasons. A, they make so little money. B, they make so much money in such diverse ways they're able to use their resources to work the system to make it appear they make no income.

Taking 15% from someone who makes $10,000 a year is a monumental effect compared to a person who makes $100,000. I agree its more fair on principle, but its hugely unfair in reality. And I don't think it would increase tax revenues, it would decrease tax revenue.


Those are interesting ideas robertbennett. I'm happy to see anything creative being expressed in here. Props!

I'm with you in repealing Medicare and Medicaid, assuming a viable private option is created. Right now nothing in the private sector is viable. I would add Welfare to the list for repeal and take SS off the list. And there would have to be big changes surrounding each of those repeals. SS for example, its a good program, the problem is the government is stealing the money that should go into it. That has to end and it would be harder than heck to do. And I'm mixed on private accounts for SS. Right now I say one extreme or the other: give me the freedom to do what I want, even if thats to take it to the track and blow it; or srictly limit how one can invest it, so it is not subject to the emotions and whims of the stock market.

Federal burden is 1/3 of total income?
How so? They Federal take of the GDP is 23% or so (and rising).

"The day we welsh on the Debt, the dollar economy collapses and the world turns to some other currency."

Yeah, that's called 'bankruptcy' and it is usually good for those who are hopelessly bankrupt -- like us.

There is no money in any 'lockbox' for Medicare and SS, Roy. There is nothing but glorified IOUs: intergovernmental debentures or even Treasuries.

"I don't think they have the money"

The states have the money...they would raise taxes for it. The upside down pyramid would be righted again...with the bulk of our tax dollars going to our States, not the Federal behemoth -- just as it should be under any federal system.


Unfair in reality is:
Mooching off others, period.

ESPECIALLY when the Moochers outnumber the Mooched Upons.

The alternative is to give more votes to the Mooched Upons relative to the Moochers. He Who Pays Makes The Rules should be in force.

Otherwise, the Moochers will vote (quite rationally for them) for more and more goodies paid for by the Mooched Upons, which is irrational for the society at large.

"Our democracy will cease to exist
when you take away from those who are willing to work
and give to those who would not." -- Thomas Jefferson

"When the people find that they can vote themselves money, that will herald the end of the republic." -- Benjamin Franklin

"Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well armed lamb contesting the vote." -- Also from Benjamin Franklin


Wow! I found something Roy said that I (mostly) agree with instantly!
"Right now there's not a lot the government CAN do to help create more jobs."

I agree with 90% of that statement...instantly w/o a thought. I'd agree with 100% of it if you would just drop the 'Right now...' part.

USA career institute
U.S hospitals and doctors go to other countries to hire nurses they give lots of incentives to hire them. They go there because those people have degrees. Get a degree in nursing find more information at http://bit.ly/HdrTn

That is both the reality, and the problem
This statement you made right here is exactly right, and exactly the problem:

"He Who Pays Makes The Rules should be in force."

It is in force! Lobbyists make the rules. Are you saying you want it to remain that way?

That really is a beautiful post Z. I doubt you intended it this way, but it really is a giant spotlight illuminating the nature of your perspective. Its honest, despite how hard you try otherwise.

You start with the above quote and express how you want wealth to be the determining factor in who gets to rig the system in their favor.
(ever accused a liberal of fighting class warfare? Yes? Yet here you are expressing support for class warfare! Conservative? Check.)
And then you continue with a quote from Ben Franklin- "When the people find that they can vote themselves money, that will herald the end of the republic."

Thats awesome. You argue the wealthy should get to vote themselves money and then Ben Franklin biitch slaps you from the grave, by your own hand!

Did you realize you're heralding the end of the republic? Of course you didn't. Thats what happens when you stop thinking. Its an excellent illustration of your viewpoint.

You are one of the wolves (from the last Ben Frnaklin quote). You want so bad to be the lamb, but your lamb clothing is shoddy and weak. Thats what happens when you stop thinking.

I realize it's asking a lot...
... but just once, it would be nice to hear a voice from the political left calling for equalizing the burden by removing it from those who suffer most, not imposing it on everyone else.

"But if they wanted to be helpful, they could level the business playing field by terminating their tilt toward the largest corporate donors. Once these big dogs began paying their fair share, the burden would be lessened on small business to carry their extra load."

If they really wanted to be helpful, they could level the business playing field by recognizing that those who pay are not big businesses or small businesses, but their customers. Knowing that businesses pass their tax burden to their customers, you nevertheless call for more taxes on business; for more taxes the income of small business owners; for higher minimum wages; for broader employer-provided health care coverage. And while small business owners cry out loudly, and small businesses fail quietly, Walmart laughs all the way to the bank, and prices rise.

If they really wanted to be helpful, they would admit that corporate taxes are, in effect, sales taxes, that they are regressive, and that any business that tries to avoid passing them on to consumers will pay the price in lower profits, lower stock prices and lower dividends, hitting the investment portfolios and pension plans of consumers, to say nothing of lost jobs.

No, I don't want wealth being the determining factor...
...I want the amount of taxes one pays to be.

If you don't have the wealthy providing so much of the tax revenues, then they won't get much of a vote over and above anyone else.

Of course, you take all of this out of context. That's what happens when you stop thinking.

Condo association fees
We all pay the same regardless of income and we all receive the same benefit.
That was the intent of taxes in the USA.

But it is so rational to tax to evil corporations...
and punish those who create the wealth that creates jobs.

And the data is in: The Stimulus DOES NOT DO SQUAT to help the economy
http://online.wsj.com/article/SB10001424052970204731804574385233867030644.html#printMode

You are wrong.
It made the economy worse by increasing the power of the state.

Social Security Administration costs are claimed to be 3%
Private insurance companies absorb 30% in administration costs.

>Government jobs are of a service, regulatory, and social problem solving nature--- unquestionably necessary, but the primary motive is not to create personal wealth or economic gain, hence the thousand-dollar toilet seat scenario. These jobs are paid for by taxes collected from all employed people--- except our friends in the "underground economy", who pay virtually no taxes at all.

All kinds of "straw man" arguments in this paragraph.

For another take on public corps, see

http://en.wikipedia.org/wiki/Canadian_National_Railway#History

The thousand dollar toilet is another humbug. Try buying factory manufactured parts for your 1965 washing machine. If a production line is shut down and 30 years later the govt wants a new part . . . use your brain. see

http://en.wikipedia.org/wiki/KC-135_Stratotanker

Citation?
"When the people find that they can vote themselves money, that will herald the end of the republic." -- Benjamin Franklin

Usually attributed to the French fellow, 1800 something.

Second, "republic" refers to any government that is not (officially) ruled by hereditary rulers thus "People's Republic of China."

Third, Lincoln's war finally destroyed freedom in the US. Stupid Americans think they are "free" because they vote for their tax collectors. Both major parties are owned by the same people.

de Tocqueville after Franklin
"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money. "
http://www.brainyquote.com/quotes/authors/a/alexis_de_tocqueville_2.html

Many years after Franklin.

" When the people find that they can vote themselves money, that will herald the end of the republic. "

Franklin

http://www.freerepublic.com/focus/news/848955/posts

Who pays?
"If they really wanted to be helpful, they could level the business playing field by recognizing that those who pay are not big businesses or small businesses, but their customers. Knowing that businesses pass their tax burden to their customers, you nevertheless call for more taxes on business; for more taxes the income of small business owners; for higher minimum wages; for broader employer-provided health care coverage. And while small business owners cry out loudly, and small businesses fail quietly, Walmart laughs all the way to the bank, and prices rise."

Excellent. Why don't ALL federal taxes be placed on businesses and their owners? Then they could just pass through their added cost of doing business to their customers. And we little guys wouldn't have to file every year with the IRS.. unless we were self-employed.

It would make life a lot simpler. And by your estimation, would cost those businesses nothing. They'd just pass the bill along.

When the 16th amendment is repealed...
then implement the sales tax, which is what you are advocating.

We need a new deregulation not more laws, free business, lift up middle class, endorse tax cuts, increasing taxes cuts investments. Just remember the tax on yachts? It was supposed to make the rich pay, what happened? The rich bought their boats outside the US, saved the tax, paid less for their boats then the boat industry in Massachusetts and Rhode Island collapsed leading to the end of the industry in these states and the loss of of 25,000 jobs, that was under Clinton, did not Obama hear about it?

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