Tag Archives: Business

Democrat policies hurt the poor, and actually increase income inequality

Two articles from Investors Business Daily. The first discusses how big government tax policies actually encourage poor people not to work. The second one looks at major cities, and finds that 9 out of the top 10 cities with the most “inequality” are run by Democrats.

Let’s start with the first article.

It says:

The nonpartisan Tax Foundation has put out a new report titled “Income Tax Illustrated .” OK, cue the jokes. But it isn’t boring. Really.

[…]”As low-income households earn more money, not only do their tax burdens grow rapidly, but they also receive fewer benefits from federal social assistance programs,” the report said. “In fact, individuals who move to higher-paying jobs sometimes end up with less overall disposable income, after taxes and transfers.”

The report uses two examples, as noted by the Washington Beacon. In one, a single parent earns $4,800 in salary before taxes. That’s not much, but because of entitlements such as Medicaid, Temporary Assistance for Needy Families, the Children’s Health Insurance Program, food stamps, and Housing Choice Vouchers, that person’s take-home pay for the year jumps to $22,090 — not a lot, granted, but it’s more than 4-1/2 times greater than what that person actually earned working.

That compares to someone who earns $21,000 before taxes but, because of taxes and entitlements, takes home $24,057 for the year.

Yes, that person earns $16,200 more from work, but takes home just $1,967 more, thanks to the tax code and generous benefits to those with less income.

“As low-income households earn more money, not only do their tax burdens grow rapidly, but they also receive fewer benefits from federal social assistance programs,” the report said.

“In fact, individuals who move to higher-paying jobs sometimes end up with less overall disposable income, after taxes and transfers.”

[…]Believe it or not, this bizarre distortion gets worse when you consider a married couple with two kids.

Because the Earned Income Tax Credit is phased out at higher incomes, a family of four making $48,000 faces a marginal tax burden of 43.7% — an absurd disincentive to work harder and earn more for families.

When Republican presidential candidates like Jindal, Cruz and Rubio talk about simplifying the tax code, their intent is to solve these perverse incentives that keep poor people dependent on government. We have make changes to the tax code so that people who are able to work can do better by working, rather than by not working. Republicans are in favor of encourage people to work, marry and have kids. Democrats… just want them to keep voting for dependence on big government.

On to the second article.

Which states have the most income inequality?

The Washington Post looked into the numbers and found that 5 of the top 7 states are decidedly blue — New York, Connecticut, California, Massachusetts and Rhode Island.

And Washington, D.C., which is ground zero of big government liberalism, has the highest level of income inequality of all.

At the other end of the spectrum, the three states with the lowest levels of income inequality are solid red: Utah, Wyoming and Alaska. Nebraska comes in fifth and Nevada ninth.

And what about down at the city level?

The liberal-leaning Brookings Institution looked at inequality by city, and the results show that 9 of the top 10 are run by Democratic mayors — including San Francisco, Boston, D.C., New York, Chicago, Los Angeles and Baltimore.

In contrast, 7 of the 10 least unequal cities are run by Republican mayors, and 9 of 10 are in red states.

And what about Obama, has he helped to reduce income inequality, or has it increased under his watch?

Now take a look at the national level. As the chart above shows, income inequality as measured by the Census Bureau was flat over the course of the George W. Bush years. But under President Obama, it’s been on the rise.

Under Obama, the poor have gotten poorer and the rich richer. Incomes for the bottom 20% have fallen in each of the past four years and are now 8% below where they stood when Obama took office. Meanwhile, incomes of the wealthiest 5% have climbed under Obama, after adjusting for inflation.

IBD had a nice graph for that last point:

The Gini index measures income inequality
The Gini index measures income inequality

So, why is this happening? Why does taking money from “the rich” and giving it to “the poor” makes income inequality worse?

IBD explains:

As we’ve seen over the past seven years, higher taxes, vast new regulations and sharp increases in spending primarily benefit a relatively small number of well-connected people and those companies that can afford an army of lobbyists. In other words, the rich.

At the same time, higher taxes, more mandates and onerous new regulations stifle innovation and make it harder to start up new companies — the sort of companies that create new jobs and new opportunities. The Kauffman Index of business startups, for example, has been below average since 2011.

Incomes are down, because there aren’t enough job creators. We have a 38-year LOW in labor force participation. People rise when there are lots of job offers from job creators. The more people looking to hire, the more people can shop around and get the most salary and benefits for their labor. But wages have not gone up under Obama. He punished job creators with taxes and regulations, so they are creating fewer jobs. Fewer jobs means less competition. Less competition means lower wages and fewer worker benefits.

Kevin DeYoung’s article opposing gay marriage has broad appeal

Marriage and family
Marriage and family

In my own secular case against gay marriage from a while back, I argued for 3 points:

  • same-sex marriage is bad for liberty, especially religious liberty
  • same-sex marriage is bad for children
  • same-sex marriage is bad for public health

My hope when I wrote that was that pastors and other Christian leaders would learn to argue for what the Bible says by using evidence from outside the Bible, so that they would be able to appeal to more people instead of only appealing to the minority of people who accept the Bible. I think that Christians who argue for their views by citing the Bible only will only be convincing to people who already accept the Bible. But there is not a majority of people who do accept the Bible as an authority, so I think that pastors have to make another plan. They need to argue using the Bible to those who accept the Bible, and without the Bible to those who don’t accept it.

Now with that said, take a look at this article by pastor Kevin DeYoung that Dina sent me. It’s from earlier this week. The article makes the same exact three points as I made in my article last year. Let’s take a look at how Kevin does that.

My first point was liberty, especially religious liberty. He writes:

[I]n the long run, the triumph of gay marriage (should it triumph as a cultural and legal reality) will mean the restriction of freedoms for millions of Americans.

This will happen in obvious ways at first–by ostracizing those who disagree, by bullying with political correctness, and by trampling on religious liberty. Surely, Christians must realize that no matter how many caveats we issue, not matter how much we nuance our stance, no matter how much we encourage or show compassion for homosexuals, it will not be enough to ward off the charges of hatred and homophobia.

[G]ay marriage will challenge our freedoms in others way too. It’s not just Evangelicals, traditional Catholics, and Mormons who will be threatened. Once the government gains new powers, it rarely relinquishes them. There will be a soft tyranny that grows as the power of the state increases, a growth that is intrinsic to the  notion of gay marriage itself.

My second point was bad for children. He writes:

[T]he state has an interest in promoting the familial arrangement which has a mother and a father raising the children that came from their union. The state has been in the marriage business for the common good and for the well-being of the society it is supposed to protect. Kids do better with a mom and a dad. Communities do better when husbands and wives stay together. Hundreds of studies confirm both of these statements (though we all can think of individual exceptions I’m sure). Gay marriage assumes that marriage is re-definable and the moving parts replaceable.

My third point was bad for public health. He writes:

The unspoken secret, however, is that homosexual behavior is not harmless. Homosexuals are at a far greater risk for diseases like syphilis, HIV/AIDS, hepatitis, gonorrhea, HPV, and gay bowel syndrome. The high rate of these diseases is due both to widespread promiscuity in the gay community and the nature of anal and oral intercourse itself. Homosexual relationships are usually portrayed as a slight variation on the traditional “norm” of husband-wife monogamy. But monogamy is much less common among homosexual relationships, and even for those who value monogamy the definition of fidelity is much looser.

He also talks about the definition of marriage, and more.

I’ve criticized pastors before for dealing with social issues by only citing the Bible, like John Piper does. That approach won’t work on enough people to change society, because not enough people consider the Bible to be an authority in their decision-making. We have to use evidence from outside the Bible – like Wayne Grudem does in his “Politics According to the Bible”.

I think that pastor Kevin’s article is quality work, because it follows the pattern of taking an all-of-the-above approach to persuasion. He uses all means to persuade so that he might win some over to his side. I hope that many more pastors will do the same thing on this issue of marriage and other issues – even fiscal issues. Fiscal issues do have an impact on moral issues – think of how abortion subsidies and single mother welfare lower the penalties of recreational premarital sex. We can do this, we just have to do what works, instead of what makes us feel “holier-than-thou”.

Toyota moves thousands of jobs from socialist California to capitalist Texas

California is a liberal hell of regulations and high taxes. So, a story like this one from the ultra-leftist Los Angeles Times should come as no surprise. (H/T ECM)


Toyota Motor Corp. plans to move large numbers of jobs from its sales and marketing headquarters in Torrance to suburban Dallas, according to a person familiar with the automaker’s plans.

The move, creating a new North American headquarters, would put management of Toyota’s U.S. business close to where it builds most cars for this market.

North American Chief Executive Jim Lentz is expected to brief employees Monday, said the person, who was not authorized to speak publicly. Toyota declined to detail its plans. About 5,300 people work at Toyota’s Torrance complex. It is unclear how many workers will be asked to move to Texas. The move is expected to take several years.

[T]oday, about 75% of the Toyota branded vehicles sold in the U.S. are built in America — many of them at plants in Texas, Mississippi and Kentucky.

Why is this happening? Here’s why:

Frank Scotto, Torrance’s mayor, said he had no warning of Toyota’s decision. He said he did know that the automaker planned a corporate announcement for Monday.

“When any major corporation is courted by another state, it’s very difficult to combat that,” Scotto said. “We don’t have the tools we need to keep major corporations here.”

The mayor said businesses bear higher costs in California for workers’ compensation and liability insurance, among other expenses.

“A company can easily see where it would benefit by relocating someplace else,” Scotto said.

Think that this is an exception? Think again:

Occidental Petroleum Corp. said in February that it was relocating from Los Angeles to Houston, making it one of around 60 companies that have moved to Texas since July 2012, according to Texas Gov. Rick Perry.

Perry last month visited California to recruit companies. The group Americans for Economic Freedom also recently launched a $300,000 advertising campaign in which Perry contends 50 California companies have plans to expand or relocate in Texas because it offers a better business climate.

Like these other companies, Toyota could also save money in an environment of lower business taxes, real estate prices and cost of living.

[…]Toyota isn’t the first automaker to leave Southern California. In late 2005, Nissan announced it was moving its North American headquarters from Gardena to Franklin, Tenn., just outside of Nashville. About 550 employees left for Tennessee; an additional 750 left jobs at Nissan to stay in Southern California.

“The costs of doing business in Southern California are much higher than the costs of doing business in Tennessee,” Nissan Chief Executive Carlos Ghosn said at the time. He cited cheaper real estate and lower business taxes as key reasons for the move.

I know a lot of people like to write books about how bad companies like Wal-Mart and Exxon Mobil are. Young people have been trained to believe that we should raise corporate taxes, raise the minimum wage and burden businesses with other costs, like health coverage for condoms. That’s what young people learn in school from government employees. But in the real world, companies respond to incentives.

Nancy Pelosi’s brother-in-law gets $737M of taxpayers’ money to build solar plant

From the UK Daily Mail.


Nancy Pelosi is facing accusations of cronyism after a solar energy project, which her brother-in-law has a stake in, landed a $737 million loan guarantee from the Department of Energy, despite the growing Solyndra scandal.

The massive loan agreement is raising new concerns about the use of taxpayers’ money as vast sums are invested in technology similar to that of the doomed energy project.

The investment has intensified the debate over the effectiveness of solar energy as a major power source.

The SolarReserve project is backed by an energy investment fund where the Minority Leader’s brother-in-law Ronald Pelosi is second in command.

PCG Clean Energy & Technology Fund (East) LLC is listed as one of the investors in the project that has been given the staggering loan, which even dwarfs that given to failed company Solyndra.

Other investors include one of the major investors in Solyndra, which is run by one of the directors of Solyndra.

Steve Mitchell, who served on the board of directors at the bankrupt energy company, is also managing director of Argonaut Private Equity, which has invested in the latest project.

Since Solyndra has filed for bankruptcy has been asked to testify about the goings on at the firm by two members of the House and ‘asked to provide documents to Congress’.

[…]The project approval came as part of $1 billion in new loans to green energy companies yesterday.

Did they learn anything from Solyndra? No:

‘The administration’s flagship project Solyndra is bankrupt and being investigated by the FBI, the promised jobs never materialised, and now the Department of Energy is preparing to rush out nearly $5 billion in loans in the final 48 hours before stimulus funds expire — that’s nearly $105 million every hour that must be finalised until the deadline,’ said Florida representative Cliff Stearns, who is chairman of the investigations subcommittee of the House Committee on Energy and Commerce.

Since Nancy Pelosi took over federal spending in January 2007, the national debt has increased from $8.5 trillion to about $17.5 trillion. That’s NINE TRILLION dollars in new spending. And much of it just handed off to the people and groups who got the Democrats elected 2008 and 2012.

American corporations are expanding outside the United States to avoid high taxes

From Investors Business Daily.


Walgreen, America’s venerable drug-store chain, is thinking the unthinkable: relocating to Europe. Not because it sees growth and opportunity there, but because of onerous taxes here in the U.S. It’s an ominous trend.

The Financial Times of London calls it “one of the largest tax inversions ever.” That is, a company seeking to avoid punitive taxes in one market by moving to another.

No doubt the FT is right. And after its recent $16 billion takeover of Swiss-based Alliance Boots, it would be easy for Walgreen to remake itself as a Swiss company.

If it did, the Democratic Party’s liberals would no doubt call Walgreen unpatriotic for wanting to lessen its tax burden. In fact, they are responsible for an economic environment so hostile to capital and investment that companies now find it intolerable.

[…]According to an analysis by UBS, Walgreen’s U.S. tax rate is 37.5% — compared with Alliance Boots’ rate in Europe of about 20%. That’s a huge gap, worth billions of dollars a year.

But it’s even worse than that. A recent OECD study says the “integrated tax rate” — taxes on capital and income — for U.S. companies is a nightmarish 67.8% vs. 43.7% for the OECD.

Many companies facing steep tax rates and insane regulations in the U.S. have had enough. They’re keeping their profits overseas. Last week, Senate Finance Committee chief Ron Wyden, an Oregon Democrat, reported U.S. corporations now hold $2.1 trillion in earnings in overseas accounts — a massive amount, roughly equal to 12% of U.S. gross domestic product.

A total of 547 companies — including Apple, GE, Microsoft and Pfizer — have dramatically expanded their so-called foreign indefinitely reinvested earnings overseas, which let them avoid the punishing rates here at home.

[…]Not only are taxes too high, but also new laws such as Dodd-Frank and ObamaCare, a vast expansion of regulation, debt and the size of government, the federal takeover of entire industries, the bullying of Wall Street and demonization of CEOs, and forced CO2 cuts that will hammer manufacturers have made this the least pro-free market U.S. government in generations.

If you make it harder for businesses here to do business (higher taxes and burdensome regulations), then they will expand abroad instead, and in some cases, they will just move completely. How does that help create jobs here? It doesn’t.