Tag Archives: Taxes

News

What causes rich Democrats to lay off Americans and ship jobs overseas?

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First off, I spotted this American Spectator story by Robert Stacy McCain on The Other McCain.

Excerpt:

California Democrat Rep. Jane Harman’s family business is laying off American workers – including engineering employees in California – and shifting jobs overseas.

A letter from the human resources director of one Harman company, obtained exclusively by The American Spectator, describes a “permanent” layoff of dozens of California workers that went into effect last week.

[…]Harman is the third-richest member of Congress, and her net worth increased last year $40 million, according to a study of Federal Election Commission records conducted by The Hill newspaper. Her husband, Sidney Harman, founded Harman International Industries, which was valued in 2007 at about $8 billion.

[…]By May 2009, the company had already slashed its U.S. workforce by 900 and expected to make more than a thousand more layoffs by mid-2010, according to a Saturday Evening Post article that noted: “[W]hile shutting down U.S. facilities, Harman was simultaneously opening factories in China and India, as well as massive multimedia outlets in Dubai and New Delhi.”

She’s a rich Democrat… and she is shipping American jobs overseas? Why???

Well, California is an anti-business state and it’s run by socialist Democrats who hate businesses and capitalism. (H/T ECM)

But what about other countries? Why do they ship jobs overseas?

Look what is happening in New Zealand with the new Hobbit movie. (H/T Anon)

Excerpt:

At least half a dozen countries, including Australia, are lobbying to win the right to film The Hobbit and Hollywood accountants are now doing the numbers of rival offers, the movie’s co-producer and co-writer Phillipa Boyens says.

The $US150 million Sir Peter Jackson blockbuster has been mired in an industrial dispute in recent weeks, following complaints from a group of international labour unions over poor on-set working conditions for actors.

Jackson, who strenuously denies the claims, has accused the Australian-based Media Entertainment and Arts Alliance of bullying to gain control over the production, which he says may be forced out of New Zealand.

Boyens told New Zealand’s National Radio’s Nine to Noon programme the movie was ready to begin filming in January but has now been thrown in turmoil by the actors’ boycott.

She said New Zealand Actors’ Equity seemed to believe the whole thing was a bluff.

“I am concerned over some of the statements made… by New Zealand Equity that there is still a misunderstanding on the seriousness of what is involved here and what is at stake,” she said.

“That is very real and that has put at risk the livelihood of countless thousand New Zealand industry workers,” she said.

Scotland, Ireland, Canada and Eastern European countries had entered the negotiations in a “feeding frenzy” inspired by the threat of union action.

And it’s not just left-wing anti-capitalist governments and unions that cause outsourcing and shipping jobs overseas.

It’s the uncertainty caused by massive spending, constant interventions, anti-business regulations, the appointment of radical anti-capitalists and judicial activists to positions of power.

Here’s a story from Reuters.

Excerpt:

Tough budget measures to keep its international bailout on track have helped prompt thousands of Romanian companies to relocate to neighboring Bulgaria, where lower taxes and more stable regulations offer an easier place to do business.

Bulgaria has corporate and income tax on profits of just 10 percent, compared with Romania’s 16 percent, and now also has lower value added tax after Bucharest hiked its rate as part of efforts to meet the conditions of a 20 billion euro EU/IMF bailout.

Sofia has also cut red tape and initial capital for setting up a company is now 2 levs ($1.39), compared with a previous 5,000 levs and 200 lei ($63.55) in Romania. It takes less than a week, almost half the time needed in Romania.

That may seem like small beer, but business people say the speed of the changes forced by the bailout and uncertainty over future cuts in Romania have encouraged them to move base.

Bulgarian authorities have not released precise data, but local media report up to 2,500 Romanian companies have set up there already and another two are registering daily in the border city of Ruse alone.

“Romanian legislation and taxation are changing from one day to another. So how can I have any guarantee, any certainty if I open a company here?” said 23-year-old Bogdan Popescu from Bucharest, who wants to open an online television business.

“I could as well wake up with a 40 percent income tax tomorrow (instead of 16 at present),” said Popescu, who plans to put his headquarters in Bulgaria. “The present fiscal legislation is in no way a stimulus.”

The two Balkan countries share a long border and though links can be complicated — only one bridge connects the states along a 470 kilometer (294 miles) stretch of the Danube — companies can set up a paper headquarters but still effectively run operations from Romania.

Both suffered deep and painful recession after 2008’s financial crisis, but while Romania is having to cut spending and raise taxes, Bulgaria previously ran large fiscal surpluses and has enough reserves to keep taxes low despite dwindling revenues.

Whenever government and their union supporters make life difficult for businesses, the businesses leave. Governments and unions ship jobs overseas. Governments and unions outsource jobs to other countries. Businesses just dance the the tune that governments and unions play. It’s no use complaining about big corporations and rich greedy executives. If you want a job then you promote the conditions that will attract businesses. Left-wing unions, left-wing political parties, left-wing news media and left-wing judges attack businesses, and that’s why unemployment goes higher.

And businesses know that massive government spending is going to require higher taxes or printing more money to that will devalue savings. They are not going to expand in banana republic economies like the United States until we vote a large enough number of Democrats out of all three branches of the federal government.

What I resent is when rich Democrats create the legal conditions that require companies to outsource and then complaining about outsourcing while engaging in outsourcing themselves. That’s hypocrisy.

Commentary

Victor Davis Hanson explains Obama’s opposition to business

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From National Review.

Excerpt:

Obama, the supposedly savvy politician, oddly has little appreciation of the psychology of business.

[…]Obama’s policies are also seen as malleable and predicated on notions of social justice rather than on absolute adherence to the law — as in the reordering of the Chrysler creditors and the recent threats against health insurers who do not toe the federal line. Employers are human. Call them greedy, undeserving of their profits, and prone to party at Vegas — and in hurt they will sit on their money and wait such castigation out.

There also seems to be little appreciation of how one creates wealth — not surprising, since Obama and his economic architects are mostly salaried elitists who have spent much of their lives on various tenured government payrolls. Almost none were entrepreneurs who had built businesses from nothing.

The result is that Obama has little insight into the mentality of a businessperson, whose values and world view are antithetical to those of the salaried and tenured employee who accepts stability and a monthly check as he does the changing of the seasons. But to the self-employed, the world is an often hostile place in which a bad back, a chance fire, an unethical employee, a wrong guess, or a national recession can destroy years of hard work in a blink.

Nor do the Obamians appreciate that the possibilities for wealth creation are infinite: The more rewards the audacious see, the more they take risks to turn ideas into new products and services. That energy enriches us all. Instead, there is now the return of the old peasant mentality of a limited good. With a finite pie, one slice to someone must mean one less to someone else. The relative wealth of a few, not absolute wealth for all, is what matters.

Implicit here is Obama’s progressive notion that wealth is unfairly allotted, ill gotten, and ill spent, and therefore should not be entirely one’s own. Surgeons in countries without socialized medicine, he has told us, make money by gratuitously slicing off limbs or ripping out tonsils. High earners can go to Vegas or the Super Bowl without thinking twice about it, given the superfluity of their riches. “I do think at a certain point you’ve made enough money,” the president pontificates — a variation on his earlier lament that the Supreme Court had never demanded “redistributive change.” Where that “certain point” rests, we do not know, though we suspect it is high enough to allow vacationing at the Costa del Sol and Martha’s Vineyard.

In his mind, government simply cannot allow one person to make $10 an hour digging a ditch, and another $300 an hour sitting behind a desk closing a deal. The old tragic justifications of the inequality in compensation inherent in capitalism — one rises up the job chain, and recompense is not rigid and fixed; the successful entrepreneur takes more risk, may have greater skills and education, can create more wealth for others, is luckier, more motivated, or healthier, accepts more stress, does not necessarily want the more moral or enjoyable life — mean little to the therapeutic Obama. His Manichean world is fixed: suspect rich and noble poor.

As a materialist he judges equity in life by income. Thus he sees the government’s proper moral obligation not as ensuring equality out of the starting gate, but as guaranteeing that we all reach the finish line at the same exact moment.

This article is the top article on National Review right now. It’s worth a look.

This post on the economic policies of Margaret Thatcher may also be helpful. Maggie cut taxes and busted up unions. And everybody – rich and poor – saw their standard of living go way, way up! A JOB IS THE ULTIMATE STIMULUS PROGRAM.

News

LSU Professor: Repeal of oil industry tax credits will cost 150,000 jobs

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From Marathon Pundit.

Excerpt:

Two days ago I participated in a blogger conference call with Dr. Joseph Mason, a professor of finance and the Hermann Moyse Jr./Louisiana Bankers Association Endowed Chair of Banking at Louisiana State University’s E. J. Ourso College of Business.

Since the Deepwater Horizon blowout began spilling oil into the Gulf of Mexico, Mason has been a consistent voice in support of energy industry jobs. A moratorium on drilling in the Gulf could would have devastating results on employment, Mason warns. But that’s not the only threat to energy industry jobs. On Monday Mason released his latest study on tax policy, “Regional and National Economic Impact of Repealing the Section 199 Tax Deduction and Dual-capacity Tax Credit for Oil and Gas Producers.”

Dual-capacity allows oil companies to deduct taxes it pays abroad, something I was able to do when I owned a mutual fund comprised exclusively of foreign stocks. Section 199 allows companies to deduct up to nine percent of their net income derived from domestic oil production.

Okay…so what if the oil industry pays more tax? Well, that puts our nation’s energy industry at a disadvantage. Specifically, Mason argues, “Without it US-based [energy] firms compete on an uneven global playing field against Russian and Chinese firms that receive substantial state support.”

“The higher energy taxes would cost by my estimates,” Mason added, “some $341 billion in lost economic activity and $68 billion in wages.”

Wages means jobs…Just in the next year our economy will lose 150,000 jobs in the next year if President Obama and the Democrats have their way on dual-capacity and Section 199. And they might. Yesterday the Senate struck down an amendment by Florida Senator Bill Nelson, a Democrat who sees the light, to keep Section 199 in place.

As for job losses, where will they come from? Obviously in the Gulf states, but in others too. Texas will lose 38,000 jobs and Louisiana 13,500. But in other states–such as California, the painful effects will be felt as well: 23,000 lost jobs there, as well as 4,000 more in Ohio, Indiana will suffer 3,000 layoffs, and my own Illinois, which is not a big oil producer, will lose 4,500 positions. And that is just in year following the repeal of Section 199 and the dual capacity credit.

I’ll conclude with a quote from Rep. Paul Ryan (R-WI), “You can’t love jobs while hating the people who create them.”

I stole his whole post! I hope John doesn’t mind.

As for job losses, where will they come from? Obviously in the Gulf states, but in others too. Texas will lose 38,000 jobs and Louisiana 13,500. But in other states–such as California, the painful effects will be felt as well: 23,000 lost jobs there, as well as 4,000 more in Ohio, Indiana will suffer 3,000 layoffs, and my own Illinois, which is not a big oil producer, will lose 4,500 positions. And that is just in year following the repeal of Section 199 and the dual capacity credit.

I’ll conclude with a quote from Rep. Paul Ryan (R-WI), “You can’t love jobs while hating the people who create them.”