McCain wants to give tax breaks to businesses so that they can hire more people and "spread the wealth around." Now, I may not be a business owner but I do know enough to know that more money in the pocket of the business owner does not automatically translate into more jobs for Americans.
Let's take a plumbing business since everyone is so focused on Joe. If a currently operating Plumbing business has a customer base that requires the owner to have at least six plumbers available, he'll have six plumbers on the payroll. If, under a McCain administration, he gets a tax break which puts more money in his pocket, that in no way translates to an increase in his customer base or a need to hire more employees. No business is going to hire additional employees unless the consumers create the need for more. All the tax break for businesses does is to put more money in the owner's pocket. Meanwhile, the middle class, who still can't afford to pay for a plumber, continue to do their own plumbing repairs.
Do I have this right or is there some reason why businesses would hire additional employees they don't need and spread that wealth around?
[question posted by spalladino]responses and comments:
I don't know exactly how McCain is planning to do this, or what form the tax breaks will take. I know that my county did that in the past to attract new business, particulary manufacturing companies. And it is great for local workers, one company came in and hired hundreds, maybe even thousands of local workers (I forget the most recent numbers). But I agree with you, just giving a business a tax break does not create new jobs! [soooobored]
I believe this is different from tax incentives to bring in new business. Obama wants to increase taxes for the wealthy 5% and leave the rest of us alone. McCain wants to give tax breaks to the rich and continue to hope that trickle down economics will work even though it hasn't in the past. McCain says that business owners won't be able to hire more employees under Obama's plan because they will be paying more taxes but it seems to me that businesses, new or otherwise, don't hire more employees than they need. Logically speaking, if the middle class get the tax breaks like Obama's plan indicates, we'll increase our spending, keeping more businesses open and more people employed. [spalladino]
I've got a very interesting post on the way to my blog about Joe the Plumber (whose first name is actually Samuel...no idea why he uses "Joe" instead--"Sam the Plumber" sounds equally 'folksy', don't you think), and I'm going to cross-post it here. Your argument here is a specific example of a more general one I've made in the past to people crying out against Obama raising taxes on even just the upper couple percent: how can you make money with your business if the consumers are too broke to buy your product (or in this case, service)? [ClarusVisum]
"Quicherwhining girl. You asked a question I answered it." The only question I asked in my initial response was "how can you make money with your business if the consumers are too broke to buy your product (or in this case, service)?" Saying that his middle initial is J does not answer that question, goofball. Time to brush up on your reading comprehension. "The drive by media has earned their name. They have gotten Sam fired." So it's the media's fault that Joe was unlicensed and unregistered? I don't think so. [ClarusVisum]
Well my brother in law, Bob the Plumber, says no! They keep their money, they need it. And of course the large corporations -- they just plain export their jobs for cheap labor overseas. [MoonlightSerenade]
Ditto on that opinion. If you are making more than 250 thousand plus and still living paycheck to paycheck, then you are doing something wrong. A couple of wonderful reads about that subject is The Millionare Next Door and The Millionaire Mind. [morgandrake]
Joe is supposed to spread some of that money back into the pocket of the people who helped him bleed it out of the rest of the country. Gatta love those kickbacks don't you know! [uath13]
Ah but after 30 days would they really care? I doubt that would be enough time for them to develop a conscious. [uath13]
Trickle-down economics, or more precisely, "voodoo" economics have never worked and they won't work now. It's amazing to me that poor people would rather have business get all the breaks! Like big oil companies, for instance...poor Exxon only had a rise of 14% in the 4th quarter of 2007; $11.66 billion in net profits. Yes, McCain! Let's give them all the tax breaks they need. Poor things! You are absolutely right, it would not profit old Joe or Sam or whoever he is to hire any more plumbers. That is definitely not how it works. [CherylsPearls]
Are you kidding? That's exactly the plan they wanted. His crew has sold out to the big oil companies ( which you should have known when he brought in a VP from a state that has done nothing but ). Give big oil a bigger break & maybe they'll help line his pockets some more. [uath13]
So what would Joe the Plumber do with the money he saves on taxes with McCain's plan? According to his interview this morning, he'd like to buy a boat. Guess you could stretch that to concede that since he has more money to spend, he's providing a market for other goods and services - but then you're stretching it to the point where you have to concede that if you give the tax breaks to more people, then more people have money to spend (or save) and stimulate the economy. It makes the same kind of sense that deferring taxes on income left overseas until it is brought home makes. Wouldn't you think that it makes more sense to tax income invested overseas and exempt income invested here at home? [chameleonsdream]
Spalladino - EXACTLY. If he is worried about paying his employees, then he'd damn well better use anything extra he gets to pay his employess, NOT BUY A DAMN BOAT. I'm telling you, with any type of plan to try and give money back or have this trickle-down theory (which won't work) work, there has to be a specification that the business owners are NOT ALLOWED to keep that extra money for profit, for themselves, to hoard, etc. I'd say they are only allowed that break if they show how they are going to benefit the employees or customers or both. Nobody can count on anybody to do the right thing any more, you have to FORCE THEM or it doesn't happen. [mommyboo]
Ok here's my question lol If these small business owners are smart enough to start a small business then why not be smart enough to set up an Llc? They are taxed like a corporation and have limited liability. I mean are they that stupid that they wouldn't spend $1,000 to keep their personal property safe?! Anyway, Joe the plumber isn't a plumber well not by my counties standards anyway and with all of my years in construction it would be hard for him to pass himself off as a plumber without a license in these parts. [ZephyrSun]
Shhhh, Zeph...you'll scare the scare tactics away! LOL! [spalladino]
American business owner pay very high tax at the currant rate the United States the business tax is second to the highest in the world. Employers pay the hourly employee wage,rent/least on their shops/stores,electric,phones, it is a long list of busienss expenses for the person in business. As it is presently business people pay more then their fair share in tax before they themselves eat. Business people if their business tax goes up will do one of two things cut back on their employee or simply close their doors. Think unemployment is bad now if business shuts their doors or cut back the unemployment line will swell. Few people to none has ever picked up a steady pay check from a poor or middle class person. Greed is the very reason the United States is in the big mess that it is in and seem little has been learned steal more seems to be in fashion. I saw Joe the plumber this morning on Fox News his name seemed to be Joe and he has been a plumber for fifteen years,thinking about buying his boss business,but if their is an increase in the business tax it would run him out of business. A tax break for Joe gives him the needed money to keep his business running he has to pay rent/lease on his shop,shop expenses,lights,heat,phone, telephone number listed,t.p for the shop bathroom,he needs supplies to repair pots and sinks and so forth,the saved tax money putting it in Joe's pocket which helps keep Joe in business. Keeping Joe in business assures other plumbers a job,so by not rising the business person tax saves business and jobs with out business people this country goes flat broke. To punish people by taxing runs people out of business and lowers investing with out these people who are the very oil that turns the wheels of this county the poor and middle class have nothing,the rich is the oil that feeds the poor and middle class much wiser not to bite the very hands that feeds you and your family. [kennyrose]
If I owned or managed a business & knew I had to have X# of employes to handle Y# of customers I think I would at least have the good sense to make sure my prices were enough to cover the expences. Giving an employer a tax break doesn't mean he will hire more employees if he doesn't need them. There has to be a demand for the service or product being offered. Opening up a business where there is no demand just because of a tax break won't help one bit. [uath13]
I used to own my own business, a bridal shop. I would have loved to have more employees to take the workload off of me. But no matter how much money I could have gotten from the government, if my business did not expand, and new customers come in and generate loads more cash that could not have happened. It takes so much more than just money. Advertising more works but it take alot of it and also alot of time to create more interest. And this might work in years, but would do nothing now when it is needed the most. [Barbietre]
I have to say I always just toss the flyers into the floorboard, usually without even looking at them. Not a good way to advertise. [uath13]
This is what bothers me about Joe the Plumber's reaction to Obama's answer to his question: I've always wanted to ask one of these guys a question and really corner them and get them to answer a question . . . for once instead of tap dancing around it. And unfortunately I asked the question but I still got a tap dance . . . " A tap dance? I watched the video of the entire conversation between him and Obama, and I think Obama gave an excellent, articulate, and completely honest answer. It may not have been what Joe wanted to hear, but a tap dance around the issue? Hardly! Joe (or Sam, is it), is a Republican and was leaning towards McCain in the first place when he went to the Obama rally. His question was more of a statement, "You're plan is going to raise my taxes, isn't it?" Obama didn't lie, he explained how his plan is going to work. Joe the Plumber now admits he doesn't make $250K a year (he really only expects to someday), he doesn't actually have a plumbing license, but he still thinks it's wrong for different people to be taxed at different rates (sorry, Joe, but we do it that way already, we have done it that way for eons.) The thing I liked best about Obama's conversaton with Joe was that he ended it with, "Even if I don't get your vote, I'll still be working hard for you." But Joe apparently wasn't impressed. I believe he's a conservative who pretty much had his mind made up to begin with. McCain probably realized that and that's why he kept bringing him up in the debate. I disagree with Joe's political views but I feel sorry for him, McCain did him a disservice by making him an instant celebrity like this; the guy had reporters camped out at his house overnight. And now I'm sure the Republicans will point to any negative thing liberals say about Joe and call them evil for harrassing the guy. But McCain started it, using the guy to try to save his desperate campaign. [philjas]
Good point chameleonsdream. The auto industry is very good example of how the loss of the customer base has a very negative effect on business. [spalladino]
No, you've got it right Spalla. And that's not even accounting for the greedy employers which will "hoard" money for themselves. We don't have a shortage of businesses -- yet. We are, however, losing customers. PART of this is bad business mojo, but the rest is circumstances like foreclosures, high prices for basic parts of living, waste, jobs not being able to or wanting to employ people (at least for reasonable amounts of money), as well as more complicated things like inflation and predatory bank practices. It's not so simple that you just allow businesses to keep more of their money. In small business, a little more money's appreciated by doesn't equal much, and big business has a tendency toward bad policies and practices. The businesses can take care of themselves, it's the people that need the help. So...to make it short, I think that that's a flawed approach to things. He might think it's logical, but like you pointed out...it just doesn't translate at all. [xParanoiax]
Oh I am just a teenager, I just got plenty of sense when it comes to business -- I do help my family stay afloat, so it wouldn't do if I didn't! Besides, economics I consider to be a fun subject (because it's so complex, mostly.) so I read alot about it...even though it's kinda depressing today lmao. Anyway, thanks! Exactly, Mommyboo. Even if SOME businesses do, do just that -- passing along the benefit/relief to their costumers, it's spotty at best. Not even fifty/fifty chance as far as how many of them would do that, anyway. As for gas stations, well they have it tough most of them. They can't control how the products they sell are priced when they buy it and therefore only have marginal control over the end price that you and I buy it at. SOME of them are greedy, plenty of them don't want to sell it for super expensive due to compassion or at least in knowing that they could lose business and therefore profit (not that this offers them much of a choice in the end anyway, they can't not sell it for what they sell it at or else they shut down). It's tough. And oil's going down mostly because demand is shrinking because everyone's freaking out because of the economy (and justly so). The big oil guys are kinda arguing and a bit scared themselves. ...I'm going on now, though. It's not a cookie cutter world, there's blanket circumstances and then there's unique circumstances which crop up. Understanding the blanket circumstances is generally a good idea, but without bothering to dig a little deeper things can always be missed. And as McCain himself has said, he doesn't know as much about economics as maybe he should know. [xParanoiax]
You are sooooooooooo right!! Who the heck can afford a plumber nowadays? Thanks for the post, very interesting...I agree with you 110% ;-) ~G~ [gwoman2]
Bartering for what you need is better all around, I'd rather trade something I can do for someone for what I need, that keeps the value equal. In this time, we need that, everything else is so backwards and skewed and upsidedown. You can't even get a burger and fries for five bucks any more and milk costs more than gas lol. [mommyboo]
Hey spalladino! I take the same way that you do! I don't see much point in what McCain is suggesting either. It doesn't make much sense to me at all! The money surely isn't going to get spread around anywhere. It will stay with the owner of the business, just like it does now which leaves the people who really need the money right where they are. They still will need more money and still will probably be out of a job too! So as far as I can see, it is all pointless and he is just talking in circles and saying nothing! [Opal26]
I love how the folks who support McCain accuse those of us who could use a tax break lazy socialists wanting handouts yet they cry & moan about poor Joe the plumber because McCain told them to. What about Joe & Jane Average Citizen, struggling in this economy to make ends meet? God forbid they should care about their neighbors! [spalladino]
I think you have slightly misunderstood; if Joe pays less tax then Joe spends more cash. More cash spent stimulates the economy creating jobs in providing products or services for Joe all the best urban [urbandekay]
If individuals are better at creating jobs then tax buts may be a better approach to unemployment problem. And even large firms often depend upon the purchasing power of small individuals and there job creating potential may also be affected by tax cuts to individuals all the best urban [urbandekay]
Hmmm. if the business person is a lot more considerate with employees than his/her own profit, why not. but that is fantasy and the reality is, they need more money than just hiring people. that would be risky, even for the government to lower taxes on business, it can either give them a dis advantage or come up with a new tax burden to the entrepreneurs. well, it's all talk for me, unless they both show us some proposals, in paper. [Greeneagle24]
My husband is a plumber, with his own small business. It's all about supply and demand. What McCain proposes to do is not about small businesses as much as larger ones. I hate to admit it but he is right in the fact that those large companies can afford to move to Mexico to get tax breaks there. And that's how we lose our jobs here; no jobs, no money. A vicious downward cycle. We need to keep our businesses here, on US soil. If we stopped importing inferior cheap good from other countries, that would help too. Under Obama's plan, our self-employment taxes will go from a huge 37.9% to a whopping 54.9% and we will not have a business anymore. We'll be added to the Welfare rolls soon enough. How is that going to help? Spread the wealth around so I have nothing. Yeah, great plan. We can barely pay our bills now, and we do not live beyond our means, we don't buy things we can't afford. Just our regular bills, rent, food, phone. McCain's tax plan won't affect me in a significant way but Obama's will and negatively at that. [thelastwolf113]
That's it in a nutshell, Mommyboo, GREED. But it's the American way and I don't see greedy people being capable of being less greedy. [thelastwolf113]
I don't understand this either. On the other hand, tax breaks for businesses might make it easier for businesses which are on the brink - you know, just barely making it - to survive or even businesses which are moderately successful to expand. I've never really understood the trickle down theory of economics. [cutepenguin]
It's too bad that we can't make more things as they should be - that would be the answer to all of the problems we are experiencing now. Everybody understands how things SHOULD be but it would take an act of GOD (not of congress) to make those things happen. [mommyboo]
As an ex-business manager, I can tell you that you never hire more employees than you need. The spread the wealth around theory is just a variation on the tickle down economics of earlier failures. It is economics as "it should be", not as it really is. It also ignores basic tax law. An tax increase for income over 250 thousand only affects income that one makes over 250 thousand; the first 250 thousand is taxed at the lower rate. So McCain is not concerned about Joe the Plumber, he is concerned about his rich friends. There is no reason that spread it around economics will work. It presumes that only people making more than 250 thousand create new businesses and jobs. In reality, unemployed people create more new businesses than any other group, and new jobs are created by natural demand. You can not jimmy the system even if you think that economics should work that way. [morgandrake]
Businesses will opt to continue to make a profit at the expense of having enough employees to do the job best. All businesses clearly want to make a profit and they will cut corners everywhere else in order to do that, even if they try to say they won't. Tax breaks to them will not relieve the trouble for the average American family, no way. It would be better to tell businesses they can only make a certain percentage of profit and that they must pass the savings onto their consumers. If every single business had to until the economy recovered, then nobody would be hurting (as badly) as people who disagree with this idea might think. If I had a business of course I would want to make a profit BUT I would make a reasonable profit, not scalp people for it by marking up my prices way high as most businesses clearly do! [mommyboo]
Nice argument, tax cuts for businesses should be selective.Its not applicable to all. Same thing with other taxes. Those who have much to spare should be given the honor of paying bigger taxes. Agree?wub [WATARIKENJI]
It would be good to have it relative to your income, yes, in terms of both business and personal. Also, people who are the worst off don't necessarily deserve things for free either, that's where all the tax money that people with higher incomes is going - to support the people who have nothing but they don't give back either. For instance if they feel they deserve free education for their kids, then there should be some volunteering or something else they do in order to obtain it. Nobody should be able to get something for nothing while passing the bill onto others. [mommyboo]
I believe Mccain said that Obama wants Joe to spread the wealth. Giving the business's the tax breaks has nothing to do with spreading the wealth. Raising the business taxes spreads the wealth to the little guy because then the government can afford to give the little guy the tax breaks. I think you misunderstood the debate. [camomom]