It’s really simple. Borrowing to give $2 Trillion to middle-class and poor people is “inflationary”, while borrowing to fund a $2 Trillion tax cut for the wealthy is “an investment”.
Some animals are more equal than others.
intercst
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I prefer my system. No tax cuts for anyone. If you CLAIM to be a “Job Creator”, it is easy to separate the fool and his/her money. I have posted this previously, on the old boards.
Use tax benefits (= “tax cut”) to offset tax increases exclusively on the wealthy only if they create jobs in the US (additional benefits can be offered at the state level by the states if they should choose to do so). Tax benefits are only available for full-time jobs, hiring part-time workers will not be rewarded with this tax benefit.
The obligation of the government is to take in enough income (fees, taxes, etc) to cover the cost of running the government and providing public services.
The claim is tax cuts (especially to the wealthy) create jobs. Ok, “We, the People” will take the people who make such a claim up on their claim–and tie tax benefits to jobs created by those specific alleged “job creators”.
Here is how to do it responsibly:
Step 1: Create a new tax exclusively on wealthy taxpayers (individuals and families–but NOT corporations). It needs to be enough to help with the current budget. Trap #1 is set. Result: The government is now getting substantially more tax revenue from people who actually have money and can afford to pay it. Say it is $150,000 per year per wealthy taxpayer. This is not a real number, just one used for this example.
Step 2: Create a new tax benefit of $XXXX/year for each new/additional job created by those wealthy taxpayers for a minimum number of months (to be determined, i.e. 36 months? 48 months?). The benefit can be used for up to 2-4 years depending on the economy and government policy. Benefits need to be tiered by the year so no one is able to run a scam. Tax benefits are paid after the year is over, so it is only for real businesses that last a significant length of time. Otherwise, no tax benefit.
Example of how the tax benefit works (numbers are for illustrative purposes only):
Rates:
Year 1: $2000 for each additional employee who worked the entire first year.
Year 2: $3500 for each additional employee who worked the entire second year.
Year 3: $4500 for each additional employee who worked the entire third year.
First year: $2000/new employee who worked the entire year (no benefit for new employees less than 6 months, pro rate for 9+ months?), 100 new employees = $200,000 benefit ($2000 x 100). Business has 100 total full-time employees. Hires 50 new employees to start the second full year. First year employment = 100 workers.
Second year: $3500/employee who worked both years. Original 100 employees work second year = $350,000 tax benefit. The 50 new employees worked that full year, they count for the first-year deduction and the amount is 50 x $2000 = $100,000 additional deduction. Now 150 total full-time employees.
Third year: $4500/employee who worked the full three years. Same 100 employees work third year = $450,000. Same 50 newer employees work second year = $175,000. 150 total full-time employees. Hires 100 new workers to start the fourth year. Total employees = 150 workers collecting paychecks, buying houses, cars, appliances, etc.
Fourth year: Benefit ends for the first 100 employees. This is third year for those same 50 employees who started the second year= $225,000. If the 100 new workers work all year, that is another $200,000 deduction for fourth year, $350,000 the fifth year, and $450,000 the sixth year. Total employees = 250.
Total tax benefits received:
Year 1: $200k
Year 2: $350k + $100k
Year 3: $450k + $175k + $200k
Year 4: $225k + $350k
Year 5: $450k
Year 6: $0 (no additional new jobs created in years 4-5-6)
Total tax benefits = $2.7-million (= govt subsidy = welfare for the wealthy? Hmmm…)
Wealth taxes paid = $0.900-million (= 6 yrs x $150k/yr).
Analysis: $2.7-million tax benefit less $900k higher taxes over six years = net cost of $1.8-million to govt. Cost per job created = $1.8-million/250 = $7200.
Can not fire existing workers and hire new workers to restart benefits. Must be additional jobs created. No additional jobs created = no tax benefit.
Given the above information, the business is obviously successful (hired more people and kept them on), so the business venture is also profitable.
Per the allegations, because the wealthy create large businesses with many new employees at good wages and benefits, the tax benefit more than offsets the tax increase and will help fund the cost of those new workers. Hiring new employees is a business decision made by the business. The tax benefit is designed to help in the first few years of adding new workers, when business needs the most help with expansion. So it is obviously “small-business” friendly.
This is the “put up or shut up” point in the entire discussion and is Trap #2:
If wealthy taxpayers actually create a lot of new/additional jobs in the US (as claimed), then they will create many more new jobs in order to take advantage of the tax benefit. They can choose to create many more jobs in the US–which would create an even bigger tax benefit for them than was available previously.
The only jobs eligible for the tax benefit would be additional jobs created by those who pay that higher tax rate on wealthy taxpayers. Replacement jobs (i.e., transferring jobs between companies to get the tax benefit) would not count. Neither would “hire/fire/re-hire” routines be allowed to count.
This tax benefit also could be available to all those “small/medium” business owners who do create jobs AND pay the higher tax rate on wealthy taxpayers. It is NOT available to people who do NOT pay the higher tax for wealthy taxpayers. Corporations could not be eligible for this tax benefit because corporations do not owe the tax liability incurred by wealthy taxpayers.
If new jobs are created by those wealthy taxpayers who pay the higher tax rate, the country will receive additional taxes, consumer spending, and a nice stimulus from the new employees to offset the tax benefits issued. Net cost to government: Reasonably close to zero over the long term because large volumes of decent new jobs generate additional tax revenues, consumer spending, and even more additional new jobs (with no government subsidies required for the supplemental jobs created).
Now the arguing can commence over the amount of the tax benefit, how long it would last (for each job created), and how much taxes on wealthy taxpayers go up.
The budget deficit is smaller–and we can get on with our lives.
If wealthy taxpayers do create all those many additional jobs (as alleged), they will be rewarded with tax benefits and profits from their business ventures. That is the definition of a “business friendly” environment.
If wealthy taxpayers do not create all those additional jobs, that is their choice. They simply pay more in taxes here to offset their choice of creating those jobs elsewhere–or not at all (because it is not profitable?). That is fair for everyone.
It’s not personal, it’s business.
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The system is not broken. We have very low unemployment and rising wages.
The heart of it is creating a faster real GDP growth rate. All boats will rise.
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Some animals are more different, they invest instead of just spend.
The Captain
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