Tuesday, February 21, 2012

Reality Checks of Conservative & Liberal Rhetoric

As an absolute independent (i.e. not democrat or republican) looking at things void of those "filters" I usually get people on both sides upset as they accuse me of being from the side they oppose. Anyway, here are a few reality checks irt often brought up rhetoric:

1) The mantra that "taxing the rich" kills job creation and, similarly, "tax breaks" create jobs.

Reality check- This one does have some truth to it but not nearly as much as some would have you believe. Yes, the rich do account for many job creations but it's nowhere near the levels that purveyors of this rhetoric proclaim when they infer "every dollar" kept by the wealthiest is used for job creation. Top tax rates would have to be MUCH higher iot impact reinvestment policies of an already successful businesses. Anyone with business experience will tell you that the most important factor when considering business expansion or hiring is demand. Regardless of any tax breaks/incentives that may be offered, a business will fail without demand "period".

However, the alternative options of stimulus packages for extended unemployment, state aid funds, etc, are no better. While they sound nice and actually "do" ease a painful downturn, they don't spur on meaningful, long term, job creation... Current and potential employers "see through" the temporary nature of stimulus packages and will not do any real expansion or long term job creation based on temporarily manipulated demand that has little long term impact.

2) Taxes, in general, prevent job creation by innovators/inventors.

Reality check- This one does have "some truth" to it but not nearly as much as some would have you believe. Top tax rates would have to be much higher iot have a "seriously dramatic" impact on already successful businesses reinvestment policies.

The vast majority of innovators/inventors are focused on the challenge of creating or improving something and aren't even thinking about "taxes" they may eventually pay. That's especially true on the young innovator side because taxes aren't even a concern to most young inventor/innovators. Microsoft, Apple, Google, Facebook, MySpace, Yahoo, etc. were started without worrying about what the tax code was and they created a whole lot of jobs...

3) Arguments that big oil tax break are necessary.

Reality check- The argument is so weak that people touting it consistently contradict themselves. They'll say: 1. "The dem's want to blame gas prices on oil co's but the oil co's margins are tiny so they're not responsible for high gas prices!
Then, during a different tirade, they'll say 2. "Look how expensive gasoline is...Can you believe the dem's want to take away oil co's incentives?...In who's world does that seem like it will help bring prices down?!"

Number 1 indicates they have practically no impact on pump prices while 2 indicates the exact opposite (contradictory). #1 is correct (they make little per gallon)., various taxes and fees push up prices (as well as demand obviously). #2 is a smokescreen in favor of "not removing" the tax breaks. Tax breaks/gov't incentives have a place in helping along various industries during specific conditions and for limited time periods. Things Oil co's haven't been in those conditions for a long time and some of them had even said (when oil was around $30/barrel) that there would be no reason for them to need tax incentives if oil was above $50/barrel...

It's also very disingenuous to hear petroleum lobyists & supporters say "we should take away tax breaks & incentives from everyone so we all have an EVEN playing field". That's like having a race to the 50th floor and saying "we should all have to use the stairs so we have an even playing field" (after having used the elevator to get to the 30th floor)...

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