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Government cannot create private sector jobs

The Obama administration and the Occupy Wall Street crowd have at least one thing in common: Both, apparently, have bought into the progressive fantasy that corporate profits are evil and that only increased government spending will create jobs.

Now it's true that governments can create jobs in the public sector; they do it all the time and President Barack Obama's recently rejected $400 billion "jobs bill" would have done more of it. Governments can hire consultants, school teachers, social workers, and millions of bureaucrats to administer its thousands of programs and enforce its myriad of regulations.

Importantly, however, the funds for these public jobs must be provided by either taxation or by money borrowed from the private sector. Thus as almost all economists recognize, any increase in public sector employment must come — in some real sense — at the expense of lost opportunities for private sector employment.

To see why this is so, assume that $1 million is raised by taxation to, say, fund new staffing at the Environmental Protection Agency. No debate; public sector jobs get created. But note that the very same $1 million cannot now be spent by taxpayer/consumers on new washing machines or trips to Las Vegas or newspaper subscriptions. Thus for every job created by government spending there must be a trade-off of jobs not created (or maintained) in the private sector.

Private sector jobs are created by an entirely different process; if they are sustainable, they are self-financing. Private employees are hired with the expectation that their wages will be paid by the additional profit that they generate for some employer. Individuals that work for a washing machine retailer or for a travel agency or for a newspaper must generate a stream of benefits for the company that more than compensate for the wages they are paid — or they will be fired. In short, private firms create jobs if and only if it is profitable for them to do so.

We can now see why the Bush and Obama jobs programs of the past all failed to create private sector jobs; simply put, hard-earned tax money was not invested profitably. The most notorious programs involved channeling your tax money and mine to politically well-connected private firms in so-called green industries. Predictably, bureaucrats are notoriously poor at selecting "winners" and many of these firms went belly up. The $528 million that was wasted on the solar panel company Solyndra (only the tip of the iceberg) could have been spent by consumers supporting local retailers and their employees. Instead, it was classic crony capitalism debacle with money and jobs down the drain.

http://www.tcpalm.com/news/2011/oct/24/dom-armentano-occupy-wall-street-protestors-dont/

Social injustice a disincentive to tax paying

AS A GENERAL rule, most people do not like paying taxes and will avoid doing so if they feel they can get away with it. This is why in all developed states, Inland Revenue and other tax collection services have sweeping powers while courts impose severe punishments on individuals found guilty of cheating the tax authorities. 

Big fines and prison sentences are powerful deterrents to tax evasion, because if the authorities took a lax approach to tax collection, as they had done in Greece, very few people would pay their dues. Effective tax collection is also dependent on the standard of services offered by the state. People would be less inclined to engage in tax evasion if the state was offering a high standard of education and healthcare and other services free of charge, the case in Scandinavian countries.

In countries, like Cyprus in which the state does not offer a good standard of service to its citizens and squanders the taxpayer’s money on populist measures and on paying public employees obscene wages and pensions, many people, understandably resent paying taxes, because they cannot see any benefit. This is not to say there are no greedy individuals who would avoid paying taxes no matter how good the services offered by the state were, but the current state of affairs does not put any moral pressure of people to pay their taxes.

For instance, union bosses have been demanding for the last two years that the government clamp down on tax evasion by the self-employed rather than dock the wages of public sector workers. But could we blame a plumber or an electrician if he chooses not to declare his full income, choosing instead to invest part of it in a private pension plan. The alternative is to pay the amount to the state Social Insurance Fund, and subsidise the generous pensions paid to public employees, who contributed less to the Fund but would be paid a pension at least twice as high as the plumber’s. And by declaring a higher income, they might not be eligible to free, state healthcare which public employees are guaranteed regardless of their earnings.

Businesspeople are in a similar position. They have to pay tax on every cent they receive from the company for justified expenses, whereas senior state officials and deputies are entitled to a ‘representation allowance’ (€18,000 for the former and even higher for the latter) which is tax-free but still goes towards the calculation of the state pension. Even the use of a company car is taxed as a benefit in kind, but it is not in the case of state officials; as for deputies they have the privilege of not having to pay any taxes when they buy a car.

We have not heard any union bosses complaining about this legalised tax evasion, but they wasted no time expressing their objections when they heard that finance minister Kikis Kazamias was considering taxing the big retirement bonuses paid to public sector employees. The tax privileges of the workers of the broader public sector are a ‘workers’ conquest’, insist union bosses while demanding a clampdown on tax evasion. But is not being exempt from paying taxes on benefits such as low interest loans, the use of government cars, free healthcare, cheap holiday homes not tax evasion, even if it is sanctioned by the state? Private sector workers pay tax on these benefits.

If the government is serious about clamping down on tax evasion, as its union comrades have been demanding, the first step should be to end the tax discrimination and create a level playing field. All citizens must be treated equally by the tax authorities and be subject to the same taxation rules and regulations. What sort of democracy and rule of law do we have when the state taxes all the benefits of one set of citizens and none of the benefits (not even big cash allowances) of another set? This is social injustice.

Once we are all treated equally, there may be fewer resentful citizens willing to cheat the tax authorities. There should also be a clampdown on tax evasion that should be exercised much more effectively than has been the case so far, but the priority must be the equal treatment of all citizens by the tax authorities. Now, that the State is desperate for cash is the perfect time to introduce a fair, non-discriminatory taxation system.   

http://www.cyprus-mail.com/taxes/our-view-social-injustice-disincentive-tax-paying/20111023

When did it become D.C.'s responsibility to pay town employees?

To the editor,

If the presidents latest attempt at a "jobs" bill comes to the Senate floor our Senators should vote no.

The millionaires tax to pay for it is a red herring. The vice president's statements today about putting teachers and first responders back to work is disingenuous at best. It is just another payoff to the public employees unions at the expense of people who have nothing to do with these laid off workers.

When did it become the national governments responsibility to pay local public employees? These local governments have had three years to deal with their problems. If they do not have the political will to either raise taxes or cut wages and benefits then they can't have these workers. And the workers have to deal with a new reality that the country and the taxpayers are all broke.

Wrapping this jobs bill with code words like "First Responders" makes you think we are not being protected from terrorists by the federal government, when this is just not true.

Rather than dealing with this three years ago, the state governments took hundreds of billions in stimulus money to pay them . . . remember those saved jobs. Now the stimulus money is gone, the workers have lost their jobs anyway and we still have to pay it all back.

If we do not come to grips with and except the economy we have and begin to live within our means rather than continuously kicking the can down the road hoping for some miracle, we will end like Greece.

James Edgar

Meredith

http://www.laconiadailysun.com/story/james-edgar-10-22

Swampyville's - "Tax! Tax! Tax!, then Tax! some more"

Question? What is a Value Added Tax (VAT)?

Politically Correct Resolution:

Every taxable item "Manufactured" in the United States has an Added Value Tax (hidden tax) of 17% added by the government.

A value added tax (VAT) is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, in each stage of its manufacture or distribution. The manufacturer remits to the government the difference between these two amounts, and retains the rest for themselves to offset the taxes they had previously paid on the inputs.(Wikipedia)

The "value added" to a product by a business is the sale price charged to its customer, minus the cost of materials and other taxable inputs. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. With the VAT, collections, remittances to the government, and credits for taxes already paid occur each time a business in the supply chain purchases products.(Wikipedia)

There are politicians who want to add an additional 10% of Federal sales tax on top of the current (VAT) being paid. If they are allowed to do this, the consumer will be paying 33% in taxes for taxable items that they purchase. The same approximate amount that is actually being paid on most credit cards (with their hidden charges)! I guess the government/corporations/ Financial Interests need every penny of the tax payers money than can get to keep from starving to death! Make no mistake about it, The Government/Corporations/ Financial Interests are all complicit in minipulating the Tax codes to allow this Usury to happen/continue.

http://www2.ljworld.com/weblogs/swampyvilles-the-banshees-cry/2011/oct/19/swampyvilles-tax-tax-tax-then-tax-some-m/

Texas High School students made to recite Mexican National Anthem, Pledge of Allegiance

A high school student refused to participate in a bizarre class assignment that required students to recite the Mexican Pledge and national anthem. She said it had nothing to do with learning Spanish and decided to video the incident. The Blaze has the exclusive and disturbing video. Students in a Texas public high school were made to stand up and recite the Mexican national anthem and Mexican pledge of allegiance as part of a Spanish class assignment, but the school district maintains there was nothing wrong with the lesson.
Wearing red, white and green, students had to memorize the Mexican anthem and pledge and stand up and recite them in individually in front of the class.

That didn’t go over well with sophomore Brenda Brinsdon. The 15-year-old sat down and refused to participate. She also caught it all on video:

It happened last month in an intermediate Spanish class at Achieve Early College High School in McAllen, Texas — a city located about 10 miles from the U.S.-Mexico border.

http://www.theblaze.com/stories/blaze-exclusive-tx-high-school-students-made-to-recite-mexican-national-anthem-pledge-of-allegiance/