Sorry, Republicans, The Economy Is Not Crappy Because Of “Uncertainty” About Taxes And Regulation

The reason for complicated taxes is that they are written by big business lobbyists and are enacted by
the best congress that money can buy. I don't here any complaints by GE. We get what they pay for.

Businesses hire because of one thing - they can't meet demand. If you drop a boatload of money in the lap of business, through tax cuts, or reduced regulation, or anything else, it will not cause them to hire. If you drop a boatload of orders in their laps, then the hiring begins.

I can only speak for myself as a small businessman with a company that currently has 33 employees why I am not willing to invest another single dime into my business. In 2009 my sales were cut in 1/2. I ended up having to put in a load of my savings to pay payroll and overhead expenses. To date I have not taken back a single dime since my business, while profitable, is generating about 1/3 of the income it use to. This time if my cash flow starts declining, I am going to be proactive and cut, cut, cut. I will not invest another dime in my business as I don't think its prudent given where the economy is right now and the precarious finances of the federal government.

I am not worried about taxes unless they are going to go up substantially. For small tax increases I can simply cut back on non-critical expenditures and get tighter with the wallet when it comes to raises, bonuses, perks and benefits to make up the difference. What concerns me more is that there is no way to even begin to fix the budget crisis of the federal government without massive spending cuts and tax increases on everyone at all income levels. If that happens, which I give a probability of 25%, the economy will no doubt go into shock, only making things worse. On the flipside, if very little is done, which I give a much higher probability to, the government will be required to destroy its currency to generate enough inflation to effectively give a hair cut to bondholders. If that happens, many like me that have worked hard and taken a ton of risk will see their savings decimated. So its kind of hard to get excited about the future when all options point to a lot more pain down the road. Right now for me and probably many other business business owners its about wealth preservation and not so much wealth creation.

The article gives one business' point of view. But they are right on the complicated tax laws. We spend way too much on accounting to satisfy the government requirements. You don't see the accountants complaining do you?

The purpose behind having "tax brackets" is so the financially successful companies and individuals can, to a small degree, support emerging companies. When the largest companies pay no tax on billions of dollars - and individuals who's medical bills fall outside the norm are audited the system is BROKEN. I suggest we vote out any incumbent who doesn't make fixing the tax code a priority.

It is not just the UNcertainty of taxes and regulations, but coupled with the taxes and regs in place,that does stifle growth.

Democrats seem to feel businesses are in business to hire people.

As a recruiter, many of the companies I recruit for say they hire when customer demand outstrips their labor force.

I don't think Republicans believe the economy is crappy because of taxes. I think they believe the economy is crappy because all our jobs have gone overseas. If people were employed, they could pay taxes. It's a no-brainer. Even Democrats can understand it.

Taxes and regulation hit different businesses and different business sectors in different ways.

Talk to a Chili's owner on the healthcare bill. Or talk to a coal miner on EPA regulation.

What sells in DC or on Wall Street is very different from reality on Main Street business which is where this economy sinks or swims.

My husband and I both work for corporations so we get a w-2. WIth our combined income very little is deductible (the deductions are all phase out or eliminated through the alternative minimum tax) including child care. Many of our neighbors are essentially contractors that have set themselves up as small businesses. They deduct their vacations by doing a little work on the vacation and they defer a substantial portion of their income ($100K?) by setting up retirement plans (they are the only employee so they can have "rich" retirement plans). There car is deductible, all home office expenses, etc. I get they are legally taking advantage of the tax system but when they live in larger houses and have new cars yet only pay one fifth of the taxes that my husband and I pay, I think there is something wrong with the system. It is funny that these families are all about raising taxes to pay down the deficit. Most of their lifestyle is tax free. My husband and I are trying to save for our own retirement because our employers have eliminated pension plans. Since our savings come right off the top, we essentially have to make $2 for every $1 of retirement savings. Yes we take advantage of the 401K but $15K a year for the time we have left to save is not going to get us there when we thought we were going to have a pension to rely on.

If this country wants to raise more money, they should take away the mortgage interest deduction. That way we are all committed. I am sick of everyone who pays next to nothing in taxes compared to their lifestyle deciding that those of us who pay tax on every dollar we make should pay more.

Sorry Henry, but it is all part of it. Taxes and Regulations due play a large roll. Just ask the CFOs. I want to hire, how much is it going to cost, sorry can't tell you yet. Well let me know when you can.

You could take all the logic of those who believe tax cuts are the way to fix things and put it in a shot glass with plenty of room for an ounce of vodka. This is called supply side economics or as the father of our last Republican president called it in 1978, Voodoo economics, which takes the view that increasing supply automatically increases economic activity. This is pretty much the opposite of how the economy works. Someone always has money even in Zimbabwe, someone has money. If they find something they want or need, they will spend to buy it. This is called demand. If one of their friends, relatives, or mere acquaintances decide they want the same thing, they attempt to buy it. This is called an increase in demand. The person or company that makes the thing these people want sets about producing more. To do this, this person or company will buy the materials needed to make their product; thus, the demand is multiplied down the supply chain. As soon as a producer cannot keep up with demand for the product, the producer looks for ways to improve production either by buying technology that assists a human in making more than a human could make alone, or the producer hires someone to help make more of the product than the producer can make alone. By paying this employee with some of the money received from sales, the employee begins to acquire more stuff; for example buying a new pair of slacks or buying more meat. This is how it works. If taxes and regulations were the root cause of our economic problems, it would have already corrected itself.

Our current economic problems are due to more than one thing. First and foremost, we had 8 years of Republican supply-side nonsense even though Reagan had proved it to be nonsense in the 1980s. They insisted on cutting taxes even though it would send us back into deficit spending and national borrowing just when we had started to right the fiscal ship in the 1990s. Then to make matters worse, we got into two wars costing billions of dollars per month for which there was nothing in the budget, and they cut taxes, again, even as our spending needs went through the roof. They borrowed and borrowed and borrowed some more until we were over seven trillion in debt. This is still not the cause of the economic collapse, but it comes into play.

The supply-siders also insisted that government regulation was automatically bad even evil. Their take on it was that all business people are somehow righteous and good and none of them would ever be so greedy and venal as to put the economy at risk. They also feel that business people are always of superior intellect and reasoning ability so they eliminated whole sections of regulations, particularly on the financial sector, and what regulation was left was simply not enforced. That allowed those kindly, ethical people in the banking industry and mortgage brokerage industry to come up with all sort of Rube Goldberg financial constructs. Unlike Rube Goldberg contraptions in the cartoons, these convoluted financial constructs did not work, but no one wanted to say anything as long as they could fool investors into giving more money. It became a gigantic Ponzi scheme that made Bernie Madoff look like a Boy Scout. Everything went to hell in a hand basket on a slippery slope. Suddenly, we had an economic collapse under way the likes of which had not been seen since the Great Depression (which followed a similar period of hands-off government). When we should have been priming the pump and sending some people to jail, we found our options severely constrained by prior bad, supply-side and tax policy.

Of course, the details were more complex than I described, but the most simplified explanation that still has facts and truth behind it is as I described. Those of you who keep repeating the tax cut mantra are not basing your thoughts on anything other than Republican orthodoxy and ideology.

Sure the feds have put money supply in, but that doesn't create an economy. You need velocity (Hint they teach it in freshman economics). Unfortunately, the only way to create velocity is to hire people who can then spend it. That is what we are not doing. The wealthiest 5% of our nation could do this today and drop the nations unemployment rate to 5%, which is widely considered full employment. Mid and small size business cant just hire-they have to wait for the big boys and girls to go first. In my opionion today's crop of CEO's and business leaders is violating Rule#1 of finance "Maximize the Wealth of the Shareholder". If you do the math, 5% of the nations workforce at an average salary/benefit package of $60,000 is about $450 Billion. Do an internet search of the drop in value of just the S&P 500 from 2008-2009-that figure is $1,2 Trillion. That's right, our nations business leaders cut spending by $450 Billion in order to COST the economy at least $1.2 Trillion as measured by a singular capital markets index. By the way, those unemployed or underemployed, now have to use the government's money and will have to use it in retirement too since they have been unable to earn their own way or save their own way. That is the path to socialism not the government increasing short term money supply.

Yes our tax code sucks. When I think of our tax system I am reminded of Steve Martin in the movie "The Jerk" when he is operating a game booth at a carnival. A kid wnating to play asks what he can win given the bookshelf loaded with prizes and fully visible to paying players. Martin works his way through each shelf and finally whittles it all down to one shelf and really only one prize, no matter how well a contestant performs!
The game of denial! Our tax code is so cluttered and equally confusing as that shelf full of prizes that its nothing more than DCs carnival game for we, the tax payers!
Heres our tax code in a few words, if this, then that, however if that and that, then this but, it must and you must or it doesn't or wont, however if this, then that and that but not before this and only in this year. But if this, then that or when this, then that but not without that. If you need help, feel free to call your tax experts at the IRS however, anything the IRS says on the phone can not be considered advice and the IRS is not liable.
What a JOKE and a very sad abuse of tax payers. When the treasurey sec,///numerous politicians etc. can not get their taxes right, when the head of the IRS says he has to hire someone to whittle through his tax situation.......its time for change and people are frustrated enough with our politicians on this issue that the rumor is there is a high demand for tar and feathers.

So why is the economy crappy?

Because we're buying more than we sell, and borrowing the difference.

No fix is possible without reversing the trade deficit. Win at manufacturing and export like the Germans, or go broke like the Greeks. That's what matters; all else is window dressing and details.

It is a cloudy web of confusion with everyone wanting to say they know the solution. It is not more taxes, it is not more regulations, it is the complex nature of all these rules and regulations. More time and money is spend on making sure we understand them and we comply with them. They are complex because of special interests and our election system. Our elected officials have to listen to those that gave them money to get elected, so they make sure there are certain exceptions for those that gave them money. Just look at the Environmental Regulations, we kill more trees completing records and verifying compliance, then we save with the regulations. There is money to be made off complying with all regulations. We have to fix our election system in order to get any real meaningful changes or legislation.

I saw this passage from Wikipedia. Is it possible that this could be the same Henry Blodget? Is that possible or is this someone different??

"Fraud allegation and settlement

In 2002, then New York State Attorney General Eliot Spitzer, published Merrill Lynch e-mails in which Blodget gave assessments about stocks which conflicted with what was publicly published.[4] In 2003, he was charged with civil securities fraud by the U.S. Securities and Exchange Commission.[5] He settled and agreed to a bar from the securities industry. He paid a $2 million fine and $2 million disgorgement.[6]"

A simplified tax code would so encourage business. The current code is a minefield and businesses and many individuals employ armies of CPAs to navigate it. Is this productive? I think not, except maybe for the CPAs.

A fair tax would help reduce the resentment many feel toward the current system which is perceived to be riddled with special interest favoritism. Most people wouldn't mind paying taxes if they could be sure EVERYONE was paying taxes.

Could it be that business aren't hiring because they are located in an insolvent country in the beginning stages of a depression? Could it be that both political parties could care less about the 43,000 factories that were closed in the past 10 years? Could it be that both political parties are bribed by Wall Street and the defense contractors, and don't have a clue as to how to fix the economy? Nah, that's crazy talk!

As a recently retired person, I would have to disagree i.e. we are supporting three wars, unemployment is stated as 8.8% but that should really be 17% due to people no longer looking and the layoff of Easter hired help. Housing defaults are reaching a all time high and pending defaults are coming. Business hires are at a lull and if not for the retiring "boomers" we would see even higher record unemployment and the confidence factor is not there. Is Henry seeing an economy that the rest of us don't see??

Businesses are nervous because, despite the government's massive and ongoing stimulus, the economy still basically sucks.

This is known as "begging the question": the economy sucks because the economy sucks. Surely "Business Insider" can do better than that???