Saturday, February 4, 2012

Taxes and Jobs

What’s new Today

Story #1 discusses reality vs propaganda when it comes to taxes.  #2 looks at the current unemployment rate and what is really going on. 





1.  Taxes: Reality vs. Liberal Propaganda

Want to help make a huge step towards balancing the budget, make the tax code fair and equitable, and improve the economy?  According to President Obama, Massachusetts Senate candidate Elizabeth Warren, and other liberals, the way to do this is to raise taxes on the wealthy:

From a CBS partial transcript of the 2012 State of the Union address: "Tax reform should follow the Buffett Rule. If you make more than $1 million a year, you should not pay less than 30 percent in taxes."

More famously, from a 2011 Warren town hall: "You [wealthy people] moved your goods on roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces the rest of us paid for."

These are great arguments to run on in an election cycle focused on jobs, economic fairness, and government reform. Unfortunately, they run into the slight problem of not being based in reality -- especially Warren's statement, since she dishonestly implies that wealthy people don't pay taxes.

As described here, the first fact ignored by the tax-increasing crowd is that upper-income-earners pay both more federal taxes than lower-income Americans. This is true both for the percentage of income taxed and as a percentage of the total federal taxes paid to the IRS. This has been the case for decades. Additionally, taxing millionaires at 30% would be a mere 1% increase in their average tax rate, and it would bring in less than $10 billion in additional revenue….

….Last month, the Congressional Budget Office's 2012 alternative fiscal scenario (read: political reality) budget report estimated that the federal government would spend $47.136 trillion from 2012 to 2022 and collect $36.154 trillion in tax revenues. If we took half of the value of all loopholes over ten years and put them toward deficit-reduction, we could take the rest and lower the tax burden on all Americans by about 13.8%. If put toward deficit-reduction, the remaining $5 trillion would cut about 45.5% of expected deficits over this period. Not only would this be a strong step in the right direction fiscally (always good for our barely existing AAA credit rating), but it would also help create a stronger economy, which would in turn bring in more tax revenues to the government.

These solutions would accomplish far greater reduction in the deficit than the Democrats' ideology-infused proposals…..






2.  Unemployment



Everyone, of course, would be thrilled if 243,000 jobs were actually created in the month of January. Hallelujah!

Remember, we are talking about the month when companies go into hibernation because of bad weather and temporary Christmas jobs end. Jobs aren’t created in January. They are lost.

Yet there it is in the Labor Department release yesterday — “total non-farm payrolls rose by 243,000 in January and the unemployment rate decreased to 8.3 percent.”

A lie? Political manipulation? Or maybe it’s just that most people don’t understand what they’re looking at. The answer is the latter.

Those 243,000 jobs are the total after seasonal adjustments.

The question you should be asking is, what’s the un-tampered-with number before the adjustment?

Glad you asked. The Labor Department reported a loss of 2,689,000 jobs in January.

Seasonal adjustments are intended to smooth out holiday bumps like that. But because of the depth and unusual nature of the nation’s Great Recession, those seasonal adjustments are being skewed.

Here’s how it works: In January 2010, as I said, there was an actual, unadjusted job loss of 2,858,000 jobs.

To make it simple, the government computers were expecting a bigger unadjusted loss than the 2,689,000 jobs because last January’s decline was 2,858,000.

Why weren’t there as many job losses this January? Very likely because the weather throughout the country is a lot milder this year than during the past two Januarys.

A loss of jobs that isn’t as bad as expected turns into a job gain. Does that mean there really are 243,000 new jobs out there? Absolutely not.

Let’s say there are rumors in your company that 300 people are going to be laid off. Instead, management decides to fire just 200.

Two hundred people, of course, have lost their jobs. But, adjusting it for expectations, 100 people didn’t get fired. Using this analogy, the government would say that, on an expectation-adjusted basis, 100 jobs were created.


When you have to start explaining things like this, most people glaze over.  The Republicans need a simple explanation or comment.  For instance, 3 million new jobs means that each new job cost $280,000 stimulus dollars or if you want to look at the deficit, we have $1.5 million per job with deficit spending. 

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