Archive for the ‘Politics’ Category

Who? What? Huh?

July 4, 2012

We oppose the teaching of … critical thinking skills and similar programs that … have the purpose of challenging the student’s fixed beliefs and undermining parental authority. ”

I can’t fathom what kind of organization would be against critical thinking skills. Critical thinking is the process that promotes scientific discovery, and is the essence of sound business decision making skills. Who are these people?

Here’s a clue.

[Our group] repudiates the humanistic doctrine that the state is sovereign over the affairs of men, the family and the church.”

Oh. So the laws of man don’t trump the laws of the church (although I am not sure whose church we are talking about here). They are some kind of Bible-thumpers. Is there another clue?

We support the definition of marriage as a God-ordained, legal and moral commitment only between a natural man and a natural woman, which is the foundational unit of a healthy society, and we oppose the assault on marriage by judicial activists.”

We affirm that the practice of homosexuality tears at the fabric of society and contributes to the breakdown of the family unit. Homosexual behavior is contrary to the fundamental, unchanging truths that have been ordained by God”

To protect our serviceman and women and ensure that America’s Armed Forces remain the best in the world, we affirm the timelessness of those values, the benefits of traditional military culture and the incompatibility of homosexuality with military service.

Ok. Bible-thumping homophobes, but that’s almost redundant. Who could this be? This could be a clue:

America’s founding fathers wrote the 2nd amendment with clear intent – no level of government shall regulate either the ownership or possession of firearms. Therefore we strongly oppose all laws that infringe on the right to bear arms. We oppose the monitoring of gun ownership, and the taxation and regulation of guns and ammunition. We collectively urge the legislature to pass “constitutional carry” legislation whereby law-abiding citizens that possess firearms can legally exercise their God-given right to carry that firearm as well. ”

Bible-thumping, homophobic, gun rights zealots who are against critical thinking skills… hmmm. Perhaps this is the manifesto for one of those Jesus-based militia cults like David Koresh. Remember Waco?

Then there is this:

We support labeling of all products containing genetically modified organisms”

There’s something I can agree with. We should have government regulation that informs the public of the contents of things they consume. Where did that come from?

Who are these people?

The clear indication of the failure of a point-of-view is when it fails to achieve internal consistency. While this group is against critical thinking skills,

[We believe in] having an educated population, with parents having the freedom of choice for the education of their children.”

While is group is against abortion,

Health care decisions should be between a patient and health care professional and should be protected from government intrusion. ”

Perhaps the most glaring and troubling internal contradiction is that of freedom. The preamble to their manifesto upholds the notion of freedom and opportunity. They explicitly reassert the inalienable right to life, liberty and the pursuit of happiness, but later assert:

We urge our national leadership to reasonably use profiling to protect us ”

Neither the United States nor any state shall recognize or grant to any unmarried person the legal rights or status of a spouse.”

[Welfare] recipients should be required to submit to random drug testing in order to receive benefits. ”

We oppose the expansion of legalized gambling”

So basically, all people are entitled to freedom and the pursuit of happiness, unless you are a homosexual, non-Christian, like to gamble, receive some form of government assistance or don’t look like an American.

So ask yourself, what kind of group is a Bible-thumping, homophobic bunch of gun zealots with no critical-thinking skills whose belief system is littered with internal consistencies and ironies that are the making of dark comedy.

Of course. The current Republican Party.

All quotes are from the official Republican Party platform of Texas. Check it out for yourself at:

http://www.texasgop.org/about-the-party

The Paradoxical Conservative

February 18, 2012

There are many topics that come up in the national agenda that I don’t have the background to understand completely. As with any debate, I seek to understand the veracity of both sides so I can make an informed decision as to where I stand on the issue. The critical thinking process that I use starts with assessing the internal consistency of the argument. While I may not understand domestic economics or global climate change, I can assess the argument on whether it passes this “sniff test” for logic-based thinking.

One argument coming from conservatives is that government is inherently wasteful and should be smaller. However, the largest government organization in the history of America was created by a Republican – the Department of Homeland Security. That was in response to an unusual time in our history, so maybe that deserves a pass. However, for some reason many conservatives don’t feel the rule of government waste applies to the Department of Defense. I was a contractor for a small DoD job and it was well-known that there was tremendous waste going on. (Our contract was specifically an assessment to help a small piece of that). So when President Obama tries to reduce military expenditures, conservatives like Dana Rohrabacher claim that he is “trying to gut the military.” [1]

One argument coming from conservatives is that deficit spending is a problem. Actually, I agree on that point. Of course, deficits weren’t a problem for conservatives when Ronald Reagan almost tripled the debt. Deficits weren’t a problem for conservatives as recently as the Bush Administration when tax cuts, two wars and a prescription drug benefit were all taking a toll on America’s financial resources [2], but now they are a problem. If we can agree that the deficit is truly a problem, it should be a addressed with a combination of revenue increases through changes in the tax code and government spending cuts. Simple math dictates that military spending has to be part of the cuts (see first point above).

One argument coming from conservatives is that the government should not be in the business of redistributing wealth. That conservative argument focuses on federal policies that take tax revenues to fund social safety programs. However, tax incentives for multinational corporations like GE and the oil industry are never considered a “redistribution of wealth.” In all fairness, the Paul Ryan plan does include reducing agricultural subsidies and cuts in defense spending [3], but the focus is on cuts in social programs. It also includes tax cuts. I am not an economist, but reducing the deficit by reducing federal income seems like magical thinking to me.

One argument – or perhaps more of an ideology – from conservatives is one of personal freedom and personal responsibility. I can also relate to that. I was raised to believe that and have lived my life according to that ideal. For many of those same conservatives, it is the government’s responsibility to interject themselves in the most personal of issues – reproductive health. Access to birth control reduces unwanted pregnancies, and thus the need for abortions. Unwed mothers have an increased likelihood for needing access to social support programs. Access to birth control seems to be in the best interest of all Americans, but then we have Rick Santorum stating “One of the things I will talk about that no President has talked about before is the dangers of contraception in this country.” While he doesn’t go so far as to advocate making contraception illegal, there seems to be paradoxical thinking on his part that just doesn’t reconcile with the realities of life in America.

One argument – a red herring really – coming from conservatives is that Obama is waging a war on religion. We’ve all seen the “war on religion” memes on our social network sites. There is an assertion that children aren’t allowed to pray in public schools. Of course that assertion is just plain false. What can’t happen is school sanctioned and led prayer. That is an assault on Christianity, according to religious conservatives, but just ask if it would be OK for a Muslim-led prayer and you get a resounding “No!” Religious freedom to Christian conservatives means they can impose their faith within public-serving institutions like hospitals, but at the same time, they don’t want any other religion to have the same opportunities.  Treating religious freedoms equally across all religions somehow becomes a “war on religion.” Just Google “Sharia Law” and look at the nutty paranoia [6]. Apparently religious freedom only applies to Christians.

There was a time where the conservative point-of-view was more consistent and well-articulated. There used to be an opportunity for an honest discussion of the contrast between a conservative point-of-view with a more liberal point-of-view. Since Christian conservatives interjected themselves into GOP politics in the 1980s and now with the intrusion of this pseudo-libertarian ideology from Tea Party conservatives, I just don’t get what the GOP point-of-view is.

One thing is certain. For me, it just doesn’t pass the sniff test for logic-based thinking.

 

[1] http://thinkprogress.org/security/2012/01/28/413991/rohrabacher-obama-military/?mobile=nc

[2] http://www.nytimes.com/2011/07/24/opinion/sunday/24sun4.html

[3] http://online.wsj.com/article/SB10001424052748703806304576242612172357504.html

[4] http://www.washingtonpost.com/blogs/under-god/post/rick-santorums-very-catholic-birth-control-beliefs/2012/02/16/gIQALczyHR_blog.html

[5] http://abcnews.go.com/Politics/wireStory/opposition-strikes-obamacare-birth-control-15731637

[6] http://townhall.com/tipsheet/chrisfield/2011/03/23/shariah_law_in_america_the_islamists_plan_to_destroy_us_from_within

 

 

Press ‘1’ for English

February 1, 2012

Every now and then, one of my conservative friends in my social circle will post the picture – typically with John Wayne in his macho pose – with the question, “Why do I have to Press ‘1’ for English. This is America.

Forget that the question itself shows more than a little xenophobia. Forget that it demonstrates a narrow world view of the person for whom that resonates. Forget that American history is littered with the vilification of other ethnic minorities over the years like the Irish and the Italians, or religious minorities like the Catholics or the Mormons for whom there is little contempt in modern society. For crying out loud, if you really care about America, read an American History book and get some perspective.

If the English-only movement is of such import to real conservatives, why did both Newt Gingrich and Mitt Romney run Spanish-language ads during the recent Florida primary race?

I am not going to denounce that as hypocrisy. They know that the latino vote is important to them, just as capitalists know that money from latinos is just as valuable as money from them “regular Americans” and social service organizations know that people need help, regardless of their language proficiency.

… but next time, my social network friends put out the post rhetorically asking why they have to press ‘1’, I will redirect their question to Mitt and Newt.

The American Automotive Industry

January 22, 2012

I watched a segment on “CBS Sunday Morning” today. It was on the recovery of the American automotive industry since their bottoming out in 2009. In short, GM has regained its leadership position in worldwide auto sales.

The turnaround in the automotive industry is, in part, due to normal capitalistic economic forces. Being in a stronger fiscal position, Ford managed its recovery without government help. A significant part of the credit for the recovery of the automotive industry, most notably for General Motors, is due to the government decision to inject capital into the failing industry.

Philosophically, I share concerns with the Republican party about the direct involvement of the government in private industry. I don’t know where Obama stands on that philosophy, but based on other policy decisions, I suspect his view is similar to mine. However, in times of crisis, leaders make pragmatic decisions that are targeted to ameliorate real, urgent problems.

It turns out that the policy decisions of the Obama Administration, like most other policy decisions of this administration, turned out to be the correct one – one based on analysis and not ideology.

The Republicans continue to espouse their fundamentalist policy, even in the face of the facts. They would have let the industry die. [1] Umm, “creative destruction”, I think Mitt calls it. According to conservatives, government can’t create jobs. It appears, however, targeted government action can save jobs…

… more than 1,140,000 of them in 2009 and another 314,000 jobs in 2010.[2]

According to the Wall Street Journal – you know, part of the liberal media – reported that more than a million jobs were saved by the action taken by the Obama Administration. That’s the same administration referenced by current GOP candidates on the campaign trail as the “job killing Obama Administration.”

Mitt Romney claims that America needs a CEO to lead it. With the Obama Administration’s proven track record of success – this just being one of them – I think I will stick with the community organizer.

 

[1] http://pa-magazine.com/industry-news/gop-presidential-candidates-criticize-auto-bailout/

[2] http://blogs.wsj.com/deals/2010/11/17/gm-ipo-auto-bailout-saved-more-than-1-million-jobs-study-says/

 

 

Obamacare Gets Personal

January 15, 2012

There was a virulent debate levied against the Affordable Care Act that continues in the Republican primary debates to this day.

Let’s recap on some of the major provisions of the law:

  • There no longer lifetime limits on coverage. This doesn’t affect too many Americans, about 20,000, but for those it does, it can be the difference between medical bankruptcy and the heathcare they need. Annual limits are no longer allowed, either [1]
  • Honest mistakes on your application are no longer a sufficient reason for canceling your policy. [1]
  • Young adults can stay on their parent’s plan until age 26. [1]
  • Children with pre-existing conditions can not be denied coverage. [1] It’s rather astonishing that this was allowed in the first place, isn’t it?
  • Preventative services, such as mammograms, colonoscopies, immunizations, pre-natal and new baby care are covered without expense to the insured. [1]
  • Insurance companies are required to spend at least 85% of all insurance premium dollars from large employer plans on coverage and at least 80% of premium dollars from individuals and small group plans on actual healthcare. [2]

There are more changes in store, starting in 2014.

  • Private health insurance exchanges will allow Americans to pool together to purchase coverage. For individuals and small businesses, this allows us to spread the insurance cost and risk among a larger pool of individuals. [1]
  • Small businesses may be eligible for tax credits for providing coverage to their workers. [1]

It’s also important to recognize what the Affordable Care Act is not. It is not a takeover of healthcare by the government. Insurance companies are and will continue to be private, for-profit companies. Doctors and hospitals will continue to be private, for-profit, companies. In that, there is no substantive changes to the structure of pre-Obamacare healthcare in this country.

I challenge any conservative to explain how those above items above are bad for America.

Governmental policies are important in the abstract, but they become vastly more important when they affect your personally. I run a small business, so we are pretty much on our own when it comes to healthcare coverage. We decided to see if there was an alternative to our expensive individual healthcare plans, so we talked with an insurance agent and sent in the application.

We are very healthy, but one of my family members had a minor surgery in 2008 to resolve a lifelong issue. The risk of side-effects was low from the procedure and fortunately none of those were experienced. It resolved the problem and is not the type of condition that is recurring or has long-term risks – either it works or it doesn’t. However, that was sufficient for the insurance company to deny coverage for pre-existing conditions.

As a CEO, I fully respect the capitalistic endeavor. I want my insurance company to make a profit, so they can continue to be a viable service provider for me long into the future. However, the only explanation I can derive for this to be a cause for denial is unchecked greed by the insurance companies.

Again, I ask conservatives to justify how this behavior from insurance companies is justifiable and why is it not the role of government to ensure fair treatment from companies in the business of providing such fundamentally personal and life-affecting services as healthcare insurance. I challenge Republicans need to explain why they would vote for a Republican candidate who vows to repeal the Affordable Care Act.

Justify it. I dare you.

 

[1] http://www.whitehouse.gov/healthreform/healthcare-overview

[2] http://www.whitehouse.gov/healthreform/timeline

Seriously, Newt?

November 22, 2011

All the Occupy movement starts with the premise that we all owe them everything. They use a public park they didn’t pay for, go nearby to use bathrooms they didn’t pay for, to beg food from places they don’t want to pay for, to obstruct those who are going to work to pay the taxes to sustain the bathrooms and the park so they can self-righteously explain they are the paragons of virtue to which we owe everything… Go get a job right after you take a bath.”

— Newt Gingrich, November 19, 2011.

That statement says a lot more about Newt Gingrich than it does about the Occupy Wall Street protesters. First, the assertions are false pretty much all the way through. Many of the Occupy protesters are out of work, but they did pay taxes when they had employment, so they did indeed pay for those parks and public restrooms.

I spent some time talking with, and sometimes challenging, an Occupy protester at the information desk at Occupy Denver. I suspect that Newt has not had such as experience, but prefers to pontificate from his ivory tower. What that Occupy protester explained was that he got laid off from his job in 2008. All he had been able to get is temporary work, but he gets terminated when his hours get him too close to full time. He then jumps to another temporary job. He is working and wants to work more, but is unable to find the work. Nowhere in that conversation was there a sense that “we all owe them everything.”

I can’t understand how Newt can claim to love America, but have contempt for some many Americans and ridicule the most American of ideals – the right to assembly and free speech and to air grievances about policies in our country.

Newt is as out-of-touch with middle America as you might expect from someone who has a $250,000 no-interest revolving charge account at Tiffany’s and made over $1.6 million in consulting fees from Fannie Mae and Freddie Mac.

… and this guy is a front runner for the GOP presidential nomination.

That suggests that the problem with conservatives extends well beyond Newt.

In my experience, the majority of my Republican friends are caring and compassionate people for their family, friends and associates, but it stops there. There is no empathy and often outright contempt for those different than them. Sometimes it is differences in ethnicity, perhaps religion, or perhaps socio-economic status, but if you are different, you somehow aren’t a real American.

Is this the party that we want to lead this country?

 

A Halloween Story

November 1, 2011

I love Halloween. It’s fun to dress up and see all of the kids in their costumes. This year, I decided to dress up like a Republican. I pulled out a suit I bought in 1984, back when the Great Ronald Reagan owned the White House and the World. About 6:00 pm the doorbell started to ring.

“Trick or Treat!” they shouted.

“We don’t give handouts here. Get a job!” as I smiled with that Dick Cheney smile.

One little uppity little nitwit spoke up. “We can’t get a job.”

“Why not?”, I said. There are plenty of jobs out there for people who want to work.

“I can’t get a job because I am only 8 years old.”, he retorted.

“Well, it didn’t used to be that way. The liberals of your ilk imposed job killing government regulations in 1916, when they passed the Child Labor Act.” It’s your fault if you can’t get a job.

And so it went for the next couple of hours. Beggars after beggars looking for a handout. Then it happened. This kid, maybe 12 years old, rings the bell.

“Trick or Treat!”

“Hey, you look different than all of the other kids. You are dressed pretty sharp in that suit and all. What are you dressed as?”

“I am dressed as an investment banker. Like my Dad,” he said with a proud American smile.

“What are you doing out here begging?”, I asked.

“Well,” he said, somewhat sheepishly. “My Dad lent a bunch of money to a bunch of poor people at 17% interest and the losers couldn’t pay him back. We lost everything.”

“That’s awful.”, I said. “Come in. Let’s talk. You lost everything?”

“Yes.” He said. “Not everything, really, but we had to let two of the staff go and my Mom can’t have her personal trainer over any more. It’s awful.”

“It sounds awful, I said.” This kid really touched me. “What’s your name?”

“Tony,” he said.

“Tony, it will be ok. You have everything you need to be successful in America. You can live the American Dream. You are smart, and well-dressed. Most of all, you have a rich Dad.”

“You think so?” he said with that spark in his eyes that only entrepreneurs have.

“Yes, I do.” I asserted, as I gave him an unopened 2 pound box of Russell Stover candy and patted him on the back. I walked him out the door. As he turned with a smile on his face,  I said, “This is America. You will do great.”

It lifted my spirits. There’s a chance for America after all. About that time, a cute little girl dressed as a princess about 8 years old stepped up on the porch.

“Trick or Treat!”

“Hey, you are a cute little princess.” I said. “Let me give you some advice for your treat that is better than candy. Keep being a little princess. Learn how to cook and you can stay home, take care of the kids, get married and let your man take care of you. It’s the bedrock of American society.”

She scrunched her nose with a confused look on her face and romped off to the next house.

For the next few hours, the bell rang less and less. “I knew it,” I thought smugly to myself. They are lazy. If you don’t give them handouts, they will quit asking.

As the evening went on, the traffic slowed to nothing, so I decided that Halloween was over. I mused, “I wish it could be like this every day of the year.” … and I hope Tony will be ok.

I went upstairs, took off my suit and put on my dungarees. “That’s over,” I sighed to myself. “Now I am going to have to start caring about people again.”

Living with Government Regulations

October 25, 2011

I got up this morning, went to the bathroom, took a shower and brushed my teeth. The water supply is managed by our city government, as is the sewer system. The police and fire department – all government employees – were on duty while I slept, helping to ensure my safety.

I did a little work on the computer and got ready for my 8:00am conference call. I dropped the land line a few months ago and use a mobile phone exclusively. The mobile phone industry wouldn’t be possible if there wasn’t an FCC to allocate the spectrum to the various mobile carriers in the area.

I did a few more hours work and jumped in the car to drive to my customer’s location for a meeting. The car design is heavily influenced by safety regulations. I am glad the seat belt was there 20 years ago when I totaled my Honda Prelude in a highway-speed accident. The impact caused the seatbelt to break my rib. It was before air bags, but were it not for the seatbelt, I am sure I would have had significant injuries.

I live close to the state line and my customer is in the neighboring state, so I used the Interstate Highway system to get there more quickly than the side streets.

I stopped by the grocery store on the way home to get some groceries for dinner. There were some mom’s there, who had just picked up the kids after their day at public school. I am glad the kids are in school rather than working in the local factories. I picked up some USDA-grade A beef and vegetables and got a refill on some medication at the grocery store. I appreciate that there a Food and Drug Administration that helps ensure a safe food supply and ensures that the large pharmaceutical companies can’t put anything on the market and make whatever claim they want. I remember reading Upton Sinclair’s book, “The Jungle” in high school.  It wasn’t always that way in America. That 1906 book exposed the realities of an unregulated meat-packing industry. If you haven’t read it, you should.

I got back to the home office a little before the markets closed and had time to place a trade. There is some amount of confidence – less than there used to be – that the information I used to make the trade is accurate, given the regulations enforced by the Securities and Exchange Commission. Insider trading and pump-and-dump schemes were commonplace before the SEC was founded in 1934.

So in a single day, governmental institutions are there to ensure a healthier populace and a more balanced playing field. I’ve been the beneficiary of the local government’s services and infrastructure, including our educational system, the FCC, the Interstate Highway System, automotive safety regulations, the USDA, the FDA, the SEC and – because I am a breather – the EPA. All in a typical day. That’s why I don’t mind paying taxes. Of course, all of these government institutions could be more effective and more efficient, but so could private companies like AT&T, GE and Blue Cross/Blue Shield and every other large organization on the planet.

There used to be an America without these safeguards and social infrastructure. There was a time when drug companies could make outrageous claims and the food supply was unsafe and the markets were rigged and children were working in factories instead of going to school. The Republicans – especially the Tea Party wing – want to take us back to the days of those “freedoms” and the lack of government regulation.

Do we really want American to look the way we did in 1911? I certainly don’t.

Fiscal Fundamentalism

September 11, 2011

When I first became interested in politics in the early 1980s, I described myself as fiscally conservative and socially liberal. At the time, it elicited a chuckle or two, because it was perceived at the time that social liberals liked to spend money on social programs and thus those two values were inherently contradictory. Thirty years later, I would still describe myself the same way. Given the state of the two political parties – neither of which I strongly identify – it no longer seems as contradictory as it once was.

The Republican Party tries to lay claim the mantle of fiscal conservatism, but that isn’t what is going on with the GOP these days. Webster defines conservatism as “tending or disposed to maintaining existing views, conditions or institutions.” For the majority of American history, we have had fiscal discipline and most self-described political conservatives would agree that fiscal discipline is a conservative value that we need to rejoin.

Let’s look at the political environment in my adult lifetime. Before Ronald Reagan, our debt was $1.0T dollars [1]. Reagan nearly tripled the debt to $2.9T, due largely to peacetime defense spending and permanent tax cuts. That violated my sense of fiscal conservatism and I was critical of Reagan’s break from the past. George H.W. Bush added another 1.5T to the debt, but he did the right thing and raised taxes after vowing, “Read my lips. No new taxes.” He was a true fiscal conservative and the math mandated raising government revenues. He is vilified by the current Republicans for having done the right thing.

Clinton added $1.4T to the debt, but ended his presidency with a budget surplus. Since he is the only president in my adult lifetime with a budget surplus, that makes him the ideal of modern fiscal conservatism. George W. Bush, with one of the most failed presidencies in American history, added a whopping $6.1T to the debt, bringing the total to $13.9T at the start of the Obama administration.

By what measure can the GOP make any claim to fiscal conservatism? The only modern Republican president that can claim fiscal conservatism, George H.W. Bush, is vilified by his own party.

What we have in the GOP isn’t fiscal conservatism, it’s fiscal fundamentalism.

Webster defines fundamentalism as “a movement or attitude stressing strict and literal adherence to a set of basic principles.” We can see a fundamentalist mindset in the non-political domain. Fundamentalist Muslims believe in a set of principles that haven’t changed in the last 500 years. To the fundamentalist mindset, there are no shades a gray – just black and white. Fundamentalist Christians see the world much the same way as fundamentalist Muslims. To maintain their beliefs, they have to reject much of modern science, such as evolution, and the dating of the age of the universe. They must reject much of the progressive changes in attitudes toward gays and racial relationships. It is an overly simplistic mindset that fails in the face of critical thinking.

Starting with Reagan, the Republicans have courted fundamentalist Christians as a key voting block. It should come as no surprise that the fundamentalist mindset has become pervasive in the political domain of the Republican party. The current fundamentalist belief is that there should be no new taxes, under any circumstances. Like any other fundamentalist belief, it is absolute and can not be questioned or overturned when the changing economic global picture suggest that the thinking should be challenged. Any fundamentalist belief, including those of the Republican Party, does not withstand the scrutiny of critical thinking.

Most Muslims are not fundamentalist Muslims. Most Christians are not fundamentalist Christians. Just because they share the Christian moniker, fundamentalist Christians think and act differently than most Christians. Most Republicans are fiscal conservatives, but I think few are fiscal fundamentalists.

I encourage voters to shed their party affiliation at look at the actions and attitudes in the last quarter century. Should they do that, I think most Republicans would have to conclude that their party has left them.

Sources:

[1] http://www.nytimes.com/interactive/2011/07/28/us/charting-the-american-debt-crisis.html

Taxing the Job Creators

July 28, 2011

In a July 8, 2011 press conference, Congressman Boehner suggested that it would be a mistake to tax “job creators.”[1] It was a great piece of rhetoric. It certainly polls better than a reluctance to tax the rich, which is much closer to the accuracy of what needs to be done, in part, to combat the revenue shortfall being experienced by the U.S. Government. My issue with the statement isn’t just that it’s political spin. It is intellectually dishonest in that it makes a false presumption about taxes in general.

The presumption implicit in the rhetoric is that the wealthy people create jobs. I am not an economist or a CPA, but I am the CEO of a small C-corporation (the same tax structure as the largest corporations), so I have to be involved enough with the tax implications and the math to make financial decisions for the corporation that I head.

There are really two separate tax issues at work here. How do we tax the personal income of wealthy people, many of whom are corporate executives, and how do we tax the corporate income of those corporations headed by those wealthy individuals? A C-corporation is a completely separate fiscal entity that has no direct fiscal relationship to the personal wealth of the executive team. The executives are paid a salary and other compensation the same way (although not in the same proportion) as other workers.

Thus, the first fallacy is readily apparent. Except for nannies, chauffeurs and gardeners, the personal wealth of the corporate executives aren’t used to create jobs. The jobs are created within the corporation for benefit of the corporation’s shareholders. So as a mental exercise – and I am not advocating this – what if we were to tax income above, say, $10 million at a 100%? That would effectively cap salaries at $10 million, so corporations certainly wouldn’t have salaries above that. The money would either stay in the corporation or there would be other avenues, such as dividends, to move corporate wealth into the hands of the executives. There would be no effect on job creation at all because, again, jobs aren’t created from the personal wealth of the wealthy.

So if the issue of taxes on personal income doesn’t affect job growth, surely raising corporate taxes would be a job killer, wouldn’t it? Intuitively, it makes sense. Herein lies the second fallacy.  Most of us are aware of our personal tax situation.  Taxes are based on our revenue, mostly from our salary, minus the few deductions left, such as mortgage interest and dependent children deductions.  The salary minus deductions is the taxable income on which we are taxed.

In the case of a corporation, the basic idea is the same.  Revenue minus expenses is the taxable income (aka “profit”) and the taxes are applied as a rate on that profit.  However, on the corporate side, salaries aren’t revenue like they are for us, they are expenses. The money paid by a corporation in salaries is not taxed. Here’s where it seems backward, but bear with me. Assuming revenue stays the same, if I, as CEO, hire another person, my corporation’s taxes go down because my corporation has more expenses, less profit, so my tax rate is applied to a smaller number.  So as a mental exercise – and again, I don’t endorse this – what would happen if corporations were taxed at 100%? Well, I could give all of my corporate profits to the government in taxes, I could move corporate profits to the salaried employees,… or I could hire another person. As tax rates increase, the corporate executives has a disincentive to retaining profits in the corporation as an asset, but I can’t figure out how that translates into a disincentive to hire more employees.

The reality is that the decision to hire has little to do with taxes. It has to do with whether that employee can generate revenue in excess of their loaded salary, increase efficiencies in excess of their loaded salaries or is necessary for the operational infrastructure of the corporation (e.g. CPAs, lawyers, etc.)  Taxes just aren’t a substantive part of the decision making process.

Well, that’s the basic math at work.  In reality, it’s quite a bit more complicated, but that’s the general sense of what is going on with corporate and personal taxation.  As I said, I am not an economist or an accountant, so I could be wrong. That is just my informed understanding.

So I ask you… can anyone out there explain the mathematics behind the Republican assertion? If so, explain it to me.

References:

[1] http://tinyurl.com/44hofhk