The War on Job Creation

Back in the Dark Ages, doctors were known for bleeding patients to reduce fever and cracking skulls to relieve headaches. Everything old is new again as the Obama Administration pursues excessive taxes on job creators on both Wall Street and Main Street in order to create new jobs.

Elizabeth MacDonald brings the Administration's current efforts to light in a column at FoxBusiness.com. She points out that "A House bill now being drafted would raise $150 billion each year to pay for new manufacturing jobs by taxing securities transactions such as stocks, options, derivatives and futures...But the effect here would be the polar opposite-it would hurt job creation and even though Congress says they'll exempt trades made for retirement savings, chances are slim that will happen, and the fees will get passed along. And jobs in the finance sector, already flattened, will fly overseas if the US is the only country with this taxing regime."

MacDonald's article points out the obvious. Politicians develop and implement policies as if we were trees. They believe we will take a tax, regulation, or other cost of doing business without blinking. Unfortunately for government, we are not trees. I do not know about you, but if someone attacks me with an axe I am either going to fight or take flight. That is the same thing that happens in public policy. When government attacks with a tax on job creation, that job creator is either going to fight (which in this country requires a long term strategy that includes changing the people in power) or they are going to run (which is much easier to do in our current political environment and our abilities thanks to technology).

Where and how do people run? We have many examples of this in recent years and the Internet makes it very easy for people to move their money and the rest of their lives, wherever they need to go to do business.

For example, A recent study from the Empire Center for New York State Policy is showing that the state is suffering from a similar fate. The authors of the studies -- E.J. McMahon and Wendell Cox -- point out that between the years 2000 and 2008 and following massive tax increases for those with higher incomes, the families that have been leaving have income levels that were 13 percent higher than those arriving to the Empire State. In Manhattan and the New York County area, the impact was even more profound. Those leaving the Big Apple had an average income of $93,264, which was approximately 28 percent higher than those who were arriving (which made $72,726 on average).

What is most ironic about these type of policies is that they not only fail to create jobs, but also fail to generate new revenues. They simply do not work. The old saying remains true, "the more you tax something, the less you get of it." If you heavily tax job creators, you will lose them and the jobs they create. MacDonald believes that the bill being argued in this Congress will actually force some job creators out of the country. They, in turn would likely take the jobs with them. It is time to abandon ancient practices that do not work and pursue policies that simply make sense.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

US Businesses Vote with Their Pink Slips

Before President-elect Barack Obama had a chance to resign from the US Senate there was an out pouring of pink slips through out US industry. Some may argue that they would have happened regardless of who won, but I found it interesting that these businesses held on to these many employees until after the election either to boost Republican hopes for reelection or to make a protest statement if things didn't turn out favorable for business.

We already knew that the job creators -- businesses of all sizes -- were supporting McCain and it wasn't even close. According to CEO Magazine's survey, over 80 percent of CEOs favored McCain over Obama. McCain's support or the fear of Obama was overwhelming.

However, a majority of Americans didn't seem to care. They desired a "tax cut" over a job (although we are now told that being employed will be a requirement for such a cut). It appears that many of them will enjoy neither.

Barron's notes that "A week ago, we got word that the number of unemployed Americans in October shot up by 603,000, the second largest increase in 28 years! Today, the Labor Department tells us the deterioration actually accelerated in the first days of November. The number of people seeking unemployment benefits surged by 516,000 in the week ended Nov. 8. This is the largest weekly increase since immediately after Sept. 11 and the second biggest in 16 years. At this point, more Americans are collecting unemployment insurance than at any time in a quarter century, with some 3.9 million on the dole as of Nov. 1, a 51% increase from a year ago."

The timing of these layoffs and the elections are more than coincidental to me. They are directly connected. I have been told by business owners for months that if Obama was elected, jobs would have to go. We don't know if the new President will keep his promises, but business owners certainly have. Businesses through out the country are having a second election and it is costing Americans their jobs. I don't blame American enterprise, however, but the new Administration that has a predatory view of it.

The current scenario reminds me of a mild version of Ayn Rand's Atlas Shrugged. In the Objectivist philosopher's book, she describes a scenario where the "men of the mind" go on strike and stop contributing to commerce, art, culture, inventions, etc. In that book the people that drive the economy grow tired of being mistreated by the excesses of government and they simply stop working. No, we are not quite there yet, but give us time.

Who knows, Obama might be the pragmatist he claims he wants to as he has stated in a recent interview. The media, however, isn't buying it and in light of his rhetoric and record, I cannot blame them.

Kevin Price articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.