Tax breaks meant to make jobs? New report finds that they're destroyed

Sometimes you have to be prepared to let the hostage get shot in order to establish credible threats, so that hostage takers will take your demands seriously.

I'm pretty sure no police force has that policy :P

But regardless, a government should do what is best in the long term for the economy. If that means raising taxes, so be it. Short-term business demands shouldn't factor in that much because sacrificing long-term stability of the economy is much worse.

edited 11th Oct '11 5:55:40 PM by breadloaf

I use it in a metaphoric sense. In a prisoner's dilemma repeated multiple times, the strategy of tit-for-tat is perhaps the best way to maximize payout.

Why? Because it encourages cooperation while simultaneously punishing defection. Always cooperating rewards defection and punishes (in a relative sense) cooperation, which is the worst thing you could do as a reinforcement mechanism.

I'd really like someone to find an example of a company that's dumped jobs in protest over taxation. Hiring decisions are made on the basis of profitability, and taxes come after net profits.

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

Furthermore, I think a corporation willing to drop jobs in response to new taxes isn't exactly one we'd like to have around, so, you know what, fuck them, and let some other, more sane corporation take the now-freed and pre-trained workers.

I like the idea of tying tax credits to jobs created with wage above X, though. Totally side-stepping tax breaks, that seems like a much sounder idea...

I am now known as Flyboy.

Mostly, the consequences occur in the background. Like, the US has sold a ton of securities. If one of those investors sells the securities, it raises the deficit. I'm not great at economics, so it's hard to articulate, but there's a lot of capital flight going on. That's what they mean.

I'm a skeptical squirrel

The way Savage described it, in one of his more lucid, non-extreme (or at least, non-extreme to me) theories, the idea that capital can move without people basically means that owners can chase cheap(er) or (more) skilled labor, but people can't chase better wages, is not particularly fair.

Thus, it must be rectified in some manner, and it's easier to get open borders than to stop capital flight, I'd think...

edited 11th Oct '11 6:28:59 PM by USAF713

I am now known as Flyboy.

Wal Mart has closed (or threatened to close) stores in small towns because the small towns decide to play national politics (e.g. tax hikes, new regulations) with their (usually) largest local employers.

In one case (the city of Pueblo, Colorado) they actually won the battle of public opinion against the local government because the government was trying to promote a 1960s union friendly town when that policy had led to a perpetual malaise lasting over 40 years. (The point of contention being Wal Mart wanted to build a distribution center in Pueblo that would have brought at least 350 jobs to the city and the city economic development corporation in concert with the city government itself basically ran them out of town because Wal Mart didn't conform to their unionist ideas. Needless to say, most folks weren't happy with either the city of Pueblo or its economic development corporation in the wake of Wal Mart pulling the plug on the project.)

"Allah may guide their bullets, but Jesus helps those who aim down the sights."

Walmart also closes entire stores if they fear a Union might pop up, writes off abuse of employees in ways that keep them from ever being sued in coirt as a class action, ans generally does every unfair practice on the book to rape profit margins of the companies that have their products sold there.

If anything, thats more reason to regulate the fuck out of walmart and possibly do everything in our power to destroy them and drive everyone in their corporate headquarters into bankruptcy or jail.. Theyre a cancer and a good example of the exact kind of corporation that created this mess.

edited 11th Oct '11 6:32:58 PM by Midgetsnowman

At the same time, they are one of the country's largest employers and are more than capable of taking their business elsewhere. (They usually don't however since we are their largest market too.)

You can't play hardball with them in a time of complete economic fragility. They can afford to have a few small towns pissed off at them, the Congress cannot. (Because those small town voters add up quick.)

That's the thing economically speaking. A recession/depression is the absolute worst time to institute new taxes, new regulations and new restrictions. In the end all they do is make it harder to recover. Want new any of that? Do it on the economic upturn that's measurable and perceived. You'll attract not only less controversy but in the economy's expansion it's much more likely to adapt. (People won't suddenly lay off thousands over taxes when demand and capacity issues have them in a hiring frenzy.)

"Allah may guide their bullets, but Jesus helps those who aim down the sights."

Tom, to the republicans, it'll never be the right time to play hardball with them, the second your perceived scenario happens, they'd cry :"if we do it now it might send us back into a recession!". And frankly, given their wages, they dont help even by existing. Most of the people working at a walmart dont even get paid a living wage. Theyre one of those jobs that dont pa7y enough money to allow major consumption of useless shit. also known as the prime driver of the economy.

edited 11th Oct '11 6:39:04 PM by Midgetsnowman

Wal-Mart also treats its employees like shit, since, naturally, they have no basis by which to oppose said shit treatment as a group.

I am now known as Flyboy.

And they won't fire people when it means their tax rates would double. Hence why we need to change the rules of the game instead of arguing within the current paradigm.

Well I don't want to derail too much, but Tom, this is why low unemployment rate is meaningless. Everybody working for Walmart is one of the worst possible economic situations to be in.

You realize tying tax rates to unemployment falls squarely into the Broken Window Fallacy right?

"Allah may guide their bullets, but Jesus helps those who aim down the sights."

It'd be a better job than I'm in and technically I'm in a union job.

"Allah may guide their bullets, but Jesus helps those who aim down the sights."

Wal-Mart, as a service company, absolutely positively can not just take their business somewhere else. It's pretty much impossible. They could decide to close up shop, but then someone else would just take that business.

Can they screw small-towns which decide to provide a level playing field for local businesses? Sure. But can they screw the nation as a whole? Nuuuuupe.

Note: I'm actually not a person who thinks that Wal-Mart is business Satan. I think that what they do is generally where all retailers were going, more or less.

Edit: And Nope. Tying a surtax to unemployment rates is not an example of the Broken Window Fallacy. That fallacy is basically stating that breaking/destroying things, even though it might employ people and increase GDP, doesn't improve the economy, because the point of the economy is creating as much stuff as possible, and as such, destructive acts don't result in more stuff.

edited 11th Oct '11 6:47:13 PM by Karmakin

Democracy is the process in which we determine the government that we deserve

Methinks my proposal and the Broken Window fallacy have nothing to do with each other.

Tom, I think that just means your union is shitty.

And, yes, I hate Wal-Mart, oh so much. Whether it's offering shitty jobs with shitty wages and little to no benefits, or killing an entire small town's worth of businesses because they play fast and hard with loopholes, they simply cannot seem to do anything productive.

Which is sad, because as I understand it they were much nicer when the original founder(s) were alive. Maybe I'm thinking of the wrong company?

I am now known as Flyboy.

^^ Yeah they do. The lower the unemployment rate the lower the taxes means a lot of folks will be hired for cheap part time labor simply for the tax credit.

That's the epitome of digging ditches only to fill them back up. Sure you can make the law more complex to try and counteract it, but in the end that's exactly what's happening.

edited 11th Oct '11 6:47:40 PM by MajorTom

"Allah may guide their bullets, but Jesus helps those who aim down the sights."

Alright, you make a valid point.

However, the Keynesian theory directly contradicts the notion that the fallacy is in fact, fallacious, in the situation where unemployment and the macroeconomy deviate outside the band of stability. Hence, digging ditches actually may be the correct prescription.

Then when companies need to do actually productive work, they have to pay more because people would rather sit in a room or do a low-stress/impact job as long as it's not going to pay more.

So then wages go up.

Not that I think this is optimal. It's certainly better than the status quo however. (Optimally I'd like to see the work week shortened and existing jobs spread among a larger section of the population)

Democracy is the process in which we determine the government that we deserve

Digging ditches is a prescription, and not the most efficient. Wal-Mart threatening to close stores over unfavorable tax and labor conditions is something they can only get away with because they're such a huge business; and anyway, they can only pull that on a local level, not a national one.

Until big business stops being ultimately responsible to its shareholders and starts being ultimately responsible to society as a whole, we will continue to be forced to control their behavior through regulatory and tax policy.

I propose a business surtax based on wage disparities. Businesses are taxed 50% of any compensation paid to any employee in excess of 20 times *

the lowest wage paid to any employee. Compensation includes everything: stock options, bonuses, expense accounts, etc. Also, they have to count all contractors, subcontractors, etc., in that "lowest wage" calculation, so they can't just hide it by outsourcing. In fairness, benefits count towards net compensation as well.

edited 11th Oct '11 7:02:23 PM by Fighteer

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

...This is an interesting and novel idea.

Share it so that people can get into this conversation, 'cause we're not the only ones who think like this.

I liked the idea of a law that says "highest paid person can only be X times the wage of the lowest paid person."

Either the execs raise everybody's wages to keep their own cushy paycheck, or they cut their own wages and everyone is miserable. I think most would take the former...

I am now known as Flyboy.