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I don't typically have employees, Dan. And I probably wouldn't be a good example if I did because, unlike most folks, I have no debt and I don't rent, so cash flow is never an issue for me.

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How many "small business owners" fit this same description? If they are a significant percentage of the total, then we may have to adjust our metrics in order to assess the effect of small business activity on overall employment.

For years, I had a micro business providing services. I had exactly one employee: myself. I don't think this is the kind of business people are thinking about when they talk about small business being the engine to full recovery.

Of course, if there were 25 million more one person businesses, and if each one could keep one person gainfully employed...

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My guess is that the sole proprietor makes up a good chunk of the "small business" block. A good many others are the sorts I mentioned earlier: (doctors, dentists, lawyers, architects, consultants) who may have a small administrative/assistant staff, but whose hiring needs aren't going to be affected much by taxes (they either need people or they don't).

I suspect there are very few small businesses owners whose hiring policies would be influenced by personal tax rates which don't even affect corporate profits. The business owner would have to decide that his taking home an extra few thousand dollars a year was more important than having an extra body in his office. Frankly, if you or your position is contributing so little to a company that your efforts aren't worth that much, then the company probably shouldn't have you and/or that position in the first place.

-Dan.

I think that tax rates have an enormous impact on hiring rates, but the impact is indirect. Tax rates affect the amount of saved money that is available for small businesses to borrow in order to expand. The decision to expand has to be made on the basis of forecasted sales, but the ability to expand depends on savings.

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Wages are an expense - they get deducted from profits and aren't taxed. The only way your theory works is if the company raises salaries to compensate for income tax hikes. Maybe an owner would do that for himself (in which case the impact to the company's bottom line would be relatively small), but I've never heard of a company doing it for regular employees.

-Dan.

The savings rate normally is a factor in the availability of money that can be borrowed, but not now. Banks are currently awash with cash, thanks to the Fed, but they are reticent to lend because they have become risk averse and there is a great deal of uncertainty in the markets. Within a business operation, however, taxes negatively impact retained earnings and therefore the owners' appetite for risk, which is always a major factor when it comes to hiring new workers.

The risk aversion factor is why we typically see employers who are emerging from an economic slump willing to pay substantial amounts for overtime and even contracting through temp agencies before they will commit to putting new employees on the payroll.

The decision to hire new workers isn't nearly as straightforward as some might think. The psychology involved in such decisions is essentially the same as that which drives most other investment decisions. The probability of economic strength and growing profits is weighed against uncertainty and the fear that things will go against you. And the assessment isn't purely logical. In fact, it's sometimes downright irrational. The point is that psychology plays a very big part in investment decisions, including investing in new hires. Some call it the psychology of fear and greed, fear being the far more powerful of the two sentiments.

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This is not to say that tax cuts create jobs. But I agree that Congress needs to end the suspense of what is going to happen to our taxes, because both voters and employers know that something is going to have to give in that department, because of the deficit.

Corporate taxes should stay the same, and the Bush tax cuts should lapse for everyone. That's the only change that makes sense, IMO. It will end the suspense for employers, and it will stabilize tax revenues.

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Oh what a foretaste of glory divine!

On the theme of taxes is of course the upcoming 2012 Federal Budget, to be unveiled by the House tomorrow.

Quoting from this link: http://tpmdc.talkingpointsmemo.com/2012/03/dems-to-gop-no-cover-from-us-on-your-new-medicare-privatization-plan.php?ref=fpnewsfeed

When House Republicans unveil their 2012 budget on Tuesday, they are expected to include a Medicare privatization plan endorsed by one Democrat — Sen. Ron Wyden (D-OR). That, Republicans will claim, proves their controversial overhaul proposal has bipartisan support.

Leading Democrats say they won’t let the GOP get away with it.

“We don’t see a difference in principle between the original Ryan plan and the so-called Wyden-Ryan plan,” Rep. Jan Schakowsky (D-IL) a party surrogate on health care issues, told reporters on a conference call Monday morning. “It’s equally bad or only marginally different but still would end Medicare as we know it.”

The return of the budget wars coincides with the two-year anniversary of President Obama’s health care reform law, and Supreme Court arguments over whether that law is constitutional. It means Democrats are for the first time simultaneously attacking the GOP’s Medicare plans and robustly defending the health care law — including its new and growing benefits for Medicare patients.

Why are the Republicans looking for cover from a Democrat to cut Medicare (since they didn't get any Dems to support their first attempt)? So they can get Democratic support in the House for also cutting taxes for the upper brackets, of course! That's the Ryan Plan, for those who aren't already familiar with it.

The (Ryan) budget will be unveiled tomorrow...

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Oh what a foretaste of glory divine!

Then there's this: The five tax hikes in Obamacare that most hurt seniors

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From Grover Norquist? The guy who won't allow ANY tax hikes on ANYONE (except for middle class and poor people)?

Item 1 on his list is the tax penalty for not having health insurance. People aren't "supposed" to pay this as a normal tax - it is designed to be a penalty that would be more expensive than actually purchasing insurance, so that people will go ahead and purchase it.

The medical itemized deduction reduction hits the uninsured the hardest, because medical devices normally would be covered by insurance. It is just another penalty for not having insurance.

The other 3 taxes on Norquist's list are taxes aimed at the wealthy people Norquist is REALLY trying to "protect" from paying any MORE of those horrible taxes. But depend on it -- if the tax code is re-done so that middle and lower people end up paying more, Norquist won't say a word. He doesn't want to tip anyone off. Notice how he is on board with the Ryan Plan, which would increase taxes on poor and middle income people. Norquist has never said a word of criticism about it.

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Oh what a foretaste of glory divine!

Correction - the medical device excise tax is ALSO going to act as a penalty, which only leaves 2 taxes directed at more affluent people, with 3 of them acting as penalties for uninsured people. The medical devices are covered by insurance, unless for some reason someone refuses to purchase it. The insurance company will pay this, of course, but their administrative costs and profit are pegged by the Affordable Healthcare Act, so they will be much more efficient. Premiums won't be permitted to go as high as they have in the past (premium has to be 75 or 80% healthcare costs).

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Oh what a foretaste of glory divine!

Oh boy, a piece from Grover Norquist. I know he's the first person I'd go to when looking for a reasoned opinion on tax policy.



A couple things: first, that last phrase is a borderline lie. It would not be "$1390 for those making less than $55,600." Rather, it would be ""$1390 for those making exactly $55,600." If you make less, you pay less - that's how percentages work, Grover.

Second, 2.5% is less than the insurance premiums and both are far less than the cost of a medical procedure, particularly at that age.

Third, it's interesting to see a conservative defending the ability of somebody to make a lifestyle choice that they can't afford. Going w/o health insurance at that age is playing with fire anyways, and if you can't retire early and afford coverage, then you probably ought not to be retiring early, eh?

Fourth, Grover conveniently forgets to mention the insurance exchanges which will make purchasing your own insurance cheaper and the temporary reinsurance programs designed specifically for people who retire early but before the exchanges kick in.



The excise tax is only on the premium values above those thresholds, not on the entire premium. And the excise tax is going to be levied against the insurance company, not the customer. Yes, you could make the argument that they would pass the expense on to the customer, but Norquist makes it sound like old ladies are going to get socked with huge excise tax bills.

Also, the thresholds are higher for retirees: $30,950 (family) and $11,850 (single).



Grover's spinning so much on this one, I'm surprised he hasn't yakked all over himself yet.

This is not "Obamacare's dividends tax hike." In 2003, Bush cut taxes on dividends through the end of 2008. In 2005, he cut them even further and extended the sunset out to the end of 2010. Then in 2010, Dr. Evil himself - Pres Obama - extended those same lower taxes out to the end of 2012.

It wouldn't take a big stretch of the imagination to see Obama extending this again. And not having yet extended a tax cut is not the same as hiking taxes.



Devices purchased at retail, which are able to be safely operated by untrained personnel outside of a medical environment are exempt from this tax, which means that at least wheelchairs ought to be exempt. This tax covers mostly devices and equipment that are used by medical personnel.

-Dan.

You didn't see my post about the percentage of premium that healthcare costs are required to be. So premiums are pegged, too, Iluvatar.

Also, I think the insurance penalty is pretty steep. People would certainly be better off buying insurance than wasting money paying a stupid penalty.

I wasn't aware that the excise tax was so specific to equipment used by medical personnel, Iluvatar. That would make Norquist a LIAR, wouldn't it? I really believed him, that wheelchairs would be subject to an excise tax.

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Oh what a foretaste of glory divine!

I'd have to find a list to make sure. The articles I found specifically mentioned things like eyeglasses and hearing aids, which you can buy at the mall. Wheelchairs, special beds, scooters, and such specialized-but-still-available-at-retail equipment would seem to me to fall into that same category. What is not exempted, but that Norquist ignores are things like syringes, medical gloves, surgical instruments, and monitoring equipment, etc. IF this tax hits the elderly the hardest (and that's a big IF), it would be merely because they're the greatest consumers of health care services, not because they're necessarily the ones buying the affected equipment.

-Dan.

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Behold, how good and how pleasant it is for brothers to dwell together in unity!

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