Some details here, but this would be good since it rarely matches BLS private payrolls, so figuring out which number is right is currently impossible.
Hopefully they will make their data publicly available so we can still directly compare and graph.
This is good, now if only we could get some accurate statistics on workers by immigration status that would really help. We only have spin and fictional biased lobbyist white papers vs. any statistical accuracy. Be nice to actually know what's really going on wouldn't it?
So, you'd have to look it up, but honestly that's a huge mistake to try to get exact matches on a weekly basis. First off, people who lose jobs do not necessarily immediately apply for unemployment insurance, they might wait, even to the next quarter as noted. Second off, states process initial claims slowly, miss deadlines to turn in their numbers so the timing can be off. As we can see even the monthly household survey has a lot of statistical noise so people are trying to get real time data and unfortunately (blame Congress, funding idiotic, antiquated data collection methods) government data really isn't.
I haven't run a graph but I imagine trying to plot week per week against the CPS will look like pink noise (static, meaningless) esp. if one ran a true cross-correlation of the two series.
GDP will come out on Friday and trust me, whatever that number is, it won't be that number by the 2nd revision. Always happens, esp. trade data...it dribbles in, is revised, businesses reporting figures are late, or revised and so on.
Thanks. So there is a good correlation just as for the payroll survey.
The numbers I've seen for the weekly new jobless in September don't seem to be so radically smaller as would be suggested by close to a million new jobs in that month. What was the 4-week average of the new jobless in September?
Also, as you are aware the BLS actually conducts the household survey in one week and extrapolates the numbers out to a month. What were the new jobless claims in that one week?
Above is Civilian employed vs. initial claims. Civilian employed is the level change from one year ago and initial claims is the 4-week moving average and zeroed around 400,000 levels. The scale for initial claims is on the left, in maroon, the scale for household survey employed levels is on the right, in blue.
The reason civilian employed levels are the change from one year ago is statistical noise. The survey is too small and the survey window is one week, that's correct, for monthly figures to not have too large of variance to see any correlation.
Again, this is why one wants to look at payrolls, or CES for monthly comparisons and why month to month comparisons on the civilian employed levels is a fool's errand.
Same as looking at 1 week of the initial claims number and going off of that. There just is too much variance, delays and resolution issues with the actual raw data to do that.
This is beyond George Carlin's "big club and you ain't in it." Someone somewhere could speculate that someone owes favors to someone or some group or philanthropy. Who knows. But Annan, Gates people that like to travel around the world living the high-life pretending to care about poor people with malaria or trying to settle wars (and failing time and time again while earning megamillions), yeah, why stick your neck out in an insider trading case that is being prosecuted in the name of The United States of America? Victim impact statements, I wonder, do all people screwed over because of unfair transactions and piss-poor transparency in the stock markets get to chime in? Because that could number in the millions of people that want to voice their opinion that banksters like Gupta need to go away for the max - and that's just a start to bring any level of accountability back to the markets along with locking up a criminal as well as deterrence for other bankster ilk. As far as redeeming our legal system, people like Gates and Annan should STFU. While the streets are exploding with anger over the two-tiered economic and legal systems, these folks really do have no clue about how their actions just reinforce the idea that they obey different rules and laws that screw us.
The DOJ and local US Attorney prosecuting the case, if they had any integrity, would chase after why Gates and Annan were contacted, put their names on this plea for leniency. Was money paid by an attorney or promises made to help out philanthropies, etc.?
That graph comparing the new jobless claims and the new hires by the payroll survey is quite telling. Is the connection between the new jobless claims and the household survey also generally close? If it usually is but for September it was badly off that would suggest something wrong with the September household survey numbers.
Also, this article focuses on Sept. 15th. Isn't the BLS household survey done around Sept. 19th? Do you have the new jobless claims for that week? Do they suggest there was some great drop in new jobless claims then corresponding to the startlingly household survey new job numbers?
Who knew he also enabled more jobs being offshore outsourced. Right, no surprise Gates is pleading for mercy, you can bet he wouldn't do that if Gupta had been born in the U.S., fighting for U.S. jobs and busted for insider trading. Wow, I did not know that, maybe we need to dig around in these cases...is there a connection to offshore outsourcing as well going on? The two seem so disconnected and he's a small fish while the big fish go completely unpunished.
Tata's 2Q profits rose 44% - but American companies and their outsourcing partners are looking out for America and Americans, trust them. But, but, job creators need tax cuts here, immediately, otherwise Tata won't be able to create even more jobs in India and for Indians on visas here. Come on, job creators, give them a break. Otherwise Bill Gates might cry some more, oh not for American citizens, but for people just like them, e.g., convicted insider trader/ex-Government Sachs bankster Gupta. http://www.bloomberg.com/news/2012-10-13/bill-gates-annan-urge-leniency-...
By the way, has anyone seen Gates, or Annan, or anyone else begging for help for the common man and woman that is being destroyed by austerity, unemployment, outsourcing, etc. Damn, these people really have no shame. They are in a special club and will look out for each other even when it really is none of their business. Since when did Gates' and Annan's opinion matter one iota in our national justice system. Annan, last time I checked, isn't even an American. Gates just plays one on TV. The rest of us, I guess we can just die because they don't give a sh*t. Next time Joe Average is busted for insider trading, bribery of one local official, failing to pay a minor amount in taxes, be sure to call Gates and Annan, I'm sure they'll help out. No shame, none.
Everyone is mystifies as to how the lowest incomes get by with spending twice what they have. This is how I did it-and it is not anything one desires, but rule no 1: Do what you have to do. Know or find out every available source of charity-Catholic Service League, WIC, ect-, usually utilities are covered by some sort of sliding fee scale or percentage of income payments, winter help is available for heating, Most people eventually have huge balances that will be problematic if they ever get a real income, or they fail to make even the small winter payment sum-all summer bills are due in full-and hopefully a little extra that applies to their balance. make use of clothing and food banks, usually these are limited to 1 or 2 visits a year. Do without a phone, cable, entertainment, bank, convenience, and anything you cannot learn how to do for yourself. cooperative efforts with neighbors should be pursued for sitting, lawn work, and anything people can possibly share be it duties, food, errands, repairs. The lower incomes do seem to have a better sense of community than you might think-=though healthy distrust is also present.
Many bills will still go unpaid-many times you make one payment due in full and short all the rest-sometimes you just cannot make them all even in part-prioritize as best you can roof number one-utilities and food, and hope always for something, anything to break your way, if only for a minute. Do what you can, try not to worry about what you cannot-and put one foot in front of the other-the alternative is to lay down and die. Most end like me-with a credit record beyond redemption, unbanked, unemployed-possibly unemployable, and doing the same thing as always-scrambling day to day to maintain hope, and the current tenuous conditions of house and food. All that the poorest of us cannot cover is spread around to those who can, regardless of what we want, or weather they are so inclined to cover our bills.
I would rather work-as it is very much easier all around-but my last career went to India, and despite my willingness, and availability being optimum, I can not even work off my debt to those I owe-at least my offers have been unanswered as yet. Outside of that I assume the losses will continue to be spread to others, and not much else will change.
It's more there is an incentive to hire in order to reduce one's tax bill. But more personal income tax profits has nothing to do with hiring because the person choose not to hire which would have reduced their potential tax bill.
Lower taxes actually reduce the incentive to hire for one would obtain less savings on taxes by doing so. With taxes owed, higher taxes gives an incentive to hire, lower taxes are less.
R&D is also a deduction. You do not would not pay taxes on R&D. There is a separate R&D tax credit, in addition to the normal deductions for the expenses of having employees. There are some conditions tests but any size business can claim it. It is currently lapsed but large corporations use this credit extensively and odds are it will once again be extended. So, one should assume in 2012 it will be there if not extended in the lame duck session.
But bottom line, if anything higher taxes would be an incentive to hire, not the other way around.
What is it about deduction of the costs of an employee that lowers the potential amount subject to tax that is so hard to understand here?
Look, anyone who has filled out a 1040, schedule C, knows the main points in this article are true. Me thinks we have yet another brainwashed person here when frankly anyone who has ever filled out a IRS 1040 form, especially a schedule C, knows these fundamentals on business taxes and deductions.
Either that or many in America are truly basic math deficient. I just calculated out some very simple examples, it's clear, lowing the personal income tax rate will do absolutely nothing to increase hiring and we link to many statistics which show this is also the case on the personal income tax code.
Lowering the employer side payroll taxes is another story, but the incentive to hire is too small in my opinion.
I'm with you on the demand-driven hiring; I saw exactly that at the small company I've worked at over the past 4 years. We expanded rapidly in a recession because the demand for our product was there.
I don't think anyone can make a good-faith argument that business demand is not the main driver for hiring.
But you are also making the argument that the individual income tax rate is negligible in terms of hiring decisions, right?
Playing devil's advocate, you could reasonably make the argument that a lower tax rate would put them in a better position to hire.
In your example, if the individual income tax rate were 30% for the hot dog business owner, the S-corporations, partnerships, and sole proprietorships would pay 30K in taxes on the 100K, correct? (I mean obviously ignoring deductions and any tax-code abuse)
Then if the tax rate dropped to 10%, that's 20K more they can invest in hiring.
Another example: R&D jobs are a long-term investment that don't pay off immediately. A small company cannot necessarily eat that expense without borrowing, even if they are cash-flow positive. A bit of extra money could be the difference between hiring now and deferring to the next year.
Again, playing devil's advocate, the effect of the individual income tax rate on hiring doesn't seem to be exactly negligible.
For this discussion, there are two types of taxes, taxes on a business and personal income taxes. C corporations have their own tax code and profits on that corporation are taxed by business or corporate tax code.
Whatever the shareholders own in that corporation are then also taxed on their personal income tax.
Other business entities have what is called tax pass through, that means the profits are not taxed at the business level but when the individuals who own those businesses report those distributed profits on their personal income tax, that's where they are taxed.
All businesses, whether they are C corps, S corps, LLC, LLPs or sole proprietorships, if they hired an employee, that salary and benefits would be part of costs of operating a business and thus a deduction from gross receipts.
Here is the key where I think people are getting confused:
A business has "gross receipts" or what they took in total and then that business has expenses of operating that business. All of those costs are deducted from gross receipts to come up with net profit.
Employees are a cost of doing business.
So, let's say someone owns a hot dog cart. What people pay for the hot dogs, the customers, those are gross receipts of that business. The person hired to sell the hot dogs, unless the owner, is an employee, a cost of doing business and the costs associated with that employee are deducted from gross receipts. The cost of the hot dogs, whole sale, the cart, licenses, fees, advertising, the condiments, maintenance on the cart, legal fees, health insurance, life insurance, long term disability insurance, a website,....
these are costs of operating a business and are deducted from gross receipts to come up with the total profit.
So, then, that net profit, if it is a C corporation is taxed via corporate taxes, but if a sole proprietorship, LLC, LLP, would "pass through" to the business owner who would report that net profit on their personal income taxes. That net profit is what determines their personal income tax as well as some other taxes, depending on the type of business entity it is (LLC, S Corp, LLP, sole prop).
So, as you can see, the driver of hiring someone is demand for goods and services, i.e. gross receipts. Because an employee is a business expense, something deducted before taxes, it has little impact on actual taxes paid.
It's demand for good and services which drives hiring.
Let's say a business's gross receipts are $130,000. Their costs of doing business are $30,000 to give a net profit of $100,000.
Taxes will be calculated on that $100,000.
So let's say that business needs to hire another employee to keep up with the business. Let's put the total costs of that employee, including salary, health insurance, payroll taxes, etc. at $50,000.
Then, the business still has $130,000 in gross receipts but still $30,000 in other costs beyond the new employee, then their new net profit would be $50,000.
That business owner would then pay way less taxes than previously because their net profit was only $50,000 now.
Now let's say something more realistic. That new employee allowed the business to sell way more hot dogs, instead of throwing away ones which expired, and now their gross receipts are $180,000. But now they have $80,000 in costs of operating a business so their net profits are now $100,000.
They would pay taxes on that $100,000, which is the same as previously but they have also provided someone with employment and benefits and expanded their overall business, it's growing, which implies increased profits eventually.
I'm having a bit of trouble understanding a couple of points and explaining them to others.
I'd appreciate it if you could help clarify. I think it would help you make your point to a more general audience as well.
These two arguments are pretty straightforward I think:
1. C corporations' income is not taxed under individual income tax and they only pay payroll taxes (6.2%) on employees' salaries. Therefore, individual income tax rates, especially the top rates, don't really affect hiring at all.
2. Sole proprietorships employ an average of 5 people and only make up about 4.8 million jobs. So even though their business income is affected by individual income taxes, they are not really the primary drivers of hiring.
The income from S-corporations, LLPs, and LLCs pass-through to the shareholders, which includes the owners. They will then pay individual income tax on in. It seems like lower top bracket income tax rates actually WOULD increase the business profits, which as you said can affect hiring.
The comparative effect of this and business demand is still arguable of course, but am I missing something here?
I mean I can still make the moral and social arguments that business owners don't necessarily reinvest in hiring and just hoard the wealth, that society has a responsibility to provide for all its citizens, that the wealthy benefit disproportionately from externalities, etc., but I'd like to make this argument as well.
Of course I hope we never have to come to this, but things aren't looking good. It seems everyone that sees what's going on and wants to stop it and reverse course is purposely locked out of the democratic process - something that should be impossible in our Republic. Look at USA 2012, it's being purposely destroyed from the inside. All those folks in the massive immigrant waves from Western, Central, and Eastern Europe fleeing for prosperity because they were locked out of better livings because of no jobs or discrimination? Preferences for certain groups? Welcome to it. How about all those folks from the CIS that fled during the 1970s, 80s, and 90s that were engineers, doctors, etc. but had to flee and are now "overqualified" taxi drivers and grocery clerks in the US? Well, that's what we will be very soon, and in our own country if we are lucky, otherwise we can be like Greeks reported to be cleaning toilets for Swedes. How about the Roman Empire, the British Empire, and so many other empires that kept stratifying their classes into the oh-so-content elites and the ever-growing have-nots (despite their work ethic, experience, and desire to make a better life for themselves and their Nation)? The constant foreign wars that bled treasuries dry? Yup. Remember arming the Taliban and Al-Qaeda vs. the Soviets with Stingers and then that bit the policy makers in the ass 20 years on? Well, we moved on to Afghanistan and then had to fight our own creation. And then Iraq. And now we are arming rebels in Syria in 2012 that include Al-Qaeda. Now, we are using US $ to arm people that will turn on us as soon as Assad goes. And the PRC can swoop in after the war is over and buy up/manage the commodities flow that we helped secure. And both parties are okay with it. And we can have yet another endless war that bleeds us dry. Obama and Romney have already set these positions and will go along with this "history repeats itself" so why should intelligent, honest Americans even read and learn history anymore, the plutocrats and policymakers will screw us anyway. Jobs? No. Arms for people that will turn on us (or actually are fighting us in multiple theaters) using our $ that we borrow? Check. Borrowing money from our non-allies while outsourcing everything to them so we can buy it back (win-win for other countries, not us)? Check. Forcing Americans to become unemployed after spending fortunes on education and living to be replaced by foreigners here and abroad? Check. Circuses? Check, just turn on the TV or read a corporate owned paper.
Stick a fork in us. Through no fault of the average American, we are done, or almost there.
The "fear of outsourcing" will diminish after the election?
We all know the Obama administration hasn't even implemented the swiss cheese Dodd-Frank legislation and it's five years after the financial crisis but this one takes the cake!
When the Chinese work overseas in countries outside China, they ensure they have Chinese there in management positions. Now, if you have a Chinese manager, a nice scam would be to require that those working under the Chinese manager have to understand Mandarin, Cantonese, whatever. Not necessarily English, but the Chinese dialect. English in addition would be nice, but not necessary in every position. So, job requirement now becomes "Must understand Cantonese and/or Mandarin, recent experience living in the PRC for 5+ years and/or working for a PRC company in the PRC or overseas, etc." HR of course wouldn't have to fit any standards, just the ability to eliminate all Americans no matter how much they need work, how many degrees they have, how much experience they have, etc. What's that? Can't find American citizens that fit the bill? Oh well, courtesy of DHS, State, Commerce, Interior, Energy, etc. you can now have America's natural resources being taken out of American soil, or transported across the US from Canada, then refined in the US by foreigners, and then sold on the open market where American citizens, with ever decreasing $ and jobs, can try to buy it at the market rate. And when asked about these policies, business will repeat, we owe the US nothing, we seek PROFITS at all costs, that's our mantra. And when US politicians and govt. officials are asked about this, they will say, if Americans can't compete, than they need to retrain and learn how to be leaner and do without and US companies owe "lazy Americans" nothing, just ask Galt. Murdoch's talking heads at Fox and soon to be in the LA Times and in Chicago (I guess antitrust laws no longer apply when phone-hacking/police bribing moguls seek to own all media outlets) and CNN and everyone else in the media will go along with what their corporate owners tell them to parrot. And the Chinese when asked will say they owe nobody anything, if American politicians can be bought, so be it.
Geitner has shown up in India telling India how they can have far more H1 Visas and even more offshore outsourcing, after the November elections.Geitner told Obama to give the banksters a free pass when their necks were on the line in April of 2009.
We need to focus on the pure perfidy of India with Iran. India ignores the Iran sanctions and gets Iranian oil by bartering textiles. While Iran gets no hard currency, the oil production is crucial to breaking the sanctions. With very low production due to sanctions, Iran's oil fields are in danger of structural collapse, like Iraq's under Sadam due to very low production.
No surprise that China is buying from Iran also. Without the 2 countries who kill our jobs most, the sanctions against Iran would have real bite. Iran has lost 50% of the value of the Rial.
Trojan Horse. Once inside the walls of Troy, there is no DDOS attack they could not perpetrate. Once inside the U.S. there is no intelligence they could not gain. The DDOS attacks ordered by the Politboro will not have fingerprints of China
based IP addresses when launched from U.S. soil.
China has all of its 200 MIRVed ICBMs pointed at only one country. Call of Duty one day, will not be just a video game.
The Louisiana part of the GasLand boom/bust is paid for by a credit line of $750bn of Chinese credit. What they want should be clear from the location: New Orleans oil and gas terminal. Sweep away the talk of the chemical plants in Louisiana. If China has access to inexhaustible American natgas, there is no limit to China's next leg of new exports to the U.S. This should further reduce the U.S. to Third World status and further uplift China as the premier world economic power.
The XL pipeline of Canadian Bitumen, derived by clear cutting arboreal forests in Alberta, should provide the Chinese leadership with the remaining petrochemicals, once refined in the Gulf refineries.
The oil and gas shipped to China will return to the U.S. in the form of higher value exports like computer and telecom equipment, no longer produced in the U.S.
Some details here, but this would be good since it rarely matches BLS private payrolls, so figuring out which number is right is currently impossible.
Hopefully they will make their data publicly available so we can still directly compare and graph.
This is good, now if only we could get some accurate statistics on workers by immigration status that would really help. We only have spin and fictional biased lobbyist white papers vs. any statistical accuracy. Be nice to actually know what's really going on wouldn't it?
So, you'd have to look it up, but honestly that's a huge mistake to try to get exact matches on a weekly basis. First off, people who lose jobs do not necessarily immediately apply for unemployment insurance, they might wait, even to the next quarter as noted. Second off, states process initial claims slowly, miss deadlines to turn in their numbers so the timing can be off. As we can see even the monthly household survey has a lot of statistical noise so people are trying to get real time data and unfortunately (blame Congress, funding idiotic, antiquated data collection methods) government data really isn't.
I haven't run a graph but I imagine trying to plot week per week against the CPS will look like pink noise (static, meaningless) esp. if one ran a true cross-correlation of the two series.
GDP will come out on Friday and trust me, whatever that number is, it won't be that number by the 2nd revision. Always happens, esp. trade data...it dribbles in, is revised, businesses reporting figures are late, or revised and so on.
This are really large aggregate numbers.
BTW: You're not logged in. ;)
Thanks. So there is a good correlation just as for the payroll survey.
The numbers I've seen for the weekly new jobless in September don't seem to be so radically smaller as would be suggested by close to a million new jobs in that month. What was the 4-week average of the new jobless in September?
Also, as you are aware the BLS actually conducts the household survey in one week and extrapolates the numbers out to a month. What were the new jobless claims in that one week?
Bob Clark
Above is Civilian employed vs. initial claims. Civilian employed is the level change from one year ago and initial claims is the 4-week moving average and zeroed around 400,000 levels. The scale for initial claims is on the left, in maroon, the scale for household survey employed levels is on the right, in blue.
The reason civilian employed levels are the change from one year ago is statistical noise. The survey is too small and the survey window is one week, that's correct, for monthly figures to not have too large of variance to see any correlation.
Again, this is why one wants to look at payrolls, or CES for monthly comparisons and why month to month comparisons on the civilian employed levels is a fool's errand.
Same as looking at 1 week of the initial claims number and going off of that. There just is too much variance, delays and resolution issues with the actual raw data to do that.
Anyway, the two do correlate as we can see.
This is beyond George Carlin's "big club and you ain't in it." Someone somewhere could speculate that someone owes favors to someone or some group or philanthropy. Who knows. But Annan, Gates people that like to travel around the world living the high-life pretending to care about poor people with malaria or trying to settle wars (and failing time and time again while earning megamillions), yeah, why stick your neck out in an insider trading case that is being prosecuted in the name of The United States of America? Victim impact statements, I wonder, do all people screwed over because of unfair transactions and piss-poor transparency in the stock markets get to chime in? Because that could number in the millions of people that want to voice their opinion that banksters like Gupta need to go away for the max - and that's just a start to bring any level of accountability back to the markets along with locking up a criminal as well as deterrence for other bankster ilk. As far as redeeming our legal system, people like Gates and Annan should STFU. While the streets are exploding with anger over the two-tiered economic and legal systems, these folks really do have no clue about how their actions just reinforce the idea that they obey different rules and laws that screw us.
The DOJ and local US Attorney prosecuting the case, if they had any integrity, would chase after why Gates and Annan were contacted, put their names on this plea for leniency. Was money paid by an attorney or promises made to help out philanthropies, etc.?
Thanks for the response. I especially like this article of yours:
http://www.economicpopulist.org/content/initial-claims-unemployment-just...
That graph comparing the new jobless claims and the new hires by the payroll survey is quite telling. Is the connection between the new jobless claims and the household survey also generally close? If it usually is but for September it was badly off that would suggest something wrong with the September household survey numbers.
Also, this article focuses on Sept. 15th. Isn't the BLS household survey done around Sept. 19th? Do you have the new jobless claims for that week? Do they suggest there was some great drop in new jobless claims then corresponding to the startlingly household survey new job numbers?
Bob Clark
Who knew he also enabled more jobs being offshore outsourced. Right, no surprise Gates is pleading for mercy, you can bet he wouldn't do that if Gupta had been born in the U.S., fighting for U.S. jobs and busted for insider trading. Wow, I did not know that, maybe we need to dig around in these cases...is there a connection to offshore outsourcing as well going on? The two seem so disconnected and he's a small fish while the big fish go completely unpunished.
Tata's 2Q profits rose 44% - but American companies and their outsourcing partners are looking out for America and Americans, trust them. But, but, job creators need tax cuts here, immediately, otherwise Tata won't be able to create even more jobs in India and for Indians on visas here. Come on, job creators, give them a break. Otherwise Bill Gates might cry some more, oh not for American citizens, but for people just like them, e.g., convicted insider trader/ex-Government Sachs bankster Gupta.
http://www.bloomberg.com/news/2012-10-13/bill-gates-annan-urge-leniency-...
By the way, has anyone seen Gates, or Annan, or anyone else begging for help for the common man and woman that is being destroyed by austerity, unemployment, outsourcing, etc. Damn, these people really have no shame. They are in a special club and will look out for each other even when it really is none of their business. Since when did Gates' and Annan's opinion matter one iota in our national justice system. Annan, last time I checked, isn't even an American. Gates just plays one on TV. The rest of us, I guess we can just die because they don't give a sh*t. Next time Joe Average is busted for insider trading, bribery of one local official, failing to pay a minor amount in taxes, be sure to call Gates and Annan, I'm sure they'll help out. No shame, none.
Everyone is mystifies as to how the lowest incomes get by with spending twice what they have. This is how I did it-and it is not anything one desires, but rule no 1: Do what you have to do. Know or find out every available source of charity-Catholic Service League, WIC, ect-, usually utilities are covered by some sort of sliding fee scale or percentage of income payments, winter help is available for heating, Most people eventually have huge balances that will be problematic if they ever get a real income, or they fail to make even the small winter payment sum-all summer bills are due in full-and hopefully a little extra that applies to their balance. make use of clothing and food banks, usually these are limited to 1 or 2 visits a year. Do without a phone, cable, entertainment, bank, convenience, and anything you cannot learn how to do for yourself. cooperative efforts with neighbors should be pursued for sitting, lawn work, and anything people can possibly share be it duties, food, errands, repairs. The lower incomes do seem to have a better sense of community than you might think-=though healthy distrust is also present.
Many bills will still go unpaid-many times you make one payment due in full and short all the rest-sometimes you just cannot make them all even in part-prioritize as best you can roof number one-utilities and food, and hope always for something, anything to break your way, if only for a minute. Do what you can, try not to worry about what you cannot-and put one foot in front of the other-the alternative is to lay down and die. Most end like me-with a credit record beyond redemption, unbanked, unemployed-possibly unemployable, and doing the same thing as always-scrambling day to day to maintain hope, and the current tenuous conditions of house and food. All that the poorest of us cannot cover is spread around to those who can, regardless of what we want, or weather they are so inclined to cover our bills.
I would rather work-as it is very much easier all around-but my last career went to India, and despite my willingness, and availability being optimum, I can not even work off my debt to those I owe-at least my offers have been unanswered as yet. Outside of that I assume the losses will continue to be spread to others, and not much else will change.
It's more there is an incentive to hire in order to reduce one's tax bill. But more personal income tax profits has nothing to do with hiring because the person choose not to hire which would have reduced their potential tax bill.
Lower taxes actually reduce the incentive to hire for one would obtain less savings on taxes by doing so. With taxes owed, higher taxes gives an incentive to hire, lower taxes are less.
R&D is also a deduction. You do not would not pay taxes on R&D. There is a separate R&D tax credit, in addition to the normal deductions for the expenses of having employees. There are some conditions tests but any size business can claim it. It is currently lapsed but large corporations use this credit extensively and odds are it will once again be extended. So, one should assume in 2012 it will be there if not extended in the lame duck session.
But bottom line, if anything higher taxes would be an incentive to hire, not the other way around.
What is it about deduction of the costs of an employee that lowers the potential amount subject to tax that is so hard to understand here?
Look, anyone who has filled out a 1040, schedule C, knows the main points in this article are true. Me thinks we have yet another brainwashed person here when frankly anyone who has ever filled out a IRS 1040 form, especially a schedule C, knows these fundamentals on business taxes and deductions.
Either that or many in America are truly basic math deficient. I just calculated out some very simple examples, it's clear, lowing the personal income tax rate will do absolutely nothing to increase hiring and we link to many statistics which show this is also the case on the personal income tax code.
Lowering the employer side payroll taxes is another story, but the incentive to hire is too small in my opinion.
Thanks for the detailed explanation!
I'm with you on the demand-driven hiring; I saw exactly that at the small company I've worked at over the past 4 years. We expanded rapidly in a recession because the demand for our product was there.
I don't think anyone can make a good-faith argument that business demand is not the main driver for hiring.
But you are also making the argument that the individual income tax rate is negligible in terms of hiring decisions, right?
Playing devil's advocate, you could reasonably make the argument that a lower tax rate would put them in a better position to hire.
In your example, if the individual income tax rate were 30% for the hot dog business owner, the S-corporations, partnerships, and sole proprietorships would pay 30K in taxes on the 100K, correct? (I mean obviously ignoring deductions and any tax-code abuse)
Then if the tax rate dropped to 10%, that's 20K more they can invest in hiring.
Another example: R&D jobs are a long-term investment that don't pay off immediately. A small company cannot necessarily eat that expense without borrowing, even if they are cash-flow positive. A bit of extra money could be the difference between hiring now and deferring to the next year.
Again, playing devil's advocate, the effect of the individual income tax rate on hiring doesn't seem to be exactly negligible.
For this discussion, there are two types of taxes, taxes on a business and personal income taxes. C corporations have their own tax code and profits on that corporation are taxed by business or corporate tax code.
Whatever the shareholders own in that corporation are then also taxed on their personal income tax.
Other business entities have what is called tax pass through, that means the profits are not taxed at the business level but when the individuals who own those businesses report those distributed profits on their personal income tax, that's where they are taxed.
All businesses, whether they are C corps, S corps, LLC, LLPs or sole proprietorships, if they hired an employee, that salary and benefits would be part of costs of operating a business and thus a deduction from gross receipts.
Here is the key where I think people are getting confused:
A business has "gross receipts" or what they took in total and then that business has expenses of operating that business. All of those costs are deducted from gross receipts to come up with net profit.
Employees are a cost of doing business.
So, let's say someone owns a hot dog cart. What people pay for the hot dogs, the customers, those are gross receipts of that business. The person hired to sell the hot dogs, unless the owner, is an employee, a cost of doing business and the costs associated with that employee are deducted from gross receipts. The cost of the hot dogs, whole sale, the cart, licenses, fees, advertising, the condiments, maintenance on the cart, legal fees, health insurance, life insurance, long term disability insurance, a website,....
these are costs of operating a business and are deducted from gross receipts to come up with the total profit.
So, then, that net profit, if it is a C corporation is taxed via corporate taxes, but if a sole proprietorship, LLC, LLP, would "pass through" to the business owner who would report that net profit on their personal income taxes. That net profit is what determines their personal income tax as well as some other taxes, depending on the type of business entity it is (LLC, S Corp, LLP, sole prop).
So, as you can see, the driver of hiring someone is demand for goods and services, i.e. gross receipts. Because an employee is a business expense, something deducted before taxes, it has little impact on actual taxes paid.
It's demand for good and services which drives hiring.
Let's say a business's gross receipts are $130,000. Their costs of doing business are $30,000 to give a net profit of $100,000.
Taxes will be calculated on that $100,000.
So let's say that business needs to hire another employee to keep up with the business. Let's put the total costs of that employee, including salary, health insurance, payroll taxes, etc. at $50,000.
Then, the business still has $130,000 in gross receipts but still $30,000 in other costs beyond the new employee, then their new net profit would be $50,000.
That business owner would then pay way less taxes than previously because their net profit was only $50,000 now.
Now let's say something more realistic. That new employee allowed the business to sell way more hot dogs, instead of throwing away ones which expired, and now their gross receipts are $180,000. But now they have $80,000 in costs of operating a business so their net profits are now $100,000.
They would pay taxes on that $100,000, which is the same as previously but they have also provided someone with employment and benefits and expanded their overall business, it's growing, which implies increased profits eventually.
Hope that helps.
Hi Robert,
I'm having a bit of trouble understanding a couple of points and explaining them to others.
I'd appreciate it if you could help clarify. I think it would help you make your point to a more general audience as well.
These two arguments are pretty straightforward I think:
1. C corporations' income is not taxed under individual income tax and they only pay payroll taxes (6.2%) on employees' salaries. Therefore, individual income tax rates, especially the top rates, don't really affect hiring at all.
2. Sole proprietorships employ an average of 5 people and only make up about 4.8 million jobs. So even though their business income is affected by individual income taxes, they are not really the primary drivers of hiring.
The income from S-corporations, LLPs, and LLCs pass-through to the shareholders, which includes the owners. They will then pay individual income tax on in. It seems like lower top bracket income tax rates actually WOULD increase the business profits, which as you said can affect hiring.
The comparative effect of this and business demand is still arguable of course, but am I missing something here?
I mean I can still make the moral and social arguments that business owners don't necessarily reinvest in hiring and just hoard the wealth, that society has a responsibility to provide for all its citizens, that the wealthy benefit disproportionately from externalities, etc., but I'd like to make this argument as well.
Thanks for your time,
Charlotte
Of course I hope we never have to come to this, but things aren't looking good. It seems everyone that sees what's going on and wants to stop it and reverse course is purposely locked out of the democratic process - something that should be impossible in our Republic. Look at USA 2012, it's being purposely destroyed from the inside. All those folks in the massive immigrant waves from Western, Central, and Eastern Europe fleeing for prosperity because they were locked out of better livings because of no jobs or discrimination? Preferences for certain groups? Welcome to it. How about all those folks from the CIS that fled during the 1970s, 80s, and 90s that were engineers, doctors, etc. but had to flee and are now "overqualified" taxi drivers and grocery clerks in the US? Well, that's what we will be very soon, and in our own country if we are lucky, otherwise we can be like Greeks reported to be cleaning toilets for Swedes. How about the Roman Empire, the British Empire, and so many other empires that kept stratifying their classes into the oh-so-content elites and the ever-growing have-nots (despite their work ethic, experience, and desire to make a better life for themselves and their Nation)? The constant foreign wars that bled treasuries dry? Yup. Remember arming the Taliban and Al-Qaeda vs. the Soviets with Stingers and then that bit the policy makers in the ass 20 years on? Well, we moved on to Afghanistan and then had to fight our own creation. And then Iraq. And now we are arming rebels in Syria in 2012 that include Al-Qaeda. Now, we are using US $ to arm people that will turn on us as soon as Assad goes. And the PRC can swoop in after the war is over and buy up/manage the commodities flow that we helped secure. And both parties are okay with it. And we can have yet another endless war that bleeds us dry. Obama and Romney have already set these positions and will go along with this "history repeats itself" so why should intelligent, honest Americans even read and learn history anymore, the plutocrats and policymakers will screw us anyway. Jobs? No. Arms for people that will turn on us (or actually are fighting us in multiple theaters) using our $ that we borrow? Check. Borrowing money from our non-allies while outsourcing everything to them so we can buy it back (win-win for other countries, not us)? Check. Forcing Americans to become unemployed after spending fortunes on education and living to be replaced by foreigners here and abroad? Check. Circuses? Check, just turn on the TV or read a corporate owned paper.
Stick a fork in us. Through no fault of the average American, we are done, or almost there.
The "fear of outsourcing" will diminish after the election?
We all know the Obama administration hasn't even implemented the swiss cheese Dodd-Frank legislation and it's five years after the financial crisis but this one takes the cake!
This isn't even "Bush lite".
When the Chinese work overseas in countries outside China, they ensure they have Chinese there in management positions. Now, if you have a Chinese manager, a nice scam would be to require that those working under the Chinese manager have to understand Mandarin, Cantonese, whatever. Not necessarily English, but the Chinese dialect. English in addition would be nice, but not necessary in every position. So, job requirement now becomes "Must understand Cantonese and/or Mandarin, recent experience living in the PRC for 5+ years and/or working for a PRC company in the PRC or overseas, etc." HR of course wouldn't have to fit any standards, just the ability to eliminate all Americans no matter how much they need work, how many degrees they have, how much experience they have, etc. What's that? Can't find American citizens that fit the bill? Oh well, courtesy of DHS, State, Commerce, Interior, Energy, etc. you can now have America's natural resources being taken out of American soil, or transported across the US from Canada, then refined in the US by foreigners, and then sold on the open market where American citizens, with ever decreasing $ and jobs, can try to buy it at the market rate. And when asked about these policies, business will repeat, we owe the US nothing, we seek PROFITS at all costs, that's our mantra. And when US politicians and govt. officials are asked about this, they will say, if Americans can't compete, than they need to retrain and learn how to be leaner and do without and US companies owe "lazy Americans" nothing, just ask Galt. Murdoch's talking heads at Fox and soon to be in the LA Times and in Chicago (I guess antitrust laws no longer apply when phone-hacking/police bribing moguls seek to own all media outlets) and CNN and everyone else in the media will go along with what their corporate owners tell them to parrot. And the Chinese when asked will say they owe nobody anything, if American politicians can be bought, so be it.
Geitner has shown up in India telling India how they can have far more H1 Visas and even more offshore outsourcing, after the November elections.Geitner told Obama to give the banksters a free pass when their necks were on the line in April of 2009.
We need to focus on the pure perfidy of India with Iran. India ignores the Iran sanctions and gets Iranian oil by bartering textiles. While Iran gets no hard currency, the oil production is crucial to breaking the sanctions. With very low production due to sanctions, Iran's oil fields are in danger of structural collapse, like Iraq's under Sadam due to very low production.
No surprise that China is buying from Iran also. Without the 2 countries who kill our jobs most, the sanctions against Iran would have real bite. Iran has lost 50% of the value of the Rial.
http://www.thehindubusinessline.com/industry-and-economy/info-tech/artic...
Trojan Horse. Once inside the walls of Troy, there is no DDOS attack they could not perpetrate. Once inside the U.S. there is no intelligence they could not gain. The DDOS attacks ordered by the Politboro will not have fingerprints of China
based IP addresses when launched from U.S. soil.
China has all of its 200 MIRVed ICBMs pointed at only one country. Call of Duty one day, will not be just a video game.
The Louisiana part of the GasLand boom/bust is paid for by a credit line of $750bn of Chinese credit. What they want should be clear from the location: New Orleans oil and gas terminal. Sweep away the talk of the chemical plants in Louisiana. If China has access to inexhaustible American natgas, there is no limit to China's next leg of new exports to the U.S. This should further reduce the U.S. to Third World status and further uplift China as the premier world economic power.
The XL pipeline of Canadian Bitumen, derived by clear cutting arboreal forests in Alberta, should provide the Chinese leadership with the remaining petrochemicals, once refined in the Gulf refineries.
The oil and gas shipped to China will return to the U.S. in the form of higher value exports like computer and telecom equipment, no longer produced in the U.S.
http://www.nytimes.com/2012/10/21/business/energy-environment/in-a-natural-gas-glut-big-winners-and-losers.html?pagewanted=2&ref=business
here and here.
Also, initial claims, against payrolls, I do a graph in this post, plotting the two to show the relationship.
Looks like I need to improve the site layout so additional posts on topics can be found more easily.
TBD!
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