How to Fix What Ails Us

[badlydrawnjeff.livejournal.com]

Intel's CEO, Paul Otellini, had some fairly harsh words for the folks in power this week:

Otellini singled out the political state of affairs in Democrat-dominated Washington, saying: "I think this group does not understand what it takes to create jobs. And I think they're flummoxed by their experiment in Keynesian economics not working."

Since an unusually sharp downturn accelerated in late 2008, the Obama administration and its allies in the U.S. Congress have enacted trillions in deficit spending they say will create an economic stimulus -- but have not extended the Bush tax cuts and have pushed to levy extensive new health care and carbon regulations on businesses.

...

As a result, he said, "every business in America has a list of more variables than I've ever seen in my career." If variables like capital gains taxes and the R&D tax credit are resolved correctly, jobs will stay here, but if politicians make decisions "the wrong way, people will not invest in the United States. They'll invest elsewhere."

Take factories. "I can tell you definitively that it costs $1 billion more per factory for me to build, equip, and operate a semiconductor manufacturing facility in the United States," Otellini said.
The rub: Ninety percent of that additional cost of a $4 billion factory is not labor but the cost to comply with taxes and regulations that other nations don't impose. (Cypress Semiconductor CEO T.J. Rodgers elaborated on this in an interview with CNET, saying the problem is not higher U.S. wages but anti-business laws: "The killer factor in California for a manufacturer to create, say, a thousand blue-collar jobs is a hostile government that doesn't want you there and demonstrates it in thousands of ways.")

"If our tax rate approached that of the rest of the world, corporations would have an incentive to invest here," Otellini said. But instead, it's the second highest in the industrialized world, making the United States a less attractive place to invest--and create jobs--than places in Europe and Asia that are "clamoring" for Intel's business.

This is similar, as CNet reports, to what Carly Fiorina had to say on the matter, with the difference being that Otenelli isn't running for office. But clearly the business class is less concerned about speaking up right now.

We do need to think ahead to what's going to fix the problems, though. "Unexpectedly," unemployment claims are increasing again, home sales are in decline, and the stimulus, which was supposed to save us all, has "done exactly as we expected it to", which is to mean not performed as intended at all.

So let's see - we have a failed stimulus, a looming tax hike, new costs associated with health care and financial reforms, and businesses are not spending money in anticipation of this uncertainty. What's the way out? How do we fix this problem? Where do we go from here?

Comments

[dwer.livejournal.com]

people are fleeing because California cannot provide proper services, because it is restricted from raising the money it needs.

[404.livejournal.com]

It couldn't be that they already are being taxed out of their mind, and not getting any real tangible results from it? Not in dwer's world, where the government is entitled to all our money and to disagree is tantamount to drowning kittens.

[dwer.livejournal.com]

it's funny, because all I really want is to raise the top tax rate to 39%. But, you know. Hyperbolic comment is hyperbolic.

[rasilio.livejournal.com]

No it's funny because you reference a FEDERAL tax increase in a sub thread on CALIFORNIA levels of taxation.

[dwer.livejournal.com]

For 404, taxes are taxes. Also, the highest marginal tax rate in California is a scant 10%.

[badlydrawnjeff.livejournal.com]

...which puts it at #3 or #4 highest overall (http://www.taxfoundation.org/taxdata/show/228.html) depending on how you rank Oregon. And that doesn't count the 8.25% sales tax - often higher than 10% when local taxes are factored in.

[404.livejournal.com]

Right. When 39% isn't getting the amount of money you want, you will bitch and moan that the rich aren't paying 45%, and it will keep going.

You still skipped over the point that California is the 8th highest taxed state right now, funny, that doesn't fit your narrative of the citizens of the state drowning the government in the bathtub.

[dwer.livejournal.com]

and you're skipping over the point that California's highest marginal tax rate is 10%, and it doesn't change the fact that California cannot raise the money it needs.

[404.livejournal.com]

Ok, how much do you want Californians to pay? 39% state and 39% federal? That comes out to 78%, not including property & other local taxes. Might as well take it all at that point. That still would probably not be enough for statists like you.

[dwer.livejournal.com]

it's funny, because I'm hardly a statist.

No, I don't think I want California's richest people to pay 78%, although there are several people who could certainly live on 12% of their income. That's another thing you lolbertarian neotards love to do -- pretend that the highest tax rate, which only applies to a certain percentage of the most highly paid people's salaries, is the rate that EVERYONE pays.

[mrbogey.livejournal.com]

If California can't raise the money it needs with one of the highest GDP's in the world and other states can by taxing less with smaller GDPs then maybe Californians need to realize that the party that runs the state is incompetent.

[dwer.livejournal.com]

The Republicans? Well, duh.

But once again, you're ignoring the laws of the state. New spending can be approved by a flat majority, but new revenue gathering has to be approved by 2/3 majority.

[badlydrawnjeff.livejournal.com]

and you're skipping over the point that California's highest marginal tax rate is 10%, and it doesn't change the fact that California cannot raise the money it needs.

Maybe California needs to spend less.

[badlydrawnjeff.livejournal.com]

If they're too high at 33%, why is 39% somehow reasonable?

[dwer.livejournal.com]

they're not too high. They're too low.

[badlydrawnjeff.livejournal.com]

Apparently not, since high taxation continues to be a problem.

[badlydrawnjeff.livejournal.com]

Completely false. Taxes, not services, cause people to flee. People aren't fleeing from Texas, are they? Not running screaming from New Hampshire, right?

[dwer.livejournal.com]

I can give no cause for whatever it is that makes Texans be Texans. New Hampshire and California are hardly comparable states in comparable positions.

[badlydrawnjeff.livejournal.com]

so there aren't poor and rich people in both places?

[dwer.livejournal.com]

The population of California: 36,961,664 (Jul 2009)
The size of California: 163707 square miles
The population of New Hampshire: 1,324,575 (Jul 2009)
The size of New Hampshire: 9351 square miles

California has 30 times more people than New Hampshire, and is 17.5 times larger than New Hampshire. They are not comparable in term of infrastructure needs, social service needs, or revenue requirements.

[badlydrawnjeff.livejournal.com]

So the poor in New Hampshire don't need assistance. There are no roads, no schools, no crime.

[nevermind6794.livejournal.com]

Actually, people are getting here (what with all that positive liberal media about Texas) and discovering that there aren't any jobs.

[badlydrawnjeff.livejournal.com]

Aren't any jobs? In case you missed it, Texas is the only state to have added jobs since 2006 (http://www.willisms.com/archives/2010/08/trivia_tidbit_o_856.html).

[nevermind6794.livejournal.com]

Unemployment is still historically high. (http://krugman.blogs.nytimes.com/2010/08/03/texan-tall-tales/) The increase in number of jobs is mostly attributable to an increase in population (twice the increase of the number of jobs) and cheap land keeping us out of the real estate bubble that hit just about everyone else. I'd like to see some comparison starting at dates other than 2006 - since that graph actually came from the governor's office.

Of course, Texas is also just kind of its own place. (http://krugman.blogs.nytimes.com/2009/08/03/texas-is-not-the-only-red-state/)

[badlydrawnjeff.livejournal.com]

Unemployment is still historically high. The increase in number of jobs is mostly attributable to an increase in population (twice the increase of the number of jobs) and cheap land keeping us out of the real estate bubble that hit just about everyone else. I'd like to see some comparison starting at dates other than 2006 - since that graph actually came from the governor's office.

Krugman aside, even historically high doesn't mean there are no jobs, just that there aren't as many jobs, but still quite a few. Again, that Texas keeps adding jobs means something.