The unemployment situation in America is out of hand and a HUGE part of the problem are falsities being propagated by notions that the wealthy and businesses should pay more taxes than they already do. Often I hear “talking points” repeated such as: “if tax cuts work, where are the jobs?”,”these people don’t pay their fair share”,”the wealthiest Americans should pay more”, and etc..
But behind the smoke screens presented by the mainstream media, politicians, lobbyists, and special interest groups there are much more complex reasons about why unemployment in the United States is still running rampant. Hopefully, by the end of this article you will have a better understanding of what the United States government faces in retaining businesses, what businesses face in regards to competition, and what kind of informed decision YOU make in regards your future employment opportunities.
The Two Different Employment Sectors
There are two basic different types of employment sectors in the United States:
The Public Sector consists of those people employed with TAX REVENUE. This sector does not produce a product, however, it does offer services provided by federal, state, or local government(s). This sector should not profit from collecting taxes, nor should it create jobs with taxes. If extra revenue exists, a lowering of tax rates should ensue the following year to reflect the difference.
The Private Sector consists of those people employed with PRIVATE REVENUE. This sector produces both products and services for a profit to sustain itself and the public sector. This sector must profit in order for growth to occur and employment opportunities to arise. As extra revenue, whether it be as a business or as an individual, increases, so does tax revenue.
What is important to remember is that the public sector can not exist without the private sector because the private sector pays for the public sector’s salaries, taxes, benefits, and jobs.
The Private Sector Business
Any person who becomes [financially] self-reliant due to an idea that leads to distribution of a product(s) or service(s) qualifies as a private business. Private employment is the byproduct of a successfully run private business model. As a matter of FACT, the first employee of a private business is, usually, the owner.
This is why small and mid-sized private businesses are so important to the American economy. The real people involved remove themselves from being a tax burden on society, they offer their goods or services to the benefit of the local consumers, and local hiring usually occurs with business growth. As an extra bonus, the government gets revenue from these private businesses through federal, state, and local taxes.
Equally important to the unemployment situation plaguing the United States is the growing absence of large and multinational private sector manufacturing businesses that used to employ hundreds, if not thousands, of people in America. There are a myriad of other countries such as: China, Taiwan, India, Korea, Japan, and Mexico, to name a few, that have forced the private sector business owner of the United States to globally compete with foreign businesses that are publicly funded by the citizens of their own countries. Many of these countries have despairingly huge gaps between the rich and poor of their countries, thus their standard-of-living is lower and labor is less expensive, rules and regulations are less costly and burdensome, litigation is less likely, and all but Japan have lower tax rates than the United States.
The United States Tax Lie
There are some basic rules on taxes and economics that are extremely easy to understand but are often forgotten because we are constantly barraged with inaccurate information to the contrary.
- Increasing taxes, on a person, cuts into the amount of money the person can spend. This lowers the growth of businesses that people buy products and services from and, as a result, unemployment occurs. This is especially true with the wealthiest Americans, who buy big-ticket items such as: cars, boats, RVs and campers, and etc… from companies that employ hundreds or even thousands of people.
- Increasing taxes on any business only increases the price of the product(s) or service(s) they offer. It is a well-known fact that any added costs incurred by a business pass on to the consumer in price. Ultimately, this results in a decline in sales due to higher prices and unemployment occurs.
As you can see, both scenarios spell the loss of private sector businesses, jobs, and consumer buying power. Furthermore, increasing taxes on ANYONE during a time of high unemployment will only exacerbate the unemployment situation in the United States.
Terminologies such as: “tax loop-holes”, “tax cuts”, “tax breaks”, and “fair share” are misnomers that prop up a tax system that is anything BUT fair to those who follow the law.
- A tax “loop-hole”, “break”, or “cut” is a legal tax deduction written into the tax code by lawmakers. Many of the itemized tax deductions are specifically written into the tax code to spur economic growth or encourage certain behaviors in society. In short, these deductions allow the tax payer to keep some of their tax money if they qualify for the deduction(s).
Tax deductions can allow the private sector businesses to stay globally competitive if they are deep enough. However, in order for a business to hire it must stay globally competitive, be able to pay its bills, attract consumers, and make a profit.
The Paradigm Flaw
As you can plainly see, private sector businesses have a positive effect, no matter how large or small, on the economy of a nation. They, quite literally, remove burdens from the tax system while simultaneously adding revenue to the government coffers. Even if the single employee business owner were completely tax exempt, they would be taking care of themselves and still not burdening the tax payer.
Conventional wisdom would have you believe that tax breaks equate to “stealing from the government and the people of the United States”, however, people do not view these tax breaks in the same way when it comes to their own. In example, there are many Americans who evade paying taxes by not reporting all of their income. Ask yourself, how many people make income (via a cash transactions) that they do not report to the government and how many of these people are receiving the Earned Income Tax Credit because they lied at the expense of the private sector?
It is becoming quite obvious that the overpriced educational institutions in the United States are adept at training employees for businesses to hire, but fail miserably when it comes to teaching entrepreneurial skills. Most students leave college looking for a job that offers good salaries, benefits, and securities, very rarely do these people entertain the thought of becoming their own employer, and of the people who do, even less are successful at it.
The information in this article thus far, however, does not account for present day unemployment numbers. These numbers are directly due to the actions of the United States government. In particular:
- Private sector business owners have no idea how Obamacare will effect their business costs and until they are convinced they can continue to compete in the United States against global competition.
- Members of Congress, the White House, and mainstream media are demonizing business owners for making, what they feel, are excessive or obscene profits.
The fact is, the “greed” of big government far outweighs the “greed” of big business and the unemployment situation will remain unresolved through this election cycle.