The Diane Rehm Show

I was listening to the program this morning and have two questions:

(1) Why are conservatives allowed to cling to the notion that lower taxes for quote "investors and entrepreneurs" will equal job creation? The Bush tax cuts have been in effect for how many years? And how effective has that been? Not only that, but how well have wages for the employed kept pace with inflation over that time? No one wants to pay taxes. Those most able to do so shouldn't be able to sway policy by dangling 1-2% of their income in front of our faces and saying "If you let me keep it, maybe, just maybe, I'll help you out."

(2) Why isn't a short-term revenue increase on the table? Conservatives act as though tax increases and tax decreases are immutable once enacted. How many times have tax rates changed over the past three decades? Why couldn't we enact short-term revenue-generating policies to deal with the deficit? The argument seems to be that a revenue increase of any kind would slow the recovery even more, but isn't the debt crisis slowing the economy already? Wouldn't solvency be a boon to the economy in a real way? It seems like revenue is the most efficient answer, so why can't we all agree to nip this problem in the bud?

Thanks for the great discussion.

Will someone please provide me with a study that outlines the relationship between tax rates and job creation? When I look through all of the data there is absolutely a relationship that appears in the graph. It's that tax increases lead to job creation not the other way around. Where are these studies located exactly and who is funding that research?

Almost flagged as offensive. It really is BUT that is NOT what link for...

Good luck.

d30598 is correct in that the job killers for small businesses are state and local governments, not the federal government.

As an accountant for small businesses for 35 years I can attest to the fact that the fedeeral government is the least of a small business's worries with regard to taxes. High tax rates are not the problem, the problem is government interference in the workplace.

For example, if a business operates in more than one state, there are multiple state filings, most with out of date rules. An example of this is income tax withholding tax requirements. While the federal government in 1975 required monthly tax deposits if the 3 month liability was more than $500. That is now $2,500. At the same time, the State of Ohio required monthly payments if the liability exceeded $500. Today, after doubling the tax rates in 1982 and inflation for nearly thirty years, the requirement is still the same. Ohio has more than 600 local taxes in addition to the state income tax.

My clients would gladly take pay a higher federal rate to get rid of the state and local filings.

I have several family members, who own real small businesses, and they are doing quite well. They bragged to me, a retired public employee, how they didn't pay taxes for five years due to tax breaks. During this five year period, both of these family members brought very nice homes with much larger down payments then myself; they saved money for their children to attend college; bought very nice vehicles that are 'business expenses'; and they combined vacations with professional conferences so they could off-set the costs by getting tax breaks for their airfare & hotel costs. These same family members constantly complain about their tax rates while they get much richer then me. These same family members would never get a corporate or public sector job because they would not make as much money.

Tax hikes are needed to get us out of this economic mess along with spending cuts but not ones that negatively impact our seniors & poor. Companies are not hiring while they are giving their top executives outrageous salaries and benefits which are called 'capital gains' and taxed at 15%. Meanwhile these same corporations have downsized their staffs and the remaining employees are put in the position of either doing the job of 2, 3, 4 or 5 people or else they will lose their jobs. Why aren't these same companies giving less money to their top executives and hiring more people? If they hired more people, they would use their earnings to buy socks, shoes, food, and other essentials. Their money will fuel this economy more then tax breaks for the rich that they are simply hoarding.

As a business owner of a small firm of 6 I would like nothing better than to have health care responsibilities eliminated from my business responsibilities but ensure staff and familes have coverage.

Last year I sent over 80 hours of my time just trying to obtain insurance for staff the same as my vacation. Without insurance I do not obtain top candidates and for a number of years had staff with pre-existing conditions which made it even more difficult.

I think the current healthcare laws will make it easier for me to expand my business and allow staff to be insured regardless of their employment status.

Sara

The comment suggesting that no regulations could have prevented the massive housing finance crisis (called the asset bubble by the speaker) is unsupportable to the point of delusion. The self-serving conservative theology is unable to embrace any responsibility for years of "musical chairs" concerning passing off debt that those responsible knew was toxic well ahead of the headlines. It was a dodge, plain and simple. Homeowners in many cases were being herded into variable-rate loans even when they had reservations (and could qualify for loans with higher up front payments but less risk). But those selling the loans got their commissions and targets and would not suffer the back end after defaults. I'm hoping at some point the Federal Gov't will go after the former heads of Ameriquest, Countrywide, etc.; some of the companies are gone but the individuals that ran the shell game left with their ill-gotten profits intact.

I think the "free marketeers" like the gentleman from the Heritage Foundation are being a little disingenuous about their motives to cut taxes. Back in the Reagan Administration, he talked about ttax cuts as a means to "starving the beast"---meaning government entitlements.

No one seems to remember but one of the issues in the Gore/Bush2 2004 election was putting the surpluses into a "lockbox"---meaning apply the surplus to reducing the deficit. When Bush2 and the Republicans got in, they took the surplus and gave back in tax cuts. And when the Internet Bubble burst, and the launched an occupation of Afghanistan and Iraq, they didn't raise the taxes to pay for it. Then the Republicans added the infamous "prescription drug" program as a boondoggle to the drug companies, which had the government bare the cost of whatever the Drug companies wanted to charge for Seniors' prescription drugs! And didn't let Medicare negociate prices like the Veterans' Administration has done for years.

All this to build up the deficits, and then when the inevitable collapse of the Real Estate Bubble came, and the economy tanked, suddenly we have a "deficit crisis".

I accuse them of deliberately doing all these things to create a "crisis" for which they feel the only solution is to cut entitlements! And the Heritage Foundation led the way.

Actually high taxes encourage investment. Back before 1970's when taxes were at almost confiscatory levels, we had higher growth than any of the Reagan or Bush2 years.

Back then it was "grow or die"---if they kept their profits, then they were taxes. If they invested their profits in expanding their businesses, then they didn't have to pay taxes on them. High taxes were a way of encouraging investment, not discouraging it. Of course, that created jobs, and jobs created demand for new business investment to prosper.

So it is not surprising that in the present period of low taxes and high profits, that the wealthy would rather hold on to their money---or invest it in Asia---then invest in new businesses in the US, with it's high unemployment, high cost of living, and falling wages.

Look, it doesn't matter how low taxes are, nobody is going to invest when nobody has any money to buy anything.

Increase taxes, and businesses will hire workers and workers will spend money.

Of course this doesn't include the problem of "globalization" which is really just labor arbitrage...how can you have full employment when the government is pursuing policies enourage business to export jobs and import workers.

My husband is an IT professional with 38 years of experience. He was downsized by a now defunct financial institution after their investment banking division lost money and cut 10% of their staff to boost profits. What did they do with the profits? They rewarded the same investment bankers with huge quarterly and annual bonuses. Around the same time, corporate American paid Congress to pass tax legislation, probably framed as helping small businesses, providing tax incentives for outsourcing jobs. This led to many corporations firing (oops downsizing) their IT staff and hiring H-B workers. My husband lost 2 other jobs due to off-shoring. This happened to IT workers who are now in the 40s to 70s & the negative impact fired IT workers is immense. It took my husband 4 rs to find a job working as an IT manager for a local government organization at half his salary. However, it's a steady job and his expertise is greatly appreciated.

His former financial company' greed & irresponsible behavior cost us a great deal of economic pain and heartache. It was obvious to me back in the 1990s when they starting downsizing to boost profits that they were a poorly managed company. This is the same for many corporations. They believe that their only responsibility is to the top executive and large shareholders. They don't faction into their decision-making the impact of their business decisions to the majority of Americans. It is these corporations & richest Americans, such as the Koch Brothers, who are running the Republican Party and funding the anti-tax propaganda machine. They believe that their businesses should be protected by the American military, the local & state police; that they should be able to use the roads, bridges, ports, airports without paying for them; that they should benefit from the American educational system without paying for it; and on and on.

Also as far as governmental regulations, we need them to protect us!! we need them for our safety, for our environment and health and to just protect the everyday people. And yes, if the laws were more reasonable and fair, we would not have had the Wallstreet crisis and the constant corruptness of financial companies. The rich need to stop using loopholes and lobbyists to influence Congress and the media to scare the people by giving us all these false stories- and it would be so nice to end FOX and all their Hate shows about our government. They are destroying our country.

Diane,
When one of your guests says that 20% of the businesses say that new taxes are the problem I wish you would stop them, because 20% is not a significant number.

I did find it interesting that there was so much talk about "what business people say," and I thought it was great that some of your guests called them on it, because it really is what they do, not what they say, that matters.

Also, several of your guests talked about there not being enough people buying, and that was what is holding the economy back. American prosperity has been based on the buying power of the American people for two generations. What would happen if we finally have enough stuff? (Seems like that would make an interesting program.)

Thanks for a great program; I only wish more people had heard it.

The biggest group of unemployed is people without high school diploma. Invest in education.

Also, there is no point in hiring when you have no customers, regardless how much tax you pay. Give poor people a bit more money, they will spend it, increasing sales and thus hiring (Mishel's point).

You are so right! the United State has truly let her people down by allowing so many foreigners to come here, and then giving them perfered treatment in ALL aspects of American life. We need at least 10 years of no immigration.

JSawyer wrote:

"This was an era of broad economic prosperity for many reasons - policies, booming tech and housing markets- owes little to a 1% tax cut.
Economic disparity continued to increase during this period as it has for decades."

No it wasn't. First of all it was Bush that signed the 1% Wealth Tax with the urging of Democratics in Congress. Photo-oft with Tim Foley after the signing.
One of the reason Bush I lost the election was because the country was hurting, it wasn't until the 4th quarter of 1992 after losing to Clinton but still in office is where the economy started to improve. Even in 1994 the stock market took a big hit. It was not until 1995 that the economy really started to take place especially in technology. The stock went through a tear from 1995 to 2000 until the tech bubble it.