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Comment by jedc | Hacker News Reader

The other half of it is what he got from paying taxes.

* He could hire his employees because they were educated (paid and/or subsidized by taxes.)

* He could take on loans and other debt because the financial system is regulated to ensure investor confidence.

* Companies can get their products to customers efficiently because of roads/bridges/etc.

I'm not saying taxes are too low, or even just right, or even sensible at all, but they have to be considered in context. He pays quite a bit in taxes, but how does that relate to what he puts into the economy and what he takes from the "commons" of the economy?

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He could hire educated employees because they paid for education; it is a engineering company, not McDonalds. While it is true that the government pays for most primary education, the vast majority of these funds do not come from federal or state taxes, but rather property tax.

If the government really wanted to create "security" in the financial system they would increase the reserve limit for banks to 25% and print bills to the difference in the money supply.

Roads, bridges, etc... do allow companies to move products - most employers are very happy to pay for these developments. Most of these, however, are paid with gas taxes and tolls (at least here in Canada).

The three points you mention cost money, but make up a tiny percent of the American budget. The main money leaches are Social Security, Medicare, Medicaid, interest on the debt, and the military. The author of that letter mentions welfare, but this minor in the scheme of things.

Don't get me wrong, I think that sending a letter like that is completely unwise, but I agree with the spirit of his letter.

He could hire educated employees because they paid for education; it is a engineering company, not McDonalds.

And where did these engineers go to school? Did they attend a public or private university? Was the school subsidized by land grants from the government? Did the students benefit from government-guaranteed student loans? Was the school able to attract professors because of government-sponsored research? Etc., etc.

If your family could have afforded to send you to college, It is reasonable to presuppose that they could have afforded a private school, the one is generally far more expensive than the other. If there were no public school system, then they would cost even less. - not to say we shouldn't have schools.

You think private schools don't get government funding?

Only some do. My schooling certainly didn't, and my folks weren't rich by any stretch of the imagination.

Then why didn't doesn't he start the company in a country with lower taxes? Last I checked, Russia has a significantly lower corporate tax than the US, and yet you don't see businesses thriving there as they do in the US...

"The spirit" of his letter is a naive oversimplification - the idea that "lower taxes always increase innovation" is simple to justify, but has little evidence in the real world.

I've read his letter, I see nothing about any of the things you note. In fact, I see criticism of the financial bailout and people who lived beyond their means. Are you supporting that behavior?

His major complaint, to quote the article is this:

"Who is stimulating the economy? Me, the guy who has provided 14 people good paying jobs and serves over 2,200,000 people per year with a flourishing business? Or, the single mother sitting at home pregnant with her fourth child waiting for her next welfare check?"

What he apparently doesn't know is that 75% of the (American) economy falls under "Consumer Spending". That is, if you and I don't blow our paycheck buying clothes and cars, we don't have an economy.

So really, the government is doing The Right Thing(tm) by stimulating the economy. It just upsets this guy because he feels that "Trickle Down" is better, because then the economy is sitting around waiting for this guy to buy/lease another Mercedes.

Capital spending, contributes just as much to the economy as consumer spending. More so in fact, as capital can be used to produce more goods an consumer goods cannot. This fellow spends a hell of a lot more than most of us, and on goods which will contribute to the economy in more substantial ways than anyone purchasing a television would. --- That said, I totally disagree with the tone of the letter, which betrays a level of pride and arrogance. The fact that he's threatening his employees rather than attempting to earn their loyalty, says a lot about the man.

But consumer spending is easy to stimulate. Just give consumers more money to spend.

Economists still argue what works best to stimulate businesses. There's no one right way to do it. Some believe in deregulation. Some believe in low business taxes. Some believe in business-ownership tax incentives. Some think lax credit laws or "high liquid markets" make it happen.

Others, like the letter writer, believe in trickle down and low taxes for business. An aside, anyone with a functioning brain that lived through the Reagan era knows this to be a complete falsehood. Second, its been observed (again, this is like some people say, so take with a grain of salt) that many pro-low tax people cannot control their lifestyle spending.

Therefore, the only way to increase their ability to repay on their debt/save money is to reduce their tax burden.

I've worked for a small business owner like this. They're small minded and arrogant beyond belief. They don't respect the people who work for them. "Penny smart, but pound foolish" as the expression went. He was sure to talk to us, off company time, in 2004 to remind us how dangerous it would be to vote for John Kerry because of his plan to force businesses to offer health care. At the time, none of us working there had health care, except the owner. He had a private policy which he could afford because he paid himself such a high salary. We would make $20/hr (with no benefits) and he would pocket $60/hr from our labors.

He was eventually forced to offer health care anyway, once most of his top employees (and me!) left to companies that provided benefits and didn't treat you like cattle.

Except that he states he'd use the tax money to hire more employees - who would be both consumers and producers.

No, he wouldn't.

The fact of the matter is, if he had the business, he'd hire the employees, as they would be making him money.

Just like the myth that he'd "pay his employee's more" if he didn't have to pay their payroll tax. Odds are, he'd pay his employees the going rate for their labor. Or, if he believes his employees deliver an above-the-market quality of labor, he'd pay them at what is an appropriately scaled competitive wage. The rest he would pocket.

You hire someone because you need someone to do a job. You don't have a mythical set of employees doing nothing/odd jobs simply because you have a "tax surplus".

That's clearly not a fact at all! There are lots of things that companies do that aren't directly billable to clients. What is a fact is that either you spend the money paying someone to do something, or you spend the money paying someone to do nothing.

>That's clearly not a fact at all! There are lots of things that companies do that aren't directly billable to clients.

Yes. Like I said before, you hire for your business based on need. The idea you'd have "more employees" because of a "tax surplus" is a myth. Especially from business owners that condescend to their employees and coerce their votes. I've worked for people just like this guy, and believe me, the idea he is spouting off is ridiculous.

Is it just me? I find the phrase "tax surplus" to be Orwellian.

Do you mean keeping your own money? If so, why not just say so?

People hire based on need. But people also hire based on productivity, available workforce, labor laws, legal considerations, tenure, etc. There are all kinds of modifers to the basic "need" I may need another employee, but the bar might be so high to hire them that I don't do it. In that case, existing employees just have to work harder.

Simply because a company has a need doesn't change their break-even analysis. And taxes hit the break-even analysis directly as overhead. Right? Or am I missing something?

If you'll allow me to conceed you've got a point, I'd like to offer a rebuttal that takes us in a new direction.

(Again, yes, you're right about the break even analysis).

Aside from the basics (roads, schools, telephone lines) that the taxes on his employees pay for, there is one thing the payroll tax pays for as well: Unemployment insurance. Now, nobody wants their business to fail, but the failure rate for businesses is quite steep. This is a tax that literally protects the employees from the bad business decisions made by the business owner, even if he ends up bankrupt.

Unemployment also keeps the supply of labor at a fairly constant rate. Say I worked for one of this business owner's competitors, who went out business, and have a mortgage. To make ends meet, I immediately take a job in an unrelated field. Now, that business cannot hire me because I've stopped looking for a job. (I know, i'm simplifying here, bear with me.) Unemployment lets me spend more time on the market, looking for offers in my field.

Sort of like FDR's Treasury Secretary said about the New Deal. "People don't eat over the long term. They eat everyday."

That's assuming things that aren't fair. There's many people in the US educated by alternative schooling systems. Homeschooling produces excellent students as do private schools. Not everybody needs the government to help them succeed. Indeed, in America you're limited by you and you alone.

I was home schooled and I feel the public school system is horrible.

However, I still think the public education system is one of the few things keeping chaos from breaking out. Consider the 80/20 rule the first 20% of public school money provides the vast majority of the benefit after that it's far more expensive the keep things moving. School could be year round with 3 cycles of children, and each child going every other year and we would spend far less money and still get most of the benefit from teaching reading, writing, basic arithmetic, basic heath etc. Or we could have vouchers and mandatory testing etc. But, removing any from of public school system would be a bad idea.

PS: The real question is always what point do diminishing returns kill the gain. I think we could double the amount of money we spend on education and still come out ahead.

Ditto and I agree, it is awful.

I agree that alternative schooling systems produce students that are on par, if not better than their public counterparts, particularly at the lower grades.

I scoff at the idea that "in America you're limited by you and you alone". It's an idealized extrapolation of our less regimented society, true, but if you grow up as a poor black boy or girl in the ghetto, the forces that are going to keep you there far outweigh the forces that will allow you to leave. See Hurricane Katrina: most of the poor folk that didn't evacuate were too ridiculously poor to even afford to evacuate. The same goes with someone who grows up in a rural town; if they want to leave town and go to college or otherwise make something of themselves, all of the factors in their environment are working constantly against them. I'm tired of people born into privlege (me included) feeling that growing up in an environment where the only barrier to success is your own motivation somehow applies to everyone else.

I mentioned in another submission about how one of the greatest misconceptions of the past 50 years is that our environment is somehow completely unrelated to our well-being and the choices we feel we have. I'm not about to say people can start blaming their bad judgement on their environment, but the other extreme is no better a way of understanding our country.

I overcame the extremely poor, rural part and I can raise you being homeschooled, and, in an information-society on-paper at least, relatively uneducated. That's a bigger barrier than being Black to being part of societies norms.

I was exposed to less of society than most people and in a culture much, much further than societies norms than black culture is.

I'm also dark enough to experience prejudices, if any indeed existed. One thing that life has taught me, you're treated the way you expect to be treated and the way you act accordingly. Perception is reality. You hold the key to how people perceive you.

Everything I have in life I earned by myself, I haven't finished college yet but have a decent job. I taught myself enough *nix and networking experience to move through jobs to where I'm making the mean salary for a single person in my city.

The only barrier that has ever held me back is myself. I've also experience big setbacks in life. If you feel sorry for yourself and stop moving, sure, life sucks you in. If you pick yourself and keep on striving, you can do almost anything you desire to.

This guy is complaining about proposed new taxes, not old taxes. The proper items for you to list are what he would get from proposed new spending (e.g., bailouts for detroit and irresponsible state governments, marginal state construction projects).

that is the perfect rebuttal. thank you for bringing pure, simple logic to the discussion.the rate that we tax people may not be perfect but taxes are necessary. Guys like this seem to live for the glory years of Reagan's trickle down economics but they forget the results of that policy. The first George Bush had to break his main campaign pledge of no new taxes to offset all of the "Trickle down effects" that we were bombarded with.

Let's eliminate both taxation and public sending and we'll know the answer.

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