Little Mr Mahatma

In which the middle-aged Peacenik mouths off about War Drones--and all the other things that make him cranky.

Mr Mahatma--who is a Mr in real life--lives in the valleys of Southern California with his wife, a herd of Dears, and an impressive collection of books. Pnorny!
He is reachable at:
littlemrmahatma@yahoo.com

All writings are copyrighted 2003-2008 and trademarked: Little Mr. Mahatma

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Little Mr Mahatma

Thursday, October 28, 2004

Out Sick
Blecch! I've been sick the past couple of days with this respiratory crud. Y'know where it feels like you got a chunk o' crap right where you can't cough it out. Combine it with a clogged up head and life is just peachy! On the plus side, I got to have a couple days catching up on my Xena DVDs and Nelson DeMille books, and sleeping - lots of sleep. Mmmmm, Boston won the World Series. Good for them - they wanted it, they got it. All the players who struggled through the earlier rounds came through big time (*cough* Damon *cough*).

Tax Cuts
One of the keystones of the Bush Administration and campaign has been tax cuts. While channel flipping yesterday I came across a talk show with a Bush flunkie. The flunkie said that Kerry would raise taxes. The show host replied that Kerry said he would repeal the tax cut on people making $200,000. The flunkie looked aghast and said in a smug voice that such a cuts hurts jobs since most people making over that amount are business owners and it removes an incentive for them to hire more people.

Once again the Bush logic is terribly wrong. (If challenged the Bush Administration would probably say that the flunkie didn't understand the topic well enough to comment properly - always blame someone else!) Let's examine this.

While many Americans earnings over $200,000 may own businesses, many do not. For those who don't how can they increase the number of jobs? They can't! For those who do own businesses it's highly unlikely that they are sole proprietors (meaning the person is essentially the business) therefore a taxcut for the person has no influence on the business. None! Zilch! Nada! Again, a tax cut for a person has absolutely no bearing on a business that employs that person. A CEO getting a massive tax cut isn't going to go to work and spend HIS money on hiring more employees. It doesn't happen that way.

And look at this. Even with Bush's tax cut the number of jobs hasn't increased. Bush will still show an Administration overall loss of jobs. There is no relationship between personal tax cuts and job hiring.

But Bush quite recently did give a massive tax cut for businesses and that should influence jobs, right? More money for the company, more hiring - that's what Bush says so it must be true. Except it isn't true. A company receiving an influx of money from a tax cut has many choices as to what to do with it. Here's some options:

Pay a dividend. Make the shareholders happy. Note that since the Company Executives tend to own more shares than the commoners and employees, this is the equivalent of giving them lots of money.

Pay the Employees a bonus. Nice for everyone particularly the Executives since they usually give themselves a disproportionate heftier chunk o' cash.

Pay off long term debt or just keep the cash. Either way makes the company look more attractive for a takeover or to take another company over. If that happens the Executives get a nice bonus for a job well done and some employees get a nice pink slip for being redundant.

Hire more employees. Sure, it could happen but only on one condition and that is if the market demands it. If a company is finding that their market is loaded (not on a growth path), adding personnel would add any value to the company. In fact, it only adds to the overhead. Why add people if the company growth doesn't need it? That doesn't make sense.

But maybe I am wrong. If I am would a nice Bushie clearly and calmly explain the logic behind the taxcut and give examples of where the tax cut has directly and demonstrably lead to some sort of economic growth, because I'm not seeing it. In fact, these tax ctus smell suspiciously like Reagan's Voodoo Economics - give more money to the wealthy and the money will trickle down. Well, it didn't then and it sure looks like it isn't happening now.

9:31 AM

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