Why I'm Not Hiring

When you add it all up, it costs $74,000 to put $44,000 in Sally's pocket and to give her $12,000 in benefits.

With unemployment just under 10% and companies sitting on their cash, you would think that sooner or later job growth would take off. I think it's going to be later—much later. Here's why.

Meet Sally (not her real name; details changed to preserve privacy). Sally is a terrific employee, and she happens to be the median person in terms of base pay among the 83 people at my little company in New Jersey, where we provide audio systems for use in educational, commercial and industrial settings. She's been with us for over 15 years. She's a high school graduate with some specialized training. She makes $59,000 a year—on paper. In reality, she makes only $44,000 a year because $15,000 is taken from her thanks to various deductions and taxes, all of which form the steep, sad slope between gross and net pay.

Before that money hits her bank, it is reduced by the $2,376 she pays as her share of the medical and dental insurance that my company provides. And then the government takes its due. She pays $126 for state unemployment insurance, $149 for disability insurance and $856 for Medicare. That's the small stuff. New Jersey takes $1,893 in income taxes. The federal government gets $3,661 for Social Security and another $6,250 for income tax withholding. The roughly $13,000 taken from her by various government entities means that some 22% of her gross pay goes to Washington or Trenton....

RE :”LOL! Even half of the DEMS know what will happen to the economy next year w/o the tax cuts, and they want to be re elected ;-)”

I am not sure what will happen there. Democrats may want to vote on a tax cut bill in September that only covers those making under X dollars and dare Republicans to oppose it. But if they do raise significant taxes there is a good chance they doom themselves in 2012. Yet, Obama has boxed himself in more than one corner on taxes: 1) he needs the revenue, 2) and he has said over and over he will tax the rich.

Stay tuned!

Aug. 10, 2010, 12:01 a.m. EDT

Golden eggs

Commentary: Taxing ‘the rich’ will hinder economic recovery

By Irwin Kellner, MarketWatch

PORT WASHINGTON, N.Y. (MarketWatch) — Raising taxes on the top 2% of Americans is tantamount to killing the goose that lays the golden eggs.

The administration wants to let the tax cuts passed under President Bush for the wealthiest Americans expire at the end of this year, while keeping the cuts intact for everyone else.

Effectively this is a tax increase. And while it may seem fitting for the “rich” to pay more in these days of humongous budget deficits, in reality it might well exacerbate our deficit problem rather than ameliorate it.

While many people in the top tax bracket might, indeed, be well off, quite a few are small-business owners who file their tax returns as individuals. This group includes such people as contractors, farmers, lawyers, accountants, consultants and other service providers, and even a few manufacturers.

Small businesses such as these are responsible for just about all the new jobs that are created these days. Raising their taxes adds one more cost to their burden which includes, among other things, a big increase in the cost of providing health care for their employees, thanks to recent health-care legislation.

If they believe that the cost of adding workers will exceed the benefits, these small businesses simply will not hire. As a result, the jobless ranks will be larger than they otherwise might be, leading to less tax revenues and more spending on unemployment benefits.

http://www.marketwatch.com/story/killing-geese-that-lay-golden-eggs-2010-08-10?siteid=nwhpf

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.