By Steve Pearce:
Yesterday the CEO of Verizon Communications Inc, Ivan Seidenberg, who also heads the Business Roundtable slammed the Obama administration for decisions that “create an increasingly hostile environment for investment and job creation.” It was the first time this influential group of chief executives of the nation’s largest companies has publicly criticized the administration’s policies.
Business investment is the only way the economy expands and new jobs are created. When the government taxes more, less capital is left to create jobs. Some describe this as the “trickle down” effect. Nothing could be further from the truth. The free market that made this country’s standard of living the best in the world is a Capitalist economy. Capital is the key component of Capitalism. When capital is available to companies they create new jobs. Taxes take away cash from the companies so job growth slows when taxes go up.
My wife and I owned a small company and grew it from 4 to almost 50 people. Each job we created came after we made an investment. If we wanted to hire a driver and haul our own equipment to location we had to buy a truck, trailer and buy insurance before we created the job. When taxes went up, it took longer to get the $150,000 together to purchase the new hauling equipment.
If we wanted to add an operator to repair the oilwells we worked on, we had to buy a pickup truck, a pump, a power swivel and tools. It took about $200,000 to create each operator job. I was the only sales person for the first 7 or 8 operators but when we got to 9 operators, meaning we had invested about $2 million to create those jobs then I hired a second salesman; that still required a capital investment in a car and an office before we could create the sales job.
Our operator salary was in the 10’s of thousands of dollars. That is not trickle down. Truck drivers made well above minimum wage and often got 10-20 hours of overtime each week. That is not trickle down. It is the free market at work. The free market works faster when taxes are lower. The process slows down when taxes are higher. Tax increases kill jobs. Tax cuts create jobs.
The argument that nothing has trickled down to employees is a catchy phrase that people love to throw around but it is deceptive and misleading. Every job requires capital. Government jobs require the capital be taxed from non government entities, private companies or individuals. Without profits in private companies, the companies do not have jobs or the ability to pay taxes. Taxes pay for the government to pay its employees or social security, medicare etc. All people benefit from the profits of companies whether they work for the government or private industry.
Mr. Seidenberg urged Mr. Obama to “focus on the big goal, job growth and to stop trying to micromanage industries.” He provided the White House with a list of policy grievances that included tax increases and regulations. The list included“hundreds of separate actions and decisions” that stifle manufacturing, innovation and job growth.
The head of NUCOR Corp., Dan DiMicco, joined the discussion declaring, “…the crisis we’re in today is of such magnitude that we have to have action in support of the private sector.”
Job growth occurs in the private sector. The government has been systematically killing jobs through higher taxes and punitive regulations. If the heads of the major companies in this country cannot convince Congress and the President to change courses, we need to change Congress and the President.
Join me in the fight against the bad decisions coming out of Washington. We can create jobs and grow the economy if we reverse the policy decisions that are hampering investment and job creation. We can solve the economic crisis that we are in if we begin now. Prosperity is a possible but it is a choice. Join with me and choose Prosperity for our nation.
