5 ways to help the economy in the United States

Some suggestions for the future President..

Published on October 7, 2004 By Draginol In Business

Here are 5 items that I would like any future President to consider if they want to actually help the United States economcially -- to create new jobs for Americans.

#1 Tort reform. People hear about company A suing company B all the time. Or an individual (or group of individuals) suing some company. I got personally sued this past year. Want to know why? Because my employer (I'm the CEO but it's a class C corporation) didn't agree to just let some company use our popular icon format without a license so they sued me personally as well as our company. Totally frivelous in my opinion (ultimately settled out of court but not before tens of thousands of dollars were spent).

#2 Lower taxes on companies. Make this up by eliminating some loopholes (such as John Edwards who creates an S corporation that pays him through dividends - clever but slimey and legal). Fewer taxes means more money to hire more people. One easy way would be to have C corporations have lower tax brackets if they net less than $1 million a year. Then you'd have less incentive to set up as an S corporation where a lot of these loopholes exist. BTW, Kerry's promise to raise taxes on those who make $200k or more is a bad idea.

#3 Make it easier to get work visas for foreign workers. Better to have them coming here to the United States than us contracting them overseas which is what we're currently stuck doing often times. Then they're here in the US buying things and contributing to the economy. We don't discriminate when we work with people. We want to work with the best and brightest regardless of their location. Whether that's Poland, UK, Italy or USA. But those who want to come to the US should be able to come here and the government should make that painless.

#4 Let small companies pool together for health care. In Europe, health care is free so I can just work with people in Europe who are just as qualified without having to pay for their health care. Let small businesses, the guys creating the jobs right now, band together to be able to get cheaper healthcare for their employees.

#5 Matching funds for college students who get a B average or better -- NOT means tested.

Comments (Page 1)

TasT

on Oct 07, 2004

Nice Ideas

My opinions:

2. Yes lets lower taxes on companies. Last I read most of our companies are taxed at an average of 25% I think it was yet a company in developed foreign countries are getting taxed at a rate of 15% or less.

3. I'll have to do some thinking on this one, but you do make a good point and it would also help eliminate the outsourceing of american jobs.

4. I definatly agree with this one, right now it's hard even for medium sized companies to do much to combat helath insurance costs.

5. I think that the A+ program we have here would work better, It allows a kid to earn ther first 2 years of college at participating universites for free by maintaing a 2.5 gpa and tutoring a couple hours a month while in high school.
The only problem is they are talking about getting rid of the program because of funding of course...

Draginol

on Oct 07, 2004

It's a pity that younger people don't vote more. We spend billions of dollars to give goodies to the elderly whether they need it or not but let people struggle through college. AARP is the devil.

COL Gene

on Oct 08, 2004

We need to return the tax rates on the top 5% to the Clinton rates. The reason is simple, we are paying for the tax cuts by borrowing money. There is no surplus to retuurn and the wealthy do not spent tha majority of the added money they receive from the tax cuts - marginal propensity to consume is the term economists give to this behavior.

Take the revenue from restoring the tax rates on the top 5% and do the following:

Help balance the budget

Invest in rebuilding the infastructure of this country- That would create jobs and the companies hired to do the work would make profits.

Close Tax loop holes to corporations so they pay their fair share of taxes. Cut unneeded spending to further balance te budget

End Pork Barrel spending and look at cutting programs that are not essential - Use this money to begin repaying the National Debt.

Stop Congress from creating Bills that tack unrelated spending to other bills. Each spending program should be a separate bill.

No more Tax cuts or new spending programs until we have balanced the budget and paid the national Debt down to less than $2 Trillion.

COL Gene

on Oct 08, 2004

The jobs number for september 2004 show that the tax economic and tax policies Bush is following are not producing the economic growth needed to create enough new jobs to keep up with our population growth. Our economic system needs to produce about 125,000 new jobs per month to just stay even with the added workers. Our economy should have created over 5 million new jobs since Bush took office to enable the new Americans that enetered the work force to find a job. By any measure you choose to use, we are between 5-6 million jobs short of that requirement! Bush does not acknowledge that reality nor do his policies address this need. Why have his tax cuts not created these jobs? They have contributed to ther annual deficit. The CBO study says. about $270 Billion of the $450 billion deficit in FY 2004 was because of the Bush Tax cuts!

We can not continue the Bush Fiscal and tax policies! It is time for a change.

Dr Guy

on Oct 08, 2004

#5 Matching funds for college students who get a B average or better -- NOT means tested.

I will have to disagree with this one. Sure, there are a lot of rich kids that dont lift a finger and get it handed to them on a silver plattr, but what does that teach them?

College is not only about earning a degree, but learning about real life. Preparing you to stand on your own 2 feet, where no one cares about youyr self esteem unless you earn it. It is time for them to earn their way. It is not impossible, but it is hard and takes discipline.

Besides, most colleges already have such a program. It is called "Scholarships". There is too much looking to the government already. Let us look to ourselves. Perhaps then there would be fewer chapter 11 and 13s as they sit around their 50" TV talking on their Cell phone, while the Caddy idles in the driveway.

mindlar

on Oct 08, 2004

Dr. Guy, I'll give you the benefit of the doubt and assume that you haven't been to college recently or have any children that are in/nearing college.

Merit-based scholarships do not exist at many schools. At this point close to 90-95% of all money being given to students in order to attend college is need-based. Need-based scholarships are pretty much designed to allow low income students to attend college. The downside is that students of middle income families pay a disproportionate amount for their college costs.

Let's take two examples of need-based and you'll see the problem (numbers here are all made up):
1) Student 1's parents make around $40k per year, which qualifies them for 90% financial aid. For about $3000 per year in loans, they will be able to attend an Ivy league school with no problems or a public school for less than $1000 per year.
2) Student 2's parents make around $90k per year, which qualifies them for 0 financial aid. This student will be able to go to a public school for roughly $15k per year in loans or $30k per year in loans at an Ivy league.

Assuming that both of them get the same grades, the first student will be in debt about $12k, while the second will be in debt $120k. They both have the same earning potential, the same education, but the second student's parents would have needed to be saving about $500 per month to keep their child's initial school debt down. If those same parents have just two children, college saving can easily eat up a quarter of their after tax pay.

Making it all merit based, with the ability for anyone to get loans would put both of them in debt about $60k. I have quite a few friends that are over $200k in debt from school loans because their parents made just enough to disqualify them from all financial aid and chose to go to private schools and pursue higher education.

TasT

on Oct 08, 2004

Just to play devil's advocate here, What's up with the worry about College, I know several dozen people that have BA or BS degrees that are working for much less money than I am. I also have 3 MBA's that work the same job that I do.

To put this in the right context I guess you should know a little about my eductation. Eight years ago when I started work for this firm I had no education past high school with the exception of 6 years of military service as a Naval Cryogenic Tech. The Firm has nothing to do with Cryogenics. Since I gained employment with them I have worked on my degree's off and on and am currently just a few credits away from my BA in Business Psycology with a minor in CIS management.

However just like the others I work with that have fancy degrees I won't be able to utilize the full potential of the degree where I am currently employed and would take a huge pay cut to leave

I guess after all that my point is why are we so focused on sending all our kids to college to get a degree when the job forcasts show a need for people that can turn a wrench and those jobs are paying well, shouldn't we be sending them to trade school or an apprenticeship first?

Sir Peter

on Oct 08, 2004

A brillian set of ideas. I wish I were as intelligent as you are, Draginol. But since I live in my own make believe world, I really don't get to do much outside my room to make a difference. Good show dear boy.

Draginol

on Oct 08, 2004

First off, the top 5% pay over half the taxes. Taking money away form the people who create the wealth of this country is a pretty bad policy. Remember, top 5% INCOME earners doesn't affect the idle rich one bit. It affects the people who are doing things to generate income.

Secondly, it won't help balance the budget. It's just not enough. If you want to balance the budget you got to cut spending.

Third, what "infrastructure" would you propose that the federal government needs to "rebuild"?

Fifth, it's not corporations that are bilking people per se. It's individuals like your friend John Edwards who creates an S corporation for himself and then pays himself through dividends rather than a salary thus avoiding hundreds of thousands of dollars of payroll taxes ($600,000 was the figure I read). If you want to eliminate that kind of crap, you have to try to migrate people to C corporations so that personal and business incomes aren't intermixed like they are today and thus subject to loophole abuse.

Sixth, "stopping congress from doing pork barrel politics" is just wishful thinking. If you want to wring your hands impotently at the government that's your business. Wha tI set out are thigns that the government coudl actually do politically that would make a real difference.

sunwukong

on Oct 08, 2004

Draginol: I wish you'd post a bit more context (e.g., stats for #1) or expand your thoughts (e.g., why no means testing on #5) in your recent posts.

1. Here's an article by David Bernstein for the Cato Institute, "Procedural Tort Reform: Lessons from Other Nations". (Link)
2. Here's a Worldbank table (though only 1999 data) of tax rates from different countries: Link
3. No dispute -- only point of context I can add is that it's very difficult to get a Green card and it's setup in a way that no individual can do it without corporate sponsorship and companies require professional legal help in doing so.
4. What's stopping this from happening now?
5. I have two issues with this: how does the "B" get measured (e.g., SAT? high school marks?) and why no means testing?

Dr Guy

on Oct 08, 2004

Dr. Guy, I'll give you the benefit of the doubt and assume that you haven't been to college recently or have any children that are in/nearing college.

I will give you that I have not been in college lately (Graduated 1978). However, I have 2 children in college right now. And while I do support them somewhat in their costs, they are required to pay most of it (I paid for all of mine myself). Both also got scholarships based upon merit, so I guess that puts them in the top 10% by your calculation. I know they are smart, and they may be that smart.

But they also have to work for some of the money, and yes, probably go into debt. I know I did.

All of which does not contradict my original statement. Keep the Government out of it, except for sponsoring the loadns (as it is virtually impossible for students to get them on their own). Giving away money for college is a waste as many would use it, and then drop out because they have no compulsion to go to college, only that it is 'free' or nearly so.

That which we work and pay for is much more precious to us than that which is given to us.

sunwukong

on Oct 08, 2004

Remember, top 5% INCOME earners doesn't affect the idle rich one bit. It affects the people who are doing things to generate income

...

t's individuals like your friend John Edwards who creates an S corporation for himself and then pays himself through dividends rather than a salary thus avoiding hundreds of thousands of dollars of payroll taxes ($600,000 was the figure I read).

Ok, let's talk about taxes on dividend income and, I guess if we're talking about idle richness, capital gains and inheritance taxes.

1. Dividend income -- the argument (when it has trickled down to the masses) has generally been, "the income of a corporation is already taxed. taxing the distribution of the income to its shareholders is double taxation."

2. Capital gains -- "why should the government get anything when it's already directly taxed the work involved in increasing the asset's worth?"

3. Inheritance taxes -- "besides a mean thing to do, the government has already taxed the source of this income at least once!"

Those are the standard arguments against having any (or higher) forms of the above taxes.

In terms of tax policy my personal experience has been:
- the more money you have, the greater the access to both the advice and means to avoid taxes, e.g., loopholes, obscure tax code, premium investment vehicles, private investment, etc.
- a simpler tax code benefits everyone

Heavily penalizing one area will just force the flow of money to other areas. Too much taxation everywhere forces money out of the country.

So, I don't have a specific tax rate for any of the tax forms in mind -- just that it's low enough to keep money in the country and broad enough that there's no way for any significant portion to be sheltered.

One exception: I'm strongly against a weak or non-existent inheritance tax. I believe this is just an income attribution avoidance scheme. Make it no more punitive than income tax but not less so.

Draginol

on Oct 08, 2004

sunwukong - how is looking at what other countries, particularly ones with half or less our population, useful? Especially when their economies aren't nearly as good as ours?

The US has the strongest economy of any major industrial power right now and based on what the Democrats are saying, it's in the toilet. So how is emulating the policies of weaker economies a good thing?

How does a B get measured? Grade Point average.

TasT

on Oct 08, 2004

After a little more research I will retract the turn a wrench statement.

Current forcast by the DOL show that tech jobs in the medical industry are where the majority of the growth is. Living in a area with lots of retired people I can believe this and also know that most of the jobs do not require a degree, but most require a certificate and between 6 and 18 months of technical training.

Dr. Guy
I agree if it's free many will blow it off, that's part of what has happend to the A+ program here. From my own experience I tried college at 19 and 24 years old only to quit after a semester both times. I started again at 29 and have stuck with it and even currently carry a 4.0 GPA. You have to be ready and at 18 I don't really believe that many kids are ready for it. especially if someone else is paying.

sunwukong

on Oct 08, 2004

Draginol:

how is looking at what other countries, particularly ones with half or less our population, useful? Especially when their economies aren't nearly as good as ours?

So how is emulating the policies of weaker economies a good thing?

You mean like tax rates? Obviously lowering corporate tax rates has an absolute structural effect on your own economy. But relative to other countries, your tax rate also has other effects, e.g., a lower relative rate makes the US a more attractive place to locate business.

While the US currently has the overall strongest economy, it is not leading in all economic measures, e.g., economic growth (that's Russia or China, I believe). It can't hurt find out what other countries are doing to catch up.

Welcome Guest! Please take the time to register with us.
There are many great features available to you once you register, including:

Richer content, access to many features that are disabled for guests like commenting on the forums.
Access to a great community, with a massive database of many, many areas of interest.
Access to contests & subscription offers like exclusive emails.
It's simple, and FREE!