Combine Corporate Tax Reduction With a Jobs Tax Credit To Keep and Grow Jobs in America

Yes, President Trump’s proposed 15% corporate income tax will make America great again as the best place to start and grow a new company, encourage American firms to stay in the US, stop off-shoring jobs, and bring their overseas cash back to invest in the US. Even more importantly, it will change the way corporate CEOs run their businesses to avoid taxes, such as unhelpful corporate mergers and acquisitions designed to eliminate jobs. More wrong decisions are made in business for tax reasons than any other, and the higher the tax, the more wrong decisions we get.

But let’s do it right. Let’s reduce the corporate tax without setting up a big tax differential for lawyers and accountants to find ways to shift high personal income into low-tax one-person corporations that don’t produce more jobs. Let’s do it in a way that will help American workers compete more equally with high-tech robots and lower-wage foreign workers. Let’s do it in a way that will do more than allow corporate managers to use their increased cash simply to buy back corporate stock or accumulate cash so that shareholders can benefit from lower capital gains or dividend taxes.

We can do all of the above by keeping the statutory corporate income tax closer to the personal income tax rate, perhaps 25%, and then get additional tax reduction with a Jobs Tax Credit so that our job-creating businesses are the ones that will benefit the most from the additional tax reduction. A $10,000 Jobs Tax Credit for every full-time employee working 12 months each year in the USA could bring the average effective corporate tax rate close to Mr. Trump’s desired 15%. We can pay for much of the lost tax revenue by eliminating the extensive corporate welfare deductions that support an army of lobbyists, lawyers and accountants paid for by big businesses.

Best of all a Jobs Tax Credit would be extremely simple, and thus available to every business, large and small. The only paper-work requirement is one new box on the standard W-2 form already in use for reporting employee income. This would be a huge benefit to small businesses, our most important job creators, who cannot afford the high-priced lobbyists, lawyers and accountants who work for big businesses. (Note that this is a credit for every full time employee in the US, not just for new employees as was proposed several times in the past and subject to much gaming of the system.)

A Jobs Tax Credit will encourage corporate management to see labor as a genuine asset, rather than simply another cost to be reduced to increase profits. Encouraging management to hire and not to fire will increase workers’ feeling of job security, helping the economy grow with workers’ increased willingness to spend. By encouraging management to hire, it will also work in tandem with welfare policies that encourage the unemployed to try to get a job.

Some may say that a tax incentive favoring humans over robots will work against economists’ calls for increased labor productivity, but economists must recognize that a continuing stream of wage income is essential for a growing economy. Robots do not pay taxes, and do not spend continuously for food and clothing and other living expenses. It’s true that a Jobs Tax Credit will raise the bar for installing robots, but this is a better way to favor humans than trying to tax robots, as some have proposed, and it will emphasize good robots installed to increase production rather than simply reduce wage and benefits costs.

In short, a Jobs Tax Credit will reward corporations for doing what their privileged corporate status intended them to do, namely, organize the efforts of many people to work together to meet society’s needs in ways none of us can do on our own, and it will most reward the businesses that grow the jobs we need to grow our economy.


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If I Had a Billion Dollars

If you had $1.2 billion to spend, what would you do with it? Before you answer, there are some strings attached. First, you are required to invest in electric vehicle technology, electric vehicle infrastructure, or something that would result in “zero emissions” vehicles. Now what would you do with all that cash? Answer: whatever the EPA dictates.

That is the crux of yet another EPA controversy. This week several free-market organizations (Competitive Enterprise Institute, Americans for Prosperity, Energy & Environment Legal Institute, FreedomWorks, National Center for Public Policy Research, and others) raised a fascinating legal issue about the settlement reached last fall between EPA and Volkswagen. A federal judge approved the deal in December, and one part of it is raising serious questions for the new Administration, according to a letter from the groups to President Trump.

The legal case stemmed from the automaker’s installation of “defeat devices” designed to cheat air quality rules in over 500,000 vehicles sold in the U.S. The consent decree provides relief for car owners, as well as penalties paid to the State of California and the Federal Trade Commission. But another part of the $15 billion agreement requires that VW invest $1.2 billion to foster electric vehicle infrastructure. What exactly does that mean? The decree does not specify where VW must spend it, but that it obtain EPA approval of the investment plan, and of spending plans every year. And EPA could levy massive fines should VW fail to comply every year. That EPA role in managing VW’s investment is now the issue.

You see, Congress has never given EPA authority or funding to oversee electric vehicle infrastructure development, much less to regulate the private investment of auto companies (foreign or otherwise). That was a major priority for President Obama, who promised in his 2011 State of the Union speech to put a million electric vehicles on the streets by 2015. Whether that is a similarly high priority for the new Administration ought to be for President Trump to decide. That’s why the groups signing this letter allege that the previous Administration used a legal settlement “to exercise the discretionary authority of future presidents.”

Legal settlements can help advance important policy goals. For example, when I was Executive Director of the Colorado Department of Natural Resources, we successfully negotiated the settlement of a case involving an accidental spill of beer into Clear Creek. Since many fish were poisoned, the state law required significant fines to be paid to the state wildlife agency. But paying lots of money to a state agency wouldn’t actually prevent future accidents, nor would it improve the environment. It’s just money changing hands. So instead, the brewery agreed to finance construction of a large system of manmade wetlands, which today treat effluent from both the brewery and the City of Golden, and which provide excellent educational opportunities for school classes learning the value of wetlands to water quality. That advanced the policy goals of our Administration, the city, and the brewery.

The difference with the EPA-VW settlement is that it advanced the policy goals of the outgoing Administration – in a way that could foreclose some options for the next. The groups writing to President Trump this week are asking two things. First, they want an analysis of how much this oversight activity will cost the EPA. Second, they want the EPA to “reassess its underlying commitment and authority” to oversee VW’s future investments. What that leads to is a call for the new Administration to exercise a “severance clause” in the settlement decree. That would allow the parties to remove that part of the deal without jeopardizing the consumer relief parts. But what will happen if the new Administration decides to do that?

Under the terms of the settlement decree, if the parties agree to cancel the EPA oversight portion, VW then has to pay the $1.2 billion to the U.S. Treasury. If you’re wondering what that has to do with the environment, or how it would improve auto compliance with clean air standards, I’m with you. Once again (to repeat a common theme), that is about money, not the environment.

So, if you had a billion dollars to help promote electric vehicle technology, what would you do with it? Most likely, you would invest in electric car companies, or those doing the best work in research and development. The last thing you would do is give it to the EPA, or pay it to the U.S. Treasury.

(This article is reprinted with permission from Resources and Reality)

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The Marketplace is Speaking. Are the Counties Listening?

After CoStar Group, a provider of real estate market intelligence, announced last fall its intention to move its research division headquarters to downtown Richmond, the company offered employees from Washington, D.C., Atlanta, San Diego, and Columbia, Md., an opportunity to move to Virginia. A big concern of Senior Vice President Lisa Ruggles was how many would want to make the move. “I had no idea of how many people would be interested,” she said.

She was surprised that 150 applicants responded, Ruggles told Richmond BizSense. After they took part in three-day tours of the metropolitan area, she says, “I told them that they were all welcome to come to Richmond, and the place erupted. Everybody was clapping, people were crying; it was an amazing sight to see.”

AvePoint, a New Jersey provider of Microsoft cloud services, had a similar experience, according to BizSense. “We estimated that when we would be transferring people down here that we might not get a ton of people, because Richmond is very different from New York,” said AvePoint COO Brian Brown. “That’s proved absolutely not to be the case.”

Big selling points: a lower cost of living, shorter commutes and a high overall quality of life. “I think one of the things people are pleasantly finding, especially people who have families, is how cheap it is to find a really nice place to live and how easy the commute is,” Brown said.

Here’s the really interesting thing:

CoStar’s Ruggles said it has been interesting to see where employees have chosen to live in Richmond. Of the 120 employees who made the company’s initial move, she said the majority chose places such as Deco at CNB and other apartment communities in Tobacco Row and Manchester. Only two employees chose to live in Short Pump, said Ruggles, who herself just closed on a house in the West End.

“Coming from D.C., a lot of our employees don’t have cars, and that was not something they were wanting to run out and buy, so a lot of people ended up in locations where they could walk to work,” Ruggles said. “We have found that, because that group relocated from D.C., where they’re used to taking the Metro or walking or riding their bike, they’re continuing to do that here.

Bacon’s bottom line: Richmond’s urban core exerts a strong appeal to highly skilled and educated employees — the affluent, creative-class types who pay more in taxes and spend more in the local economy — from other cities. If the region wants to attract more employees like them, along with the companies that employ them, the city and counties need to facilitate the building of the kind of communities these people want to live in. That means more moderate density, more mixed-use development, more grid streets, more investment in streetscapes, and, where economically justified, more mass transit.

That’s an easy sell for Richmond, most of which was laid out according to the dicta of traditional city planning. It’s a harder sell for Henrico and Chesterfield Counties, built according to the principles of suburban sprawl. The marketplace is yelling loud and clear what it wants. As a Henrico resident with a vested interest in the county’s long-term fiscal viability, I hope county officials are listening. If they’re not the City of Richmond will kick our butts in the economic development game.

(This article first ran in Bacon’s Rebellion on May 5, 2017)
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Demand Anticipated for Jobs in Health Care, Retail

What jobs will be in hot demand in the Richmond region during the next decade?

Jobs in the health care and social assistance sector and in the retail industry top the list.

For instance, the health care and social assistance sector is expected to need nearly 40,000 workers in the Richmond metro area over the next decade, according to Chmura Economics & Analytics’ JobsEQ technology platform.

About 19,000 of those jobs are needed because of growth in the health care sector, while the remainder represent positions that will be open because health care workers are retiring or moving to different occupations.

Within the health care sector, registered nurses top the list of growing occupations with nearly 5,000 more nurses needed in the region over the 10 years. About 2,000 of those nurses represent growth in the health care industry, while the remainder are a result of employees retiring or moving to different occupations.

Personal care aides, nursing assistants and home health aides round out the top four occupations in demand in the health care sector — and each of those occupations is expected to increase by more than 2,000 workers over the next decade.

The retail trade sector is second on the list of expected job openings over the next 10 years with 26,000 openings expected.

Of the expected openings in the region, about 4,000 are because the retail sector is growing. The remaining 22,000 jobs are a result of those retiring or moving to different occupations.

Retail sales positions top the list with nearly 8,000 positions to be filled, followed by cashiers at about 6,000 and stock clerks and order fillers with nearly 2,500 jobs.

And for students looking for jobs, more than 37,000 positions were available in the Richmond metro area during the past 30 days, according to the JobsEQ analytics.

More than 2,000 openings in the region were for retail sales jobs.

Registered and critical care nurses also were at the top of the list with nearly 1,500 job postings by employers in the area.

Demand also is strong for those with an information technology skill set. More than 800 job postings in the region over the past 30 days were for computer-user support specialists, and nearly 500 were for application software developers.

(This article first ran in the Richmond Times Dispatch on May 1, 2017)

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Environmental Ideas Rarely Mentioned

President Trump’s proposal to reduce the Environmental Protection Agency’s $8.1-billion budget by $1.6 billion was cut to an $80-million trim in the omnibus spending bill. However, the EPA funding and staff controversy will undoubtedly resume during the next budgetary battles in September.

That’s fueling consternation and con jobs in the heartland. According to press releases, funds for cleaning up the Great Lakes, eliminating lead poisoning, stopping oil pollution and “ensuring justice” for affected groups are “on the chopping block.” Community leaders, government officials, academics and activists will therefore meet May 10-11 in Chicago for a Freshwater Lab Summit, to “engage the public” and map out strategies for preserving Obama environmental staffs, budgets, programs, policies and priorities.

Women, minorities and low-income communities often “bear the brunt of environmental degradation,” say conference organizers, who plan to emphasize “rights” to clean water, “regardless of race, wealth or class.” Speakers include mayors, opponents of oil pipelines and exporting Canadian water to the United States, proponents of sustainability and “environmental climate justice,” and an expert on the role of water sharing and management in “peacemaking, diplomacy and economic equality.”

The summit promises to be lively, somewhat informative, certainly politicized, and likely to energize more of the resistance, rallies, recriminations, rabble rousing, rage, rants and riots that have dominated the U.S. political scene since the November 2016 elections.

Here are a few thoughts that speakers and attendees might want to consider, but most likely will not.

As I’ve noted previously, since EPA was created in 1970, America’s air and water quality have improved dramatically, to the point where most serious pollution concerns are rare and isolated. Cars have eliminated 98% of the pollutants that they emitted 47 years ago. Coal-fired power plants now remove 80- 90% of the mercury, nitrogen oxide, sulfur dioxide, particulates and other dangerous substances that used to come out of their stacks. Factories and paper mills have done likewise with air and water emissions.

However, as our laws, technologies, and changed corporate and citizen attitudes resolved most of the chronic environmental problems of yesteryear, EPA and the environmentalist movement set new agendas and priorities. They became ideological, politicized and determined to control what Congress, the states and citizens never intended them to regulate: lingering traces of air pollution, climate change, our entire energy and economic infrastructure, and nearly every rivulet, puddle and other waters of the USA.

The Obama EPA also engaged in illegal experiments on humans; when their results proved that microscopic soot particles are not deadly, the agency ignored the evidence. It also claimed plant-fertilizing carbon dioxide “endangers” America and must be slashed by de-carbonizing and de-industrializing the US economy, under the agency’s Clean Power Plan and social cost of carbon scheme.

It held “listening sessions” in Chicago and other cities where abundant college and other activists could easily testify, but affected miners, factory workers and farmers would have to travel hundreds of miles – and then have their stories and concerns ignored by the regulators. They simply became Collateral Damage in a war on coal and affordable energy that brought green energy poverty to millions.

In the mostly former steel town of Middlebury, Ohio, jobs and people moved out, as dependency, despondency and drugs moved in. In September 2016, this city of 49,000 had 30 heroin overdoses in one week. Many factors played a role in the decline, but EPA’s regulatory warfare was clearly one of them.

Meanwhile, Flint, Michigan’s drinking water was laced with lead, because EPA, state and local officials were too distracted to safeguard what Chicago summiteers view as a basic right to clean water. Prevention and repair funds were spent on climate change and other agendas. Fixing this serious health problem is a high Trump EPA priority; the funds are not going to be deleted, as summit organizers claim.

Out in Colorado, EPA-supervised contractors unleashed a toxic flashflood from the Gold King Mine, contaminating river water for hundreds of miles. EPA waited an entire day before notifying impacted communities. It refused to provide adequate compensation and never punished anyone.

Will the conferees offer compassion and demand environmental justice for all these regulatory victims? Will they demand accountability for the inexcusable derelictions of duty by irresponsible regulators?

When they call for action to block more pipelines, will they even mention that new pipelines are needed to bring oil and natural gas from new fields to refineries and petrochemical plants that provide the fuels and products they use every day? That new pipelines are needed to replace aging pipes that could spring leaks? Or that pipelines are much safer than railway tanker cars and tanker trucks on our highways?

Will summit speaker and Milwaukee Mayor Tom Barrett explain the millions of gallons of untreated wastewater and sewage that his city still discharges into Lake Michigan every year?

In the context of “drastic” budget and personnel reductions proposed for EPA, will the “unprecedented coalition of mayors and community advocates” meeting in Chicago discuss the fact that EPA simply will not require so many people or funds, now that it won’t need a massive bureaucracy to control US lands, waters, farms, factories, energy and economic development, to “stabilize” Earth’s ever-fickle climate?

Staff and funding will still be more than adequate to clean up the Great Lakes, monitor and address drinking water and sewage problems in our cities, ensure that oil and gas pipelines are built and operated safely, and enforce factory and vehicle compliance with pollution standards. Fewer funds and personnel will simply be reallocated from the grand schemes of the Obama years to real remaining problems.

Will the conference recognize that federal regulations alone cost $1.9 trillion per year – prior to the regulatory tsunami of the Obama Administration’s final three months? The eight-year Obama era alone generated over $800 billion of those annual regulatory burdens. EPA alone was responsible for well over $350 billion of the overall bill, based on 2012 data from just the first four years of the Obama presidency.

These regulations – combined with countless thousands of criminal offenses embedded in them – impose an enormous burden on every business, industry, state, community and family in the United States. They are an incalculable drag on job creation, economic growth, family budgets, and the ability of families to meet medical, nutrition, rent, mortgage, college, retirement and other needs. They have an acute and disproportionate impact on poor, minority, single parent and blue-collar families.

They deprive people of their basic civil rights and environmental justice, often for few or no benefits.

Conference participants, community leaders, lawmakers and regulators should worry less about saving the planet, and more about doing their jobs and keeping little problems from becoming big ones. Less about exaggerated, fabricated climate risks, and more about actual pollution and joblessness risks. Less about rights and demands – and more about personal and shared responsibilities.

They should especially emphasize what kids and adults must do to succeed in life: Stay in school, study hard, graduate. Minimize drug and alcohol use. Don’t join gangs or become unwed teen parents. Get and stay married. Be parents, not just sperm or egg donors. Get a job, be on time, work hard, learn new skills, and parlay that experience into better jobs. Save for college or to move into a better neighborhood. Play a positive role in making your current home, neighborhood and school cleaner, safer, better. 

President Trump’s election was an equal and opposite reaction to the excesses, abuses and failures by previous administration. Yes, elections do have consequences. The Trump election has brought new visions, agendas, directions and policies for America: rolling back costly, excessive, intrusive regulations; reducing tax burdens; devolving more power and responsibility to states and cities; telling federal agencies to focus on actual remaining problems that should be handled at that level; and persuading more people and communities to take greater responsibility for their own success or failure.

These changes will help bring jobs, opportunities and prosperity back to America. They deserve a fair hearing at the Chicago summit and elsewhere, in civil conversations that truly involve all affected parties.

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