Job Creators, Taxes and Regulatory Reform = Poppycock

August 14, 2011

Lately we’ve been treated to lectures about job creators, the people who will get us out of the fix we’re in by creating the millions of jobs we need to employ the millions of people who aren’t working. Republicans claim, as necessary elements for job creation, lower taxes and the elimination of regulations that limit business activity. Right or wrong, or as Stephen Colbert poses the question, Yahweh or No Way?

No way, in a big way! No one WANTS to pay higher taxes, and no one WANTS to be told he or she cannot do this or that!!! So it’s easy to come up with arguments for lowering taxes and eliminating regulations. And yes, it’s certainly true that the tax code is very complicated and fundamentally irrational, and that governmental regulations and the way in which they sometimes get enforced often seem nonsensical. Frustrating, yes, but interfering with the hiring or workers, and responsible for much or all of the current employment crisis?

Here’s the point:  I have represented business owners for 30 years, and have been a “job creator”–yes, attorneys do employ people*–for most of those years. I have never, not once, seen anyone make an employment decision based on tax rates or governmental regulations. To hire or not hire depends on one thing only, to wit:  Does the customer base demand enough goods or services to warrant the expense associated with hiring someone? Nothing much more to it than that, and I’ve never once heard a client or one of my partners say, “We could hire Joe or Jane, but that 28% marginal tax rate is a killer,” or “Gee, if the Arizona Supreme Court would just lighten up the disciplining of lawyers [I work in a highly regulated industry] we could hire some more people.” Simply, no one makes these statements. Claiming lower taxes and less regulation equals more jobs serves the desires of those who make the claims, but there is no basis for thinking lower taxes or fewer regulations will produce more customers, and it’s “more customers” that matter when it comes to hiring decisions. So, poppycock and No Way!!!

*I was in a meeting several years ago, and a rather arrogant man asked me what I could possibly know about making a payroll. I guess he knew very little about the legal services industry!

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