The fact of the matter is, if he had the business, he'd hire the employees, as they would be making him money.
Just like the myth that he'd "pay his employee's more" if he didn't have to pay their payroll tax. Odds are, he'd pay his employees the going rate for their labor. Or, if he believes his employees deliver an above-the-market quality of labor, he'd pay them at what is an appropriately scaled competitive wage. The rest he would pocket.
You hire someone because you need someone to do a job. You don't have a mythical set of employees doing nothing/odd jobs simply because you have a "tax surplus".
That's clearly not a fact at all! There are lots of things that companies do that aren't directly billable to clients. What is a fact is that either you spend the money paying someone to do something, or you spend the money paying someone to do nothing.
>That's clearly not a fact at all! There are lots of things that companies do that aren't directly billable to clients.
Yes. Like I said before, you hire for your business based on need. The idea you'd have "more employees" because of a "tax surplus" is a myth. Especially from business owners that condescend to their employees and coerce their votes. I've worked for people just like this guy, and believe me, the idea he is spouting off is ridiculous.
Is it just me? I find the phrase "tax surplus" to be Orwellian.
Do you mean keeping your own money? If so, why not just say so?
People hire based on need. But people also hire based on productivity, available workforce, labor laws, legal considerations, tenure, etc. There are all kinds of modifers to the basic "need" I may need another employee, but the bar might be so high to hire them that I don't do it. In that case, existing employees just have to work harder.
Simply because a company has a need doesn't change their break-even analysis. And taxes hit the break-even analysis directly as overhead. Right? Or am I missing something?
If you'll allow me to conceed you've got a point, I'd like to offer a rebuttal that takes us in a new direction.
(Again, yes, you're right about the break even analysis).
Aside from the basics (roads, schools, telephone lines) that the taxes on his employees pay for, there is one thing the payroll tax pays for as well: Unemployment insurance. Now, nobody wants their business to fail, but the failure rate for businesses is quite steep. This is a tax that literally protects the employees from the bad business decisions made by the business owner, even if he ends up bankrupt.
Unemployment also keeps the supply of labor at a fairly constant rate. Say I worked for one of this business owner's competitors, who went out business, and have a mortgage. To make ends meet, I immediately take a job in an unrelated field. Now, that business cannot hire me because I've stopped looking for a job. (I know, i'm simplifying here, bear with me.) Unemployment lets me spend more time on the market, looking for offers in my field.
Sort of like FDR's Treasury Secretary said about the New Deal. "People don't eat over the long term. They eat everyday."
The fact of the matter is, if he had the business, he'd hire the employees, as they would be making him money.
Just like the myth that he'd "pay his employee's more" if he didn't have to pay their payroll tax. Odds are, he'd pay his employees the going rate for their labor. Or, if he believes his employees deliver an above-the-market quality of labor, he'd pay them at what is an appropriately scaled competitive wage. The rest he would pocket.
You hire someone because you need someone to do a job. You don't have a mythical set of employees doing nothing/odd jobs simply because you have a "tax surplus".