Author: Nansen Malin (Page 1 of 4)

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Repeal of Section 1031 Tax-Deferred Capital Gains Exchanges Would Only Choke Economic Growth | Op-Ed

If you were asked to design a tax code from scratch, you’d want to make sure that the rules would encourage things like investment and economic growth. After all, the more you do to enlarge the economic pie, the less pain we feel when the government takes out its slice to do the work it needs to do.

Since 1921, the federal tax code has contained a provision — Section 1031 — that does exactly that. It allows taxpayers to roll over their capital gains and defer the taxes on investments in things like real estate, equipment, and vehicles, so long as the savings are rolled directly back into like-kind investments.

It’s important to note that the taxes are deferred, not eliminated. But the deferral helps businesses like farms and construction companies to reinvest and grow, ultimately driving job creation and economic expansion. And that, in turn, generates even more tax revenue in the process.

Repealing Section 1031 would be a short-sighted way to collect more taxes today while choking off economic growth in the future. The government estimates it could collect a little over $40 billion in taxes over ten years by repealing Section 1031, but Ernst and Young estimates that a repeal could cost the economy as much as $3.20 in growth for every $1 in tax revenues raised.

A farmer would dismiss that as “eating the seed corn.” You’d have to be pretty bad at math to give up $3.20 to get $1 in return. Keeping Section 1031 in place ensures investment and economic growth, which we need now more than ever.

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Centralized, Government-Controlled Price Fixing of Healthcare Does Not Work | Op-Ed

Depositphotos_30765241_s_editedIn the wake of the Affordable Care Act (ACA), healthy, hard-working Americans are facing higher health care costs and a sea of broken promises. Higher premiums, lost providers and plans, as well as increased prescription drug costs are among the negative side effects stemming from ACA implementation.

Amid the ACA fallout, efficient and already successful health care programs are at risk from interference. Medicare Part D, a prescription drug coverage program for seniors and disabled individuals, is the all too rare example of a successful government program. What makes this program work is the market-driven principles and competition built into its design. As a result, program subscribers have access to prescription drug benefits that are offered at substantial savings while simultaneously saving taxpayer money. Over 30 million are enrolled in Medicare Part D, chances are you know someone who is.

From a fiscal perspective, Part D should be viewed as a windfall for our national budget. According to the Congressional Budget Office (CBO), from 2004-2013, government spending on the program was 45 percent, or $348 billion less than originally projected. Unfortunately, myopic Beltway bureaucrats annually target Part D during the budget process and will again attempt to strip the market-driven components that make it efficient and widely popular among seniors and disabled veterans.

This is the real head-scratcher:  Why then would the Obama administration undercut Part D when it is working efficiently and coming in under budget?  It is dumbfounding. Yet, the federal government continues to look for ways to undercut Part D reducing the number of available plans, asserting price controls and instituting a rebate program that would reduce pharmaceutical research and development of new products.

Centralized, government-controlled price fixing is not the answer, and it would only drive prices higher. Furthermore, this is inconsistent with market-based reforms that promote competition and consumer choice. With Part D, prescription cost increases have held steady with the rate of inflation, and seniors have options from a variety of plans to select one that best suits their individual needs. So, rather than undermine Part D, the market-driven approach should be championed as an example of what is working in federal government.

The benefits of Part D extend beyond the fiscal savings. By improving access to prescription drugs, the overall health condition of beneficiaries is improved, decreasing hospitalization rates is realized. According to a Harvard study, Medicare Part D significantly reduced the likelihood of hospitalization for eight conditions, leading to nearly 4 percent fewer hospital admissions, or an estimated 77,000 fewer annual admissions.

While mounting evidence exists to save Part D, it is far from safe. It will likely be on lawmakers’ and regulators’ radars yet again. It is critical that we continue to defend and maintain Medicare Part D. Instead of derailing its success, the federal government should model other programs after Medicare Part D. As the numbers show, the security of Part D is not merely a concern for seniors and the disabled population. It impacts us all. The bottom line is that centralized, government-controlled price fixing is not the answer. All taxpayers benefit from Part D, and Washington, D.C., should stop its pattern of fixing something that is not broken.

[Image manipulated under license: Depositphotos.com]
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Cap-and Trade is a Stealth Tax—Don’t Let Inslee Or Anyone Else Tell You Otherwise | Op-Ed

In a previous post, I wrote about two of Gov. Inslee’s highly ironic tax hike proposals. In this post, I’ll write about a third: His de facto tax wrapped up in his cap-and-trade proposal.

The objective of this plan is allegedly to get organizations emitting more than 25,000 tons of CO2 to rein in their carbon dioxide output. In reality, like most things progressives do that increases revenue, the objective is really the revenue bump, but never mind that. Let’s pretend that this is all about what Inslee says it is about, and nothing more. Would you be surprised to know that one of the companies set to see a huge bump in its tax bill is REC Silicon Solar, which makes Solar Polysilicon for use in solar applications?

According to data analyzed by the Washington Policy Center, REC will be forking over in excess of $4 million a year if this plan goes through.

Would you also be surprised to know that Wafertech, owned by Taiwan Semiconductor, which appears also to be in the solar business, would be hit?

According to the analysis, Wafertech will be forking over about $3.5 million a year, if the plan passes.

Others that would be getting a big tax bill include facilities that appear to be generating hydrogen, which is what a lot of environmentalists would like to see power our cars in future, because it’s greener than gas.

These aren’t the types of entity that a lot of progressives think of when they think about corporate polluters that need to be made to pay up for emitting too much CO2. In fact, they seem like the kind of businesses that progressives usually want to promote, stimulate and see more of because they are tied into the green energy economy and provide those famed green-collar jobs. So this is another respect in which Inslee’s proposed tax package is rife with irony.

Also set to be hit with a big cap-and-trade bill under the Inslee proposal are the University of Washington and Washington State University. Could that mean higher fees for students? If so, that’s another ironic, anti-progressive aspect of what Inslee is pushing. Aren’t progressives supposed to be for making college cheaper? (I will refrain from commenting on President Obama’s plan for 529 accounts here).

Again, legislators should think carefully about what is being proposed, and recognize that there’s a better way of dealing with budgetary challenges than this plan.

Washington Gov. Jay Inslee

Gov. Jay Inslee’s New Tax Hikes Are the Wrong Direction for Washington State | Op-Ed

In light of ongoing state fiscal issues, Washington Gov. Jay Inslee is proposing a raft of tax hikes.

There are numerous problems with all of these proposed increases (and I’ll write about several of them in this and succeeding posts), but Inslee’s desired jump in taxes on cigarettes sold in our state is one of the three more ironic ones he’s pushing. Why? Inslee has always billed himself as a progressive Democrat. And yet he’s going all in for a tax hike that would if enacted be extremely regressive, as well as very fiscally unsound.

This 2012 study found that poor smokers spend about 14 percent of their household income on cigarettes. According to the left-leaning Center for Budget and Policy Priorities, 29 percent of poor adults smoke, compared to 18 percent of non-poor adults.  A 2007 study by the Heritage Foundation indicates that even before the economy hit rock bottom, more than 25 percent of smokers lived below the federal poverty line, with a further 25 percent living between the poverty line and 200 percent of it. These are the people Inslee wants to tax more, and in so doing, he wouldn’t even be shoring up the state’s revenue base in a sound manner.

There’s a general economic principle that if you tax something, you get less of it. In this case, what Inslee is trying to do is more heavily tax the consumption of legally purchased cigarettes. That might work well from a fiscal standpoint if no smokers were going to quit in response, or alternatively locate, buy and consume untaxed cigarettes that are purchased illegally. But when cigarette taxes go up, some smokers do quit just like anti-tobacco campaigners want them to (we’ll come back to Inslee’s solution to that problem in a bit). But most shift to buying illicitly sold smokes. Inslee doesn’t seem to have a solution to this conundrum, despite the fact that he’s trying to hike the tobacco tax in an already high-tax state that is full of Native American reservations where state tax is often not charged on cigarette purchases made by non-tribal buyers, and which borders Idaho (which has a much lower tax rate than Washington).

Given this situation, it is unsurprising that Washington has one of the highest rates of inbound cigarette smuggling of any state. Nearly half of all cigarettes consumed here are smuggled and thus have gone completely untaxed by Olympia or local governments. Nationally, cigarette smuggling deprives governments of $5.5 BILLION per year.  A fair chunk of this amount is the loss sustained by Washington.

It is unclear why Inslee wants to double down on this problem. Some more conspiracy-minded critics of his plan argue that by pursuing this kind of bad tax policy, he’s making it easier for Washington progressives to force through a state income tax, and a high one at that. More often than not, states that pursue cigarette tax increases wind up missing their revenue targets (in some cases, they even bring in less total revenue after the tax hike than they did before it, as happened in New Jersey and DC), meaning they have to find different, supplemental sources of revenue in future. In this case, that different, supplemental revenue source could be the kind of income tax we see in most American states, but which Washington voters oppose. Irrespective of the reason, doubling down on the smuggling and lost revenue problem seems to be exactly what Inslee is trying to do.

A second problematic component of Inslee’s tax plan is his proposal to jack up taxes on e-cigarettes. This, too, is ironic. Part of the logic for cigarette tax hikes is to force people to quit smoking or at least reduce their likelihood of killing themselves with cancer in chasing their nicotine fix. Higher e-cigarette prices mean more expensive devices of the type that a friend and her husband claim helped them quit smoking, and which various health studies and experts out there—including former U.S. Surgeon General Dr. Richard Carmona, former American Lung Association president and CEO Charles D. Connor, and Medical and Executive Director of the American Council on Science and Health Dr. Gilbert Ross—seem to think are less likely to kill than inhaling smoke from a tobacco-filled stick the user set on fire. (Side note: The R Street Institute also has a good post on why this tax increase is silly). But by setting a high tax rate on e-cigarettes, I suppose at least theoretically, Inslee might be dealing with the revenue problem posed by people quitting smoking, as long as they all try an e-cigarette instead of going cold turkey or using Nicorette (given the weather in the Pacific Northwest, I bet most will just go the Nicorette route, though).

Legislators should think carefully about the lack of logic behind these proposals as the session gets underway. There are better budgetary solutions than tax hikes, including the regressive, fiscally unsound and just plain nonsensical ones discussed here. I’ll write more about the third highly ironic tax hike proposal from Inslee in a separate post.

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President’s Exec Order Should Not Stop Republicans from Leading on Immigration | Op-Ed

You would have to be living under a rock to not notice all of the attention being given to the issue of immigration reform right now.  Conservatives have sometimes appeared to want the issue to go away entirely – yet it will not.  And it should not.  Republicans will now control both houses of Congress and this is our chance to lead on this issue.  We can fix the broken system our way.  Our conservative values should mean that we are stronger on immigration and we need a system that strengthens America.

The President’s recent executive order won’t address the root causes of our broken system, and so there is still an enormous opportunity for Republicans to enact real improvements and address the structural problems he is choosing to ignore.  We need a modern immigration system that drives our economy rather than ignores it.  We need to attract and retain the workers our farms, our laboratories, and industries across the economy need to compete and grow.  That requires an immigration system that responds to bull markets and bear markets by adjusting the number of visas we allocate according to the needs of our economy.  To address these needs we need the Republican-led congress to pass comprehensive legislation.

The President’s executive order won’t change anything.  The economic imperative for Congress to enact immigration reform still exists.

Reforming our immigration laws will help promote new business growth – a goal that many immigrants and conservatives share.   A Partnership for a New American Economy report shows that in 2011, immigrants started 28 percent of all new U.S. businesses and contributed more than $775 billion dollars in revenue to our Gross Domestic Product.  Foreign-born researchers and students at our nation’s colleges also help spark business innovation with new products and ideas.  This reports shows that more than 75 percent of all patents awarded at our top universities had at least one immigrant inventor involved in their production.  Foreign-born investors also help bolster the economy, accounting for over 80 percent of investments in cutting-edge industries like information technology and digital communications.

Republicans must act now to create a more streamlined immigration policy based on market-driven principles.  A market-based approach will drive new job creation and increase economic growth nationwide.

In addition to very powerful economic reasons for reform – there are also political ones as well that we cannot ignore.

Many people hold the mistaken belief that immigrant voters in the United States are predominantly liberal.  However, another recent PNAE study found that notion is simply not true.  In fact, more than 50 percent of immigrants do not identify with either the Republican or Democratic Party. These votes are up for grabs.  And, it is imperative that Republicans thoughtfully consider issues important to this growing and politically unaffiliated group of voters.

This study also found that immigrants and conservatives often hold many of the same moral and religious values.  In fact, 73 percent of Hispanics who identify as Evangelical Christians were opposed to abortion, compared to only 43 percent of the U.S. population as a whole.  Fifty-three percent of black immigrants oppose gay marriage, which is nine percentage points higher than the national average.  And, 22 percent of immigrant voters cited “moral values” as the most influential factor in determining their votes in the 2004 election.

Younger immigrants also tend to be more religious and conservative than their U.S.-born counterparts.  41 percent of immigrants aged 18-29, rank religion as being “very important.”  Due their strong religious faith and personal commitment to family, many immigrants indicate they would respond favorably to a conservative message if Republicans would act on the issue of immigration reform.

Conservatives must recognize the profound impact that immigrants have on America’s economic, cultural and political life. By implementing meaningful immigration reforms, Republicans can help fix the ineffective and broken system we have in place today.  The result will not only create jobs and build businesses, but also help Republicans gain support from this important group of voters.

[Featured image: Donkey Hotey]
Closed America

It’s Time for Immigration Reform | Op-Ed

Closed AmericaSimply stated, immigration reform is about economic growth. In Washington state alone, if undocumented immigrants followed a path to legal citizenship it would generate more than 12,700 jobs and more than $1.1 billion for the state, according to Regional Economic Models, Inc. Vital industries are facing substantial labor shortages, which could be filled by immigrant workers and ultimately drive job creation across the state.

Our broken immigration system is tying the hands of business owners and farmers from hiring necessary workers to operate their businesses. Additionally, our outdated system makes it highly challenging for foreign-born, Washington University educated, high skilled workers and innovators from having a chance to remain in the state. Meaningful immigration reform is critical to address these important issues facing our state’s economy.

Large and small companies in the science, technology, engineering and mathematics (“STEM”) fields are facing significant labor shortages of high-skilled workers across the country, and Washington is no exception. A 2011 study by McKinsey and Company found that one in every four science and engineering firms reported hiring difficulties.

Unfortunately, American students pursuing careers in STEM fields is growing at less than one percent per year, yet according to the Partnership for a New American Economy, 47.3 percent of Engineering PhD graduates in Washington’s research-intensive universities are temporary residents. Although these students want to remain in the state and companies want to hire them, our fragmented immigration system imposes arbitrary limits to the number of high-skilled visas allowed each year. This forces a significant number of immigrants educated in our taxpayer funded universities to leave the country, while creating an unnecessarily problematic structure for our businesses to recruit essential workers.

The loss of educated and motivated immigrants has a substantial impact on job creation. In the STEM industry, an additional 4.3 jobs are created for every high skilled technology job filled. Moreover, new businesses are essential to drive job creation, and the rate at which immigrants start new businesses grew by more than 50 percent between 1996 and 2011. In fact, immigrant-owned businesses employ one out of every ten American workers at privately owned-companies and add more than $775 billion dollars of revenue to the Gross Domestic Product.

It is not acceptable to allow the loss of taxpayer dollars invested in the education of foreign-born students and then make it virtually impossible for them to remain in the United States to return our investment by driving job creation, and stimulating economic growth. The passage of meaningful immigration reform is long overdue, and I am calling on Congress to pass substantive reform legislation this year for Washington’s economy, and for our country as a whole.

[Image used under license: depositphotos.com]
GabeSherman

I Told You So: Book Written By George Soros Supported Author, Gabriel Sherman, Is a 600-Page Anti-Roger Ailes Attack Ad

9780812992854Gabriel Sherman said he was writing a fair take on Roger Ailes, the Northwest Daily Marker warned you, here that it would be attack journalism. When Gabriel Sherman said it would be accurate, the Northwest Daily Marker warned you that accuracy is not Gabriel Sherman’s strength and when Gabriel Sherman and his water carriers demonstrated that Sherman was practicing stalkeratzi tactics, the Northwest Daily Marker gave him the opportunity to do the right thing. Then Sherman’s book came out.

If one takes a swing at the King, one should be sure to knock him out. Gabriel Sherman has not even knocked Roger Ailes down. We are not the only one’s who noticed. Behold: the NY Times, the Washington Post, Slate, the Baltimore SunUSA Today and The Hollywood Reporter. Not a right wing writer in the bunch. And one, Erik Wemple of the Washington Post, was a very consistent and constant defender of Gabriel Sherman and his tactics … even tactics like cyber harassing Ailes’ wife.

What even the left wing media has noticed is that Sherman–despite the years-long time to research–has simply gotten it wrong. From the big picture–Sherman’s imaginary whale, an Ailes that divided America, failed to appear–to the details, where Sherman’s own fact-checkers erase one of Gabriel Sherman’s few salacious selling points of “The Loudest Voice In The Room,” the book cannot back up its charges and adds nothing of note to the man with whom the author never spoke in its pursuit.

After four years of studying Roger Ailes, Gabriel Sherman failed to do the one thing that any author with that much time to focus should have easily accomplished. In nearly 600 pages of writing, Gabriel Sherman failed to prove the very thesis that appears on the cover of his own book, namely that Roger Ailes somehow divided a country.

A TV network dividing a nation is an odd case to make in the first place; the math is simply not on Sherman’s side and no “writing around” his subject (as Gabriel Sherman was left to do when Ailes didn’t speak with him) gets anywhere near proving Sherman’s central thesis on Ailes. Yes, Fox News dominates cable news and has for 141 consecutive months, but about 95% of Americans never watch the network. Based on total viewers, the three most popular programs on Fox News in 2013 account for a combined viewership of roughly 6,199,000 people in a country of over 319,000,000 people (or about 239,250,000 people over eighteen years of age). Even if every person who views Fox is somehow magically changed into copies of Gabriel Sherman’s imaginary Roger Ailes, 6 million people who watch TV a lot simply do not divide 239 million who can’t be bothered to tune in. As Erik Wemple points out, Gabriel Sherman himself cannot explain his assertion.

If Sherman had only missed on the big picture but added details that provided the reader a new understanding of Roger Ailes, the book would be, while not meaningful, at least interesting. But, in “The Loudest Voice In The Room,” the reader simply cannot trust the details. Gabriel Sherman recounts a story of a dinner between two media power brokers, an intimate dinner between Roger Ailes and Discovery Network President, David Zaslav. According to Gabriel Sherman, at that very dinner, Roger Ailes issued an anti-semitic slur against Mr. Zaslav. Random House, the publisher of “The Loudest Voice In The Room,” found that particular passage so important that it was among the teaser passages they released to the media. The problem? According to the two men who actually attended the dinner, it never happened, as Breitbart notes by way of quoting The New York Times. To make the problem worse and to drive the trust rating for Sherman even lower, readers don’t learn that both men deny it from Sherman’s prose, they only learn it from the footnotes of “The Loudest Voice In The Room” … if anyone besides book reviewers–or Random House’s fact checkers and lawyers–ever read the footnotes.

By failing to provide any proof at all for his central theme that Ailes has divided a country, to selling stories that his own fact-checkers do not support, the rest of the tales about Roger Ailes that Gabriel Sherman relays in “The Loudest Voice In The Room,” while salacious and larger than life, can only been seen in the light of what they actually are: second and third hand musings in a book that hoped to reveal a new Citizen Kane, but instead introduces readers to a new Kitty Kelly.

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Nansen Malin: Boeing Tax Credits Are Not a Trade-Off for Meaningful Tax and Regulatory Reform | Op-Ed

Governor Jay Inslee’s surprise announcement of a deal with Boeing to build their next-generation airliner in Washington has left our Legislature with a lot to accomplish in their special session. At the top of the agenda is a $10 billion transportation bill and an $8.7 billion package of tax credits for Boeing through 2040.

The Governor hopes the pressure of a deal to keep Boeing in Washington will get legislators to agree to the transportation plan that includes a big tax gas tax hike. But until we reform the wasteful spending and bloated bureaucracy that make transportation projects cost twice as much as other states, we’ll never be able to afford the repair, replacement and improvement our transportation system needs. An efficient transportation system is important to not just Boeing, but all the citizens and businesses in the state, and reforms that make highway projects affordable is the first step, not ever-increasing taxes and spending.

While tax credits can be helpful in encouraging business expansion and jobs, how much of Boeing’s tax credits are simply to offset the cost of the state’s anti-business regulations? Gov. Inslee promised Boeing that their aircraft factory permits would be put on a fast track, but why aren’t we making permitting easier for all businesses? Boeing is concerned (like all commercial operations in the Puget Sound region) that new Department of Ecology water quality regulations will be impossible to meet, effectively shutting down all development. Gov. Inslee promised them a “balanced, practical” plan, but shouldn’t he have already instructed the DOE not to harm businesses with senseless over-regulation? And couldn’t a better deal have been reached if the Workers Compensation reform that Boeing supported had been passed in the last session?

The pressure is on the Legislature to quickly pass all the elements of this deal; but we need legislation that benefits all the people and businesses of Washington. If Boeing needs protection from our state’s job-killing policies in order to remain dynamic in Washington, so do the rest of us.

 

Nansen Malin is the Washington State Director for Americans for Prosperity, an organization committed to educating citizens about economic policy and mobilizing those citizens as advocates in the public policy process.

United States Visa

Immigration Reform Measures Could Fill Desperate Need in Washington State for STEM-Educated Workers

All of Washington must have been proud earlier this year when one of our very own was awarded the 63rd National Teacher of the Year.  Jeff Charbonneau, a 9th-12th grade chemistry, physics, and engineering teacher from Zillah High School, was also praised for starting the school’s first robotics team.

Charbonneau’s work and the work of so many other Washington teachers are crucial, and the state continues to lead the nation in a tech-driven economy.  The presence of Washington-headquartered companies such as Microsoft and Amazon has helped the area outperform the Silicon Valley with a 7.6% job growth in STEM fields over the past few years.

However, while STEM jobs are among the fastest growing in Washington, we still may be failing to produce enough qualified workers to fill them.  By 2018, the U.S. will need to fill nearly 8,654,000 STEM-related jobs, and approximately 303,000 of those jobs will be in Washington, according to the U.S. Bureau of Labor Statistics.

The challenge of the nation’s STEM jobs gap was on display earlier this year when the U.S. opened the period for companies to apply for H-1B visas that allow them to hire foreign workers to fill vacant high-skilled positions.  This year, the full allotment of 65,000 of the visas was exhausted within just five days.  In the previous year, it took 10 weeks to reach the cap, which was set in 1990 and has not been updated to reflect a more technology-driven economy.

The need for addressing the STEM jobs crisis is clear, and Congress is considering the SKILLS Visa Act, legislation that would reform our high-skilled immigration program by raising the outdated cap on H-1B visas so that companies can immediately fill vacant STEM-related positions with high-skilled foreign workers.

The legislation also wisely looks forward and encourages the creation of a national fund to help states strengthen STEM education programs in the long-term. Because the crisis demands a solution for the long term, Microsoft and many other tech companies have long-supported establishment of a fund supported by fees companies pay for H-1B visas.

The fund would be the only federal funding stream dedicated to STEM education in the states.  It would also complement the state’s recently passed bill that will boost STEM education for students from pre-school through college.   Ultimately, Washington’s education system and our economy will be well-served if we’re able to produce more teachers like Jeff Charbonneau, who are trained in STEM.

Reforming our immigration system will help fill jobs in Washington now, but its impact will reach even further. According to a July study from Regional Economic Models, Inc., reforming the nation’s immigration system will significantly boost Washington’s workforce by adding more than 2,600 jobs by 2014 and more than 12,000 jobs by 2020.   The study also notes that reforming the H-1B visa program will add more than $555 million to Washington’s Gross State Product in 2014 and $4 billion dollars by 2045.

Washington has taken the lead to ensure the state has a stronger STEM education pipeline. When congressional members return from August recess, immigration reform and the SKILLS Visa Act specifically should be at the very top of their to-do list.

 

[Featured image used under license; depositphotos.com, credit: Melpomene]
Leprechaun

SeaTac $15 Minimum Wage Initiative is Another Example of Liberal ‘Leprechaun Economics’

LeprechaunThis fall the citizens of SeaTac will vote on raising the minimum wage in their city to $15.00 an hour. In response to the initiative’s backers anticipating a windfall for the city’s workers, I have one question: Exactly where will this wealth come from?

If we could vote ourselves rich, we would have done so long ago. No, this extra money doesn’t magically appear in worker’s paychecks, it is taken from a few in the city and distributed to many. But what is even more shocking than the prospect of a majority voting themselves the property of a minority, is the sad fact that the initiative’s supporters don’t realize that the greatest harm will fall on those who they think they are helping. Let me explain.

First of all, the predictable response of businesses will be to lay off employees. A business with 3 waiters or housekeepers currently at $10/hour will reduce their staff to 2 workers at $15/hour. The least productive of the 3 will be laid off, and the remaining 2 will be asked to work harder. A good portion of the Sea-Tac worker’s raise will come from the paycheck his neighbor no longer receives.

This minimum wage will not just apply to those on the bottom rung of the employment ladder; it will bump up wages for everyone. The skilled worker will demand to be paid better than the unskilled worker now earning $15/hour, the supervisor more than the supervised, the manager more than the supervisor, and so on. This is why the union is backing the initiative, their members don’t make minimum wage, but they are expecting a $5/hour raise across the board. This initiative will cost business far more than just $5/hour for their lowest paid employees.

Some businesses will try to avoid the expenses this initiative imposes (not just a wage increase, but mandated sick leave and regulations on hours and job security) by reducing the number of hotels rooms or employees to be exempted from it. Again, this will mean fewer jobs.

In the end, much of the costs of the Good Jobs Initiative will be from what liberals see as that endless pot of leprechaun gold, also known as “profit”. But, whether it is a large corporation or mom-and-pop operation, a reduced profit (or a loss) has very real results. When operations become less profitable, expansion is put on hold or abandoned, maintenance is deferred and even the businesses that can not relocate will start thinking about an exit strategy. With labor costs substantially higher than just across the city limits, the City of Sea-Tac will see few businesses willing to set up business there. No growth equals no new jobs.

Like all liberal policies, this initiative hurts the very people it purports to help. Some of the working poor will see a benefit, but at the cost of a lost job for others, and the loss of the opportunity to get a job for many more. In the end it just replaces what some deride as a non-living wage with no wage at all.

 

[Image used under Creative Commons license with attribution; credit: wyatt_e]

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