Dan Popp
They'll never miss it
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By Dan Popp
September 10, 2010

No enterprise can exist for itself alone. It ministers to some great need, it performs some great service, not for itself, but for others; or failing therein, it ceases to be profitable and ceases to exist. — Calvin Coolidge

Most people seem to understand that taking money away from businesses and owners is a sure way to destroy jobs. A dollar sent to Washington for taxes is a dollar that cannot go to an employee in wages. We get that.

What some people don't seem to understand is that we are all owners. Higher than the CEO, higher than the Chairman of the Board, you are the Head Honcho, the Big Boss, the Le Grand Fromage. You personally make choices that drive and steer hundreds of businesses, and affect thousands of jobs.

Let's say that every day on the way to work I buy a cup of coffee. It's bit pricey at $2 a cup, but it's very good coffee and I'm worth it. You'll just have to take my word for that.

Now let's say that the government decides to tax me an extra $500 a year. They'll never miss it, I've heard even some "conservatives" say. At tax time my wife and I sit down and try to figure out where we can trim the budget to pay the IRS that additional five hundred. Being the practical woman she is, she suggests, "You could cut out your daily donation to the Juan Valdez Relief Fund."

She has a point. So I start driving straight to work, bypassing the coffee shop. This saves enough money over a year to pay the new tax. Now if other people are taxed similarly (and they are), and if they make similar decisions about how to pay the tax (and they do), very quickly the owner of the coffee shop sees her daily receipts dwindling. Now her business budget has to be trimmed, just like our personal budget. Denise the counter girl is let go.

Poor Denise was laid off because of a decision by her boss, prompted by a decision by me (really my wife), set in motion by a decision by Congress to tax those disgusting rich people who will never miss it. Denise is 22 years old. Odds are that she voted for the very people that just eliminated her job. She, in a roundabout way, fired herself.

The trap that people fall into when thinking about these things, I fear, is the trap of They'll never miss it. Five hundred dollars does not equal a job for anyone. So there's no way that such a little bit (!) of extra taxes could increase unemployment. But it's not just money out of my pocket, is it? It's money out of your pocket and thousands of other people's pockets. We should think of these little bitty tax bites as incremental jobs. Five hundred from me, five thousand from someone else, and pretty soon you've piled up enough increments to decrement one whole job.

Now, jobs are a little bit like love and happiness: you'll never catch them if you pursue them directly. We can't create jobs by trying to create jobs. And no business exists to create jobs, either; businesses exist to make money. They do this, as Coolidge observed, by serving customers. While pursuing the objective of making more customers happier, in order to reach the goal of more money, the entrepreneur may decide it would be beneficial to hire some help. At the very least, the thriving business will provide incremental jobs for contractors, suppliers and service professionals.

That's how jobs are created. Not by setting out to create jobs, and certainly not by government programs to create jobs. Jobs are a byproduct, an unintentional side effect, of the effort to please customers. This leads to the all-important question:

Since politicians say they want to "create jobs," and since jobs are created indirectly by businesses delighting customers, how can our government help businesses delight customers? Remember, we're talking about the same folks who passed Obamacare over the piercing screams of about 70% of their own customers. Now they're telling even more of their customers to go push a rope when it comes to illegal immigration. They don't seem to be very good at internalizing customer feedback.

These are the Wizards of Commerce that can't even operate their own dining hall at a profit. Not only could they literally not run a lemonade stand, they couldn't even figure the taxes for one — with or without TurboTax®. Do you think these economic Einsteins are somehow going to help businesses serve their customers, grow, and make profits; thus really, finally, actually creating jobs?

Surely I jest.

Envying "the rich" is easy. It's a bit harder to understand that the government has just eliminated your job by taxing someone else.

If we want more jobs, employers must be allowed to channel more of their resources to wages, and less to taxes.

And we are all employers.

© Dan Popp

 

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