Friday, August 5, 2011

Wednesday, August 3, 2011

A Tale of Two Incentives: Entrepreneurship and Moral Economics vs. Corporate Welfare

It’s been said that we cannot legislate morality. Usually this phrase corresponds with teen pregnancy, alcohol abuse, gambling, and increasingly with environmental negligence.

It is rarely used, however, in discussing business practices. The EPA can site plenty of research designating BPA as a toxic substance, but it is still being used to manufacture baby bottles and food cans. Moral economics is a new field altogether, one whose very name reminds most Americans of Marx’s Communist Manifesto. In secular America, it’s more commonly known as ethics. The linguistic difference here is important: ethics is about following the rules, morals is about doing the right thing even if the rules don’t require it.

Capitalists can be moral too. The irony is that many of the same people who call Obama’s economic policies “socialist” are the same ones who preach both economic conservatism and social conservatism. If you don’t see the contraction here, I applaud you from tearing yourself away from Fox News, even if it’s only because I’m your niece, cousin, or former coworker.

Rep. John Carter [R-TX] has introduced a bill that could reward the kind of moral behavior I’m talking about. H.R. 687, the Military Spouses Employment Act, would give a tax break to businesses that hire military spouses.

I work for such a business. One that has acted with integrity and morals. A business that has only 27 employees and has managed to avoid layoffs despite a depression in our industry.

I am also the wife of a deployed active duty Senior Airman. My employer has been very understanding and supportive of the demands of a military lifestyle. They even allowed me to extend my maternity leave to make the most of my husband’s time home and are developing a work plan so I can be retained after our next PCS.

Besides the benefits to the company and myself, the state of Nebraska is benefiting. We are in a higher tax bracket, I was able to buy a more efficient car, my daughter can attend a local daycare, and we’ve starting saving for her college education while making payments on our own.

But not all military spouses are given these benefits. In fact, many businesses are hesitant to even hire military spouses, which is why we see unemployment rates as high as 25% among military spouses at some bases. This bill’s potential economic benefit to military families and to local business is huge, especially in Nebraska.

When enthusiastic campaigners tell crowds that new business would boom if government “gets out of the way,” they call to mind young entrepreneur trying to market his idea, but getting lost in the legal paperwork. But this mentality has emboldened big businesses to seek the same incentives as a startup.

If the last decade has taught us anything, it’s that we cannot ignore greed as a basic human characteristic.

Early this year, GE faced a swell of outrage at reports that, despite $11 billion in profits, it paid $0 in income tax because of domestic losses. GE Capital received a $139 billion federal bailout to offset these losses. Zero is well below the so-called outrageous 35% corporate tax rate conservatives decry. TARP funds should not be something a company can write off, like student loan interest or new homeowners finance fees.

Late in 2010, after receiving aid and collecting their tax refund, a GE plant in Massachusetts that received $1.8 billion from Defense contracts fired 600 workers. The plant had another 150 layoffs slated, but decided to first request an additional tax break from the state to prevent further layoffs.

GE’s bargain was as follows: tax credits worth $25 million to save 3,000 jobs for the next six years.

Read that sentence again. Let it sink in, read a third time if necessary. It breaks down to less than $1,500 per year per employee. So why does GE need this money up front?

Rather than seeking a tax break for jobs created, to use the Republican rhetoric, GE is seeking aid to prevent it from killing jobs. This is backwards, it is unethical and amoral. It is offensive to businesses with integrity. It isn’t just corporate welfare, this is a corporate hostage crisis.

It is offensive that a business that acts both without ethics and without morals is awarded billions of dollars in government contracts.

By contrast, this week the Small Business Administration (SBA) put out a list of 100 businesses who had used SBA programs to hire at least 100 people. Which is the kind of job creation tax incentives and economic programs were created for.

Revenue was completely left out of last week’s Deficit Deal. Whether or not the so-called Super Congress will even discuss corporate tax reform – or whether the proceedings will be open to the public – is yet to be seen. Lobbying efforts are no doubt already underway. Last year GE spent over $39 million to make sure its interests were given consideration. Even if we could consider this a tax – we could call it the Representation Tax – it would be less than 0.05% of their 2010 profits.

How much is my vote worth in comparison?

Military Spouses Employment Act

Below is the letter I sent my Representative in support of HR 687, the Military Spouses Employment Act.

If you send a letter, or make a call, please make sure to direct it to the Defense or Finance LA, otherwise an intern will read and log it.



Mr. Schweer,

I work for a small business, a business that has only 27 employees and has managed to avoid layoffs despite a depression in our industry. I am also the wife of a deployed active duty Senior Airman. My employer has been very understanding and supportive of the demands of a military lifestyle. They even allowed me to extend my maternity leave to make the most of my husband’s time home and are developing a work plan so I can be retained after our next PCS.

Besides the benefits to the company and myself, the state of Nebraska is benefiting. We are in a higher tax bracket, I was able to buy a more efficient car, my daughter can attend a local daycare, and we’ve starting saving for her college education while making payments on our own.

But not all military spouses are given these benefits. In fact, many businesses are hesitant to even hire military spouses, which is why we see unemployment rates as high as 25% among military spouses at some bases.

We are asking you to support H.R. 687, the Military Spouses Employment Act, to encourage other business, especially small ones, to hire and retain military spouses. The potential economic benefit to military families and to local business is huge, especially in Nebraska.

Thank you,