Random Thoughts -- A Sort-of Blog

The "Job Creators" taxes argument in the US

The "can't raise taxes on wealthy people because it will hurt job creators" argument has driven me bonkers for quite some time. Economically that argument makes no sense. I have wanted to write about this for a while, but haven't taken the time. Fortunately, the International Herald Tribune (IHT) just did it for me.

The following is a quote from the IHT, Sat/Sun December 10-11, page 6, "Helping Mom and Pop"

Research shows that a mere 1 percent of small business owners make more than $1 million per year. Only about 5.4 million of the nation’s 20 million small businesses pay any wages at all. The Republican claim about wealthy small business job creators, it turns out, is based on an overly broad definition of ‘‘small’’ that includes partnerships and S-corporations, like hedge funds, law practices and other often big businesses.

So when they claim to be protecting small business from high-end taxes, Republicans are really talking about protecting big companies whose owners are millionaires or better. A surtax would certainly not hurt them.

The latest Democratic bill to cut the payroll tax, blocked by Republicans on Thursday, called for a 1.9 percent surtax on income over $1 million. More important, for any savvy business owner, a surtax would have no bearing on hiring decisions. If new workers are profitable before tax, they will be profitable after tax, even if the employer has to pay slightly more of the profit in taxes. Back in the real world of small businesses —start-ups, corner stores, small companies in large supply chains —a surtax on high earners that pays for a payroll tax cut would be helpful because that tax cut would put more spending money in customers’ pockets.

The second sentence of the last paragraph contains the meat of the argument. A business person will hire someone only if it is expected that the person will eventually generate profit for the business. Hiring and wage expenses come out of pre-tax money, so one can even argue that raising the tax encourages hiring because of the effective tax subsidy. The counter-argument that confiscatory taxes will cause small business people to shut down doesn't apply at the level of rates being discussed. The rates are are less than during the late '90s, and businesses didn't shut down then.

Thanks to the IHT for saying this well.


Auto-entrepreneur in France -- a follow up

The end of July I wrote about the creating a small company in France. It is supposed to be an easy process. Well, the application process was easy, but that is where it stops. We applied around 2 months ago. The process is supposed to take 2 or 3 weeks, but we have heard nothing in 8 weeks. I called to find out what is happening and was told that no one can know. The application is stuck inside of an agency (INSEE) into which the application people say they have no visibility. Of course, what they really are saying is that they don't want to bother.

So, there is an easy, tax-efficient company structure available that for some reason we cannot use, and we cannot find out why. Sigh...


CS education and compilation

I just finished some work that required me to build a parse tree for Java statements. It required hacking on a Java grammar, feeding it to a parser generator (javacc), then using the resulting AST to do some code analysis.

I bring this up because it touches one of my concerns. Very few CS departments still require courses in compilation and programming languages, In fact, many don't even offer such a course. What happens in a few years when dinosaurs like me are gone? Aren't we losing something fundamental to CS?


User comments on CNN & Fox articles

Occasionally I read user comments on CNN & Fox articles. I should stop, because it is extremely depressing. The vast majority think they are saying something when they post comments like 'Barak HUSSEIN Obama talks out of both ends of his mouth' or 'ConservaFASCISTS/TEAliban will destroy this country'. One wonders if these people ever went to school. Worse, perhaps they really are as stupid as they sound.


An example of how not to treat customers.

I was recently in the market for a VPS (Virtual Private Server) for my new company, Frogfish Technologies Limited. For various reasons I want the IP address to be in the UK, so my choices were somewhat restricted. After looking around, I decided to try Memset. The price seemed reasonable and the specifications seemed to meet my needs.

Unfortunately, after setting it up, I discovered that there was no way to enable swap. The VPS offered no memory headroom at all. When I contacted them, I was told that this was policy. I had to purchase a configuration that exceeds the maximum load, even if that load occurs once for 10 seconds in a month, in effect doubling my costs. This surprised me, as I haven't before encountered a company using Xen that didn't offer some support for swap. I felt that I needed to go elsewhere, and canceled my VPS.

At this point things went downhill. Memset's terms insist that they be given 30-days notice. If there aren't 30 days left in the current contract, then they charge enough to pad the contract. Of course, this means that one cannot realistically pay for a month to try out the server unless you cancel it on the day you buy it. In my case they wanted 7 more days. I pointed out that they do not publicize their swap policy, that they know the purchased VPS does not meet my needs, and that swap on Xen is close to an industry standard; I agreed that I should pay to the end of the month (unhappily), but asked that the extra 7 days be forgiven. Their answer: because the terms and conditions say they can charge it, they will. It doesn't matter that I won't use the service or that they don't provide accurate specifications. For the huge sum of £2.36 ($4.50), they pissed off a customer and exposed their legalistic approach to customer support, or should I say customer non-support.

I cannot recommend using a company such an attitude towards customers.


Thanks to the bozos in Congress

I want to personally thank the Tea Party bozos in Congress for the recent huge market losses. How supposedly intelligent people can say in total seriousness that a US default is acceptable is beyond me.


Creating a small company in France

Because of the complexity of cross-border taxation, it makes sense to create a sole proprietor company in France and have Frogfish Technologies pay that company for services. Because I am the MD of Frogfish, I cannot be that company. However, Deb can, so I checked it out.

Turns out that new laws a year or two ago make the process very easy. Even better, it is very tax efficient. As long as the company's profits are less that approximately $50,000, the company pays a flat tax of 23% that covers everything: social taxes, income taxes, etc.