Monday, August 9, 2010

Michael P. Fleischer is not hiring.

From the Wall Street Journal:

Why I'm Not Hiring
When you add it all up, it costs $74,000 to put $44,000 in Sally's pocket and to give her $12,000 in benefits.

Meet Sally (not her real name; details changed to preserve privacy). Sally is a terrific employee, and she happens to be the median person in terms of base pay among the 83 people at my little company in New Jersey, where we provide audio systems for use in educational, commercial and industrial settings. She's been with us for over 15 years. She's a high school graduate with some specialized training. She makes $59,000 a year—on paper. In reality, she makes only $44,000 a year because $15,000 is taken from her thanks to various deductions and taxes, all of which form the steep, sad slope between gross and net pay.

Before that money hits her bank, it is reduced by the $2,376 she pays as her share of the medical and dental insurance that my company provides. And then the government takes its due. She pays $126 for state unemployment insurance, $149 for disability insurance and $856 for Medicare. That's the small stuff. New Jersey takes $1,893 in income taxes. The federal government gets $3,661 for Social Security and another $6,250 for income tax withholding. The roughly $13,000 taken from her by various government entities means that some 22% of her gross pay goes to Washington or Trenton. She's lucky she doesn't live in New York City, where the toll would be even higher.

Employing Sally costs plenty too. My company has to write checks for $74,000 so Sally can receive her nominal $59,000 in base pay. Health insurance is a big, added cost: While Sally pays nearly $2,400 for coverage, my company pays the rest—$9,561 for employee/spouse medical and dental. We also provide company-paid life and other insurance premiums amounting to $153. Altogether, company-paid benefits add $9,714 to the cost of employing Sally.

Then the federal and state governments want a little something extra. They take $56 for federal unemployment coverage, $149 for disability insurance, $300 for workers' comp and $505 for state unemployment insurance. Finally, the feds make me pay $856 for Sally's Medicare and $3,661 for her Social Security.

When you add it all up, it costs $74,000 to put $44,000 in Sally's pocket and to give her $12,000 in benefits. Bottom line: Governments impose a 33% surtax on Sally's job each year.

Because my company has been conscripted by the government and forced to serve as a tax collector, we have lost control of a big chunk of our cost structure. Tax increases, whether cloaked as changes in unemployment or disability insurance, Medicare increases or in any other form can dramatically alter our financial situation. With government spending and deficits growing as fast as they have been, you know that more tax increases are coming—for my company, and even for Sally too.

I love it when an employer breaks down the actual costs of doing business and explains it to the masses. Sometimes just a simply explanation of the facts can tell you a lot.

I am a big supporter of the Fair Tax, which is a proposed plan to abolish the Internal Revenue Service, scrap the income tax and fund this country with a progressive consumption tax.

I haven't argued here much about the Fair Tax because I think our main problem is spending anyway, not taxes. Any political party can raise or lower taxes, neither political party has had the balls to cut the size and scope of government. I would like to free Michael P. Fleicher from having to worry about all those government regulations and tax laws and free him to just concentrate on running his business.

He also makes a great point about employer provided health insurance:

Companies have also been pressed into serving as providers of health insurance. In a saner world, health insurance would be something that individuals buy for themselves and their families, just as they do with auto insurance. Now, adding to the insanity, there is ObamaCare.

Every year, we negotiate a renewal to our health coverage. This year, our provider demanded a 28% increase in premiums—for a lesser plan. This is in part a tax increase that the federal government has co-opted insurance providers to collect. We had never faced an increase anywhere near this large; in each of the last two years, the increase was under 10%.

We really do need to create a more free markter for insurance by doing away with employer provided health care. It shouldn't be a burden on every business to do this and it takes them away from their core competancy. If 300,000,000 Americans had to find their own insurance the insurance market would be a lot more competative. That doesn't even address the level of service. When you have a loved one in the hospital it is hard to get good service or answers to your questions. The doctors like to make rounds at 5:00 in the morning when patients are asleep and nobody is there to ask questions. Hospitals are big bureaucracies and they don't really have to answer to you. Do you know one reason why? You aren't paying the bill. Every see a doctor talk down to someone who asks a question? That probably wouldn't happen if he was on your dime.

Things I would like:

1) Cut the size and scope of government.
2) Sever the tie between employment and health care.
3) Abolish the IRS, income taxes, and all taxes on business
4) Institute the Fair Tax, a progressive consumption tax that encourages conservation and saving.

Free the People. Sphere: Related Content

1 comment:

Anonymous said...

Michael P Fleischer is Ari Fleischer's brother.