ADDENDUM TO THE JUNE 2010 BLOG.

      With all the talk from the Obama staff on jobs, we find that the large majority of these jobs are government jobs and also temporary census takers. An interesting statistic states that it costs $12 more per hour to employ a state or local government worker than a private sector employee. $39.81 an hour in wages and befefits for the state and local workers versus $27.73 an hour in the private sector. In the private sector compensation for union workers costs $37.61 an hour compared to $27.67 an hour for non-union workers. Source: : Associated Press.

      Arthur laffer was quoted in the Wall Street Journal on June 7, 2010. He points out that the nine states without an income tax are growing faster and attracting more people than are the nine states with the highest income tax rates.

      On or about Jan. 1, 2011 federal, state and local tax rates are scheduled to rise quite sharply. Bush’s tax cuts expire on that date and the highest federal personal income tax rate will go to 39.6% from 35%. The the highest federal dividend tax rate goes up to 39.6% from 15%., the capital gains tax rate up to 20% from 15% and the estate tax rate to 55% from zero. There are more increases, some subtle and some straight forward. There is a shift of income into 2010 going on which will and has been fueling growth and earnings this year. Corporate profits are unusually high considering the economy. Laffer feels that corporate profits will tumble in 2011. Laffer predicts a “crash” in tax receipts. I have mentioned in my most recent book how the Laffer Curve illustrates that rising tax rates lower tax revenues and lower tax rates increases tax revenues. Will Obama and Company ever get it right?

Gary E. Marsella

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