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How does one grow Delaware Jobs?

  • Does one say…. Here come here and will shave a penny off the cost?
  • Does one say…  If you work here, we will bend regulations to cost you less money?
  • Does one say…  Our productivity is high because our employees are smart?
  • Does one say…  There is no better place to live on this planet?

If you are good at what you do, you probably try all three….  (If that didn’t set off signals in your brain then step three is not even in the running).

We have strikes against us… We are are the 40th lowest economy, due to our small size…  We have 39 bigger economies competing against us.

Any one of which can under-bid us on business taxes and make up the difference by raising their sales tax rate a penny….

So, against this,  how do we increase Delaware’s jobs…

Well we’ve tried the carrot…  Now the stick.  There are businesses already heavily invested in Delaware….  Why not give them the option to write off new building costs?

In it’s simplest and most abstract form, it works like this:…..

Since paying taxes and building something both equally help the economy of the state, it makes no difference and is a simple trade off from the states economy’s point of view, as to whether the money goes directly to the treasury or indirectly, by being invested into new buildings on business properties…  Therefore now is the time for businesses to expand, for that expansion can be written off the tax owed to the state…

The initial lost revenue will be returned in part by the taxes on the new jobs, and by taxes on the business transactions that mushroom as a result of this policy….

So as a business owner, you have this choice.  You can pay the state and never see that money again, or you can build upon your property, and keep that money invested in the increased value of your assets… When you sell, you recoup the amount you invested so it is not lost revenue; it is not wasted… Plus the expansion now means your yearly net income is higher as well….

But at Delaware’s current abysmally low rates, even allowing the expansion write off, would benefit only a few of the larger, more prone-to-expand, business entities across this state…. Which is why it must be accompanied with a higher tax rates to create shock and awe among the principle players…

Taxes are based on the amount of money left over.  Simply put, if there is no money leftover in a business, there is no tax… There is therefore incentive to  maximize one’s profits in the field, and then minimize them on paper….  That incentive, creates the expansion that hires people… most particularly those in the construction trades….

Tax increases drove the WWII economy.  The post war expansion.  The Clinton Revival.  And now this year, 2013…  States enacting tax increases such as California and  New Jersey, are doing much better now than states reveling on their lack of taxation and their lack of regulation…

More is better in this case.

Delaware has one of the weirdest tax state income tax delineations.  The percentage climb stops at $65,000…. A person who makes $65,001 pays the same rate as does someone who’s financial empire brings in $65 billion dollars…  We have much room to pay with.  This year Delaware needs its General Assembly to act and pass a state tax system such as below….  This is just a first draft that will, and should be tweaked by the lobbyists scrambled by the powers that be to do damage control….

$1 Trillion and above…. 15%

$1 Billion and above….   10%

$100 million and above…9%

$ 1 million and above… 8%

$100,000 and above… 7%

No further changes are required….

As an example New Jersey’s economic stimulus new tax hike rate stands at 8.97% over $500,000….   No one is going to run away from Delaware because of our increased tax rate…. unless they run away in order to pay even more.

Based on sources inside Delaware’s Department of Revenue, this would increase our state’s annual revenue intake by roughly $220 million dollars or  about 7% of our current revenues…

What that should mean for every Delawarean, is that there is a very good likelihood that most of this will be invested right back into this state, if a that change in state tax code is made, thereby allowing the complete write-off of all domestic construction on this tiny patch of earth,  only 35 miles wide, and 96 miles long…..

If you build on that small patch, Delaware won’t tax you the amount you spend upon the building.  Delaware needs to jump on this idea first.  Otherwise other states will take even this competitive edge away……