Really . They should come to newton, iowa. [chuckles] and this is what they would see in newton, iowa a maytag plant, where 2,500 people worked, now abandoned. This was the chrysler dealer, the chevy dealer, the Tractor Supply company. It helps explain why there is so much anger in the land. Im sick and tired of people going to congress and washington, d. C. , and making a living out of it while we starve to death. I believe we ought to make the tax cuts for the middle class permanent. We have now got both parties essentially telling a big lie, with a capital b and a capital l, to the public. Cut taxes. Cutting taxes. Make the tax cuts permanent. The Republican Party, as much as it pains me to say this, should be ashamed of themselves. This from Ronald Reagans old budget director, architect of the largest tax cut in American History . Its rank demagoguery. We should call it for what it is. Welcome to 60 minutes on cnbc. Im morley safer. In this edition, we look at two of the topics dominating the American Economic landscape jobs and taxes. First, we meet with president obamas socalled jobs czar. Then we visit a struggling town in the heartland. And finally, we take a look at a controversial income Tax Initiative in Washington State. In the first decade of the 21st century, big american firms cut around 3 million jobs in the u. S. , while adding almost as many overseas. No company went global more aggressively than general electric, the conglomerate that makes everything from refrigerators to m. R. I. Machines to jet engines. Yet as lesley stahl reported in october 2011, when president obama was looking for someone to help get americans back to work, he recruited a most unlikely candidate the republican ceo of general electric, jeff immelt. The mood is dark. People are pissed. Why not try to do better . Jeff immelt talked about his czarship at a gathering of g. E. Managers. You know, i grew up in cincinnati, ohio, and my parents are really rightwingers. My dad watches, like, five or six hours of fox news every day and stuff like that. So i called home and said, hey, just to give you a headsup, you know, im gonna be with the president , and hes asked me to lead this jobs council. And my mother said, well, you said no, of course, didnt you . [laughing] i said, no, mom, thats not what i said. [cheers and applause] thank you. When you were chosen, there was a lot of criticism. Yeah. I saw a headline that said, the job czar from hell. Mmhmm. Because of how many jobs g. E. Has outside the united states. Ive taken heat from the right and heat from the left, and its been uncomfortable sometimes for me personally to work with the president on this. And im proud to do it. What hes doing is heading a council of ceos, wall streeters, and labor leaders to help the president come up with ideas for immediate and longterm job growth. We need to create 300,000 new jobs a month just to get back to where we were before the recession. I think, lesley, there just needs to be a sense of National Urgency around jobs, that basically, if you just looked at how many hours a day do republicans spend on job creation, do democrats spend on job creation, does the white house, its nowhere close to 100 . Were not spending enough time on jobs. One of the reasons the president chose immelt as his jobs czar is because hes actually building new manufacturing plants in the u. S. He wanted to show us one this new factory in batesville, mississippi, where theyre making jet engines for the new boeing dreamliner. Does anybody know how many different parts go into that . Somebody does. Im not sure, if itsits not me. Its not you. In this engine, we probably have invested 1 1 2 billion as a company before getting the firstthe first sale. All told, he is adding 15,000 jobs in the u. S. , about half in manufacturing. Weve got whole new generations of jet engines, whole new generations of gas turbines. Were spending a lot inside the u. S. In louisville, kentucky, where g. E. s appliance park has lost about 16,000 workers, hes actually bringing jobs back from china and mexico, where wages are going up. You know, with the currency weaker, with wage rates inflation lower here than the rest of the world, we think the u. S. Can be quite competitive. What struck me is that the new plants dont hire a lot of people. You talk about hundreds instead of thousands. And i wonder, as you bring in new factories they are so automated. Youre going to have fewer people that do any task. In the end, it makes the system more productive and more competitive. But when you walk through mississippi, for every person that was in that plant, theres probably seven or eight in the supply chain. A lot of the jobs we saw were 13anhour jobs. Thats really not the ticket, is it, to a really vibrant middle class. We have a range. When we go out and recruit, lets say, hire 1,000 people at between 15 and 17 an hour, we get 50,000 applicants. So i think youve got to start somewhere, but we want to hire more people. Coming up, going with the market flow. 60 of g. E. s revenues is foreign. When i became ceo, it was 30. Now, i wish all our customers were in chicago. I mean, everything about the u. S. Is easier than doing business here. But this is where the growth is. Well have more with jeff immelt when 60 minutes on cnbc returns. Searching with devotion for a snack that isnt lame but this. Takes my breath away life with Crohns Disease ois a daily game of what ifs. What if my abdominal pain and cramps end our night before it even starts . What if i eat the wrong thing . What if . What if i suddenly have to go . What if . But what if the most important question is the one youre not asking . What if the underlying cause of your symptoms is damaging inflammation . 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Youre either too far from the curb. Or too close to other cars. Its just a matter of time until you rip some guys bumper off. So, here are your choices take the bus. Or get Liberty Mutual insurance. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. See Car Insurance in a whole new light. Call Liberty Mutual insurance. In 2011, jeff immelt, general electrics ceo, agreed to become an advisor to president obama, his socalled jobs czar. But heres the problem when it comes to creating american jobs, its hard to compete with emerging nations like brazil, as immelt well knows. Brazil is buying more g. E. Products than almost any other country. Its no wonder they have a g. E. Company town 90 minutes from rio. You hear g. E. , and you think schenectady, new york, lynn, massachusetts. Petropolis, brazil . Its the world we live in today, lesley. This is where we have to be today to be successful. And they are wildly successful in brazil, where g. E. Is growing at a rate of 35 a year compared to 1 in the u. S. Immelt showed us around a g. E. Locomotive plant. If you go back 5, 10, 15 years, maybe we made 30 or 40 locomotives here, you know, lesley. Were now making 150. Here we can honk the horn. Thats the horn . So just push . Push down. [horn sounds] i need one of these in my office. G. E. Has become so global that more than half of its 300,000 workers are now overseas. We spoke to him on the floor of g. E. s jet engine servicing plant in petropolis. How much of your revenues, now, come from overseas . 60 . 60 of g. E. s revenues is foreign. When i became ceo, it was 30. Now, i wish all our customers were in chicago. I mean, everything about the u. S. Is easier than doing business here, but this is where the growth is. You know, its like a bucket of ice on your head. I dont think we have caught up to the reality of how much the world is consuming and how were slippin back. You know, i dont think it has to be all bad news. I still think theres lots of things we can do in the u. S. , but the customers are here. And thats just the way it is. G. E. Has 8,000 employees in brazil, and rising. At factory rallies here, immelt, as cheerleader, looks out at the future of the company. I want you to get up every day and want to beat caterpillar. I want you to hate the color yellow and do everything you can to make sure were winning and beating the competition. On top of expanding the locomotive operation here, immelt is building a new aviation plant and a new research and Development Center in rio. You have also made the case that by increasing investment in a place like brazil, it would allow you to bring more jobs back home. Now, thats counterintuitive. Look around this room. All of these components come from the u. S. How are you doing . But after following him around brazil, i wondered whether g. E. Was still an american company. Im a complete glalist. I think like a global ceo. But im an american. I run an american company. But in order for g. E. To be successful in the coming years, ive got to sell my products in every corner of the world. I mean, you may personally think of yourself as an american, but your customers are over there. You put your plants over there. You even put research. If i wasnt out chasing orders in every corner of the world, wed have tens of thousand fewer employees in pennsylvania, ohio, massachusetts, texas. Im never going to apologize for that, ever, ever. I love coming to these plants. Its great. You know, cause we actually see stuff getting made. Getting made. 90 exported from here. Thats exactly right. Immelt worked with the president to devise his 447billion jobs package. And he and his jobs council thats been Holding Meetings all around the country will give mr. Obama more proposals, such as reducing government regulations and spending more to retrain workers. If the republicans say the government shouldnt spend, how the heck are we going to get ourselves out of this . No, no, this notion that the government has no role has never been true in the history of the united states. You know, really, all of the commercial Aviation Industry has grown out of defense spending. All of the Health Care Innovation has grown out of the n. I. H. In his ten years as ceo, immelt has remade g. E. , selling off half the company he inherited, including plastics, insurance, and nbc. Oh, my god. Theyre selling nbc to a Company Called kabletown. With a k. At the same time, he has refocused the company on manufacturing, bulking up units like transportation, energy, and research and development. As jobs czar, hes urging his fellow ceos to double their hiring of engineers and devote more money to r d. At g. E. , hes triplespending on everything from medical research to green technology, including the building of a Solar Panel Factory in the u. S. , even as other American Solar companies are folding. Is this something thats incredibly risky for you . In g. E. , this is extremely low risk because we have Good Technology and we have scale. The crime for us is when we dont do things like that. We ought to be percolating 20 1billion businesses all the time that can grow inside our system. But even while he promotes american innovation, hes been accused of transferring technology to other countries, as in his recent joint venture with china where a new g. E. Computer system will go into a chinese airliner that could eventually compete with boeing. Its a way we can grow, and its approved by the u. S. Government. Its in an important market around the world, and it creates 400 jobs in the u. S. Let me be more specific. Are we in any way giving the chinese a technology that they didnt have before, that depletes our Competitive Edge in the future . No, look, youre afraid of china; im not. We see them as a big market and a big opportunity. One thing immelt is promoting that the president did not include in his jobs package is lowering the Corporate Tax rate from the current 35 , even though Companies Like g. E. Rarely pay that much. One of the things that g. E. And you get hammered for is how little taxes g. E. Pays. Its not quite zero, but its pretty low. You know, weve had an extraordinary couple of years. We wrote off 32 billion during the financial crisis. I think that we should have basically the same tax policy that germany, japan, the u. K. , everybody else has, which is a tax rate in the mid20s and no loopholes, zero. The u. S. Has the most antiquated tax system. And that means some people are going to pay more taxes, and some people are going to pay less. But i guess the big question for most people is, would that create jobs . Thats a fair debate. You know, personally i think its going to create jobs. But our companies are not spending. Theyre not investing in a way that would create jobs. And big corporations are sitting on billions and billions of dollars. Theyre just sitting on it. Companies should invest in the united states. Its still the worlds biggest economy. And if Companies Just are going to sit on cash, theyre going to lose. Theyre gonna lose, because only the people that are going to invest their way through this crisis are going to win. Immelt is also supporting a tax holiday for Global Companies to get them to bring back home more than 1 trillion in profits theyre keeping overseas. He says businesses would start hiring, even though they didnt when a tax holiday was tried in 2004. When it happened last time, it didnt. Right. So theres plenty of evidence that says that im not right about that. In other words, do i know how many jobs its going to create . I dont. But it cant intellectually be any good to anybody to have 1. 2 trillion outside the u. S. Shouldnt american corporationsdont they have some kind of Civic Responsibility to create jobs . No . My name is not above the door. I work for investors. Investors want to see us grow earnings and cash flow. They want to see us be competitive. They want to see us prosper. He wishes the public felt the same. I want you to root for me. You know, everybody in germany roots for siemens. Everybody in japan roots for toshiba. Everybody in china roots for china south rail. I want you to say, win, g. E. Do you not see any reason that maybe the public doesnt hold american corporations up here in the highest. I think this notion that its the population of the u. S. Against the Big Companies is just wrong. Its just wrongminded, and when i walk through a factory with you or anybody, you know, our employees basically like us. They do. I saw it. They root for us. They want us to win. I dont know why you dont. Since our report first aired, jeff immelt has remained a lightning rod for some critics. But immelts brand of realistic optimism continues unabated. Coming up, tough times in the american heartland. I wonder when you look forward now, what you think about rehiring people. When we hire somebody, were definitely gonna need them. Were not gonna hire one person until we need two or three, and were probably not gonna hire two until we need four or five. The economic struggles of newton, iowa, when 60 minutes on cnbc returns. I was just looking at your Credit Report site. Do you guys have Identity Theft protection . [ male voice ] im sorry, did you say identity distribution . No. Protection. Identity theft protection. You have selected identity distribution. Your identity will now be shared with everyone. Thank you. No, no, no [ click, dial tone ] [ female announcer ] not all Credit Report sites are equal. [ male voice ] were good in here, howie. Yeah, have a good night, brother. Experian. Com members get personalized help plus Identity Theft protection. Join now at experian. Com. With enrollment in experian credit tracker. The economists who decide such things say the recession ended back in june of 2009. But dont tell that to communities struggling to get back on their feet. In october 2010, on the eve of the midterm elections, scott pelley went to the american heartland and found that little had changed. Anger was the order of the day. [thunder rumbling] what surprised you the most about this recession . I think the depth of it and the length of it. I think what surprised me the most about this one is, it just doesnt want to end. You know, the economists say that the recession is over. Really . They should come to newton, iowa. [laughs] dave mcneers Advertising Company is like a lot of Small Businesses its getting smaller. Maxim advertising in newton, iowa, puts its customers logos on nearly anything, and business had only grown for 22 years, until 2007. And what was all of this . This was filled maytag, maytag, maytag, maytag. Maytag invented its washing machine in newton. 5,000 people worked for maytag here, but newton lost all of those jobs. Maytag was bought out, and by 2007, the factory was closed. Many of the jobs went to mexico. No one knew it then, but these were the opening days of the great recession. Now layoffs that started with corporations are cascading into momandpop shops. How many employees did you have at the top . 22. And today . 10. Do you remember the first person you had to lay off . One of the very hardest days of my life. My wife and i stayed up all night long. We talked. We prayed. We struggled. And you know what, man, thats a gutwrenching feeling. You hate it. I hate it, and i never wanted to have to do it again. I wonder when you look forward now, what you think about rehiring people. When we hire somebody, were definitely gonna need them. Were not gonna hire one person until we need two or three, and were probably not gonna hire two until we need four or five. [leaves rustling] and thats why the recovery is lifeless. Big and small, businesses have settled into doing more with fewer people. You ask people to step it up and work harder, work longer, make less. Is it sort of a new normal . I think for now it is. Take a quick look around newton. Gary forbes laid off half of his 60 employees, closed two locations, and switched from selling topquality furniture to scratched and dented. Website designer Cindy Brunner laid off 6 of her 14 employees. This was the chrysler dealer, the chevy dealer, the Tractor Supply company. Since the recession, weve seen a lot of troubled towns in the country but nothing that looks quite as broken as newton. Even the local chapter of the Optimist Club has closed. You know, i want to tell everybody that were a company town where the company left, but were gonna thrive. Chaz allen is the mayor of this town of 15,000 people. Its a parttime job. Pays about 4,000 a year. Allen walked us through an abandoned maytag plant that, at its peak, held 2,500 factory workers building washers and dryers. If anyone out there is interested, the mayor has more than 1. 7 million square feet to rent. It is available. It is available. Well make you a good deal. The mayors been trying to pull new jobs into town. He made a run at green energy and got a company that makes wind turbine blades. But every time he gets a few hundred jobs, he seems to lose a few hundred. This fall, a telecom Company Called windstream had two layoffs. It was 60, and then it was 146 the next time. And how does that affect people around here . You know, its a roller coaster. I want to say that i mean, i was affected in the first layoff. I was one at the windstream that was affected the first round. Wait a minute. Yeah. They laid off the mayor . Yeah. Are you working now . No. His town is shrinking. They closed an elementary school, and theyre slashing the city budget. Have you already lost policemen . Yes. Firemen . Yes. What about the hospital in town . Its being reduced in size as well. Coming up, the people versus politicians. How many of you would say that youre angry about politics right now . [people murmuring] oh, that got a big yes. Im sick and tired of people going to congress and washington, d. C. , and making a living out of it, while we starve to death. Thats ahead when 60 minutes on cnbc returns. Newton, iowas Congressional District is bipartisan country. It voted for george bush in 2004 and then for president obama. But on the eve of the 2010 midterm elections, newton was angry with washington, and the towns longtime congressman was feeling the heat. Hi. How you doing . Democratic congressman Leonard Boswell is fighting for his job. Hes been reelected here six times, but this week his race against republican brad zaun is too close to call. My wife and i watched the news last night, and i think every ad was a political ad. Who do you trust with your money, with your future . Its not brad zaun. Leonard boswell too wrong for too long. Incredibly, bruce braley supports building a mosque at ground zero. How much relevance does all of that have to you . Nothing. Doesnt have a bit of relevance to me. We invited some of the folks in town to the legion hall. How many of you would say that youre angry about politics right now . [people murmuring] oh, that got a big yes. Im sick and tired of people going to congress and washington, d. C. , and making a living out of it while we starve to death. Does it matter much to anyone in here whether the republicans or the democrats control the house, for example . Doesnt matter . [people murmuring] if a republican says it, the democrats dont listen. If the democrats say it, the republicans dont care what theyre saying. What gets done in washington . What gets done at the iowa state house . Very little gets done. I mean, everything comes down to either abortion issues, gay marriage issues. It needs to go above and beyond that. I dont have a job. Thats all i care about. I dont care about the republicans or the democrats. I care about newton, iowa, the job situation, the financial situation. We went to the foreclosure auction the other day. Nobody bid on anything. Nobody has any money. Help us. Do something about the economy. Its really hard out here. The economy is not spurring jobs. Todd meyer was laid off from the same Telecom Company that laid off the mayor. You served in the gulf war . I did. You were in the navy. Yep. In combat there . Yep, uss george washington. And now youre unemployed. Yes. How many of you think that your children will enjoy the same standard of living that you did . This worrypessimism, really weighs on families who had seen a different future. How many employees did you have at the peak . 22. How many do you have now . Im down to seven. Half pepperoni, half pineapple . All right, fantastic. Scott creech bought his own pizza franchise in newton 21 years ago. How many hours are you working . Last week, it was 82. 82 hours in a week . Correct. How long can you do that . Until i die. Sales have slipped to a place thats sometimes dangerous for his family. Once you get down around this area, i may be able to file for food stamps. His wife, julie, is working at a school to take some of the pressure off. Hes 52 years old now, and i worry about him every day. His brother died of a heart attack when he was in his 40s, and i worry about that all the time. Hello, everybody. Hi, how are you . His son parker is ten. Creech comes home to put parker in bed, but then he heads back to the shop. He washes up and closes up about 1 00 a. M. I wonder what the stress has been like for you. Ive been blessed. You know, you have guilt. Guilt about what . Youd like to have that 8 00 to 5 00 job, holidays off, but. You cant do that now. No. When youre looking for the path out of this flat recovery, there are a couple of things that strike you. One, Small Businesses create most of the jobs in this country, 65 of all new jobs, but lending to Small Businesses is actually declining. So three years after the beginning of the great recession, with Interest Rates the lowest theyve ever been in history, banks are lending less money to the engines that create jobs. Have you gone to the bank . Yeah. [chuckling] thats amazing, cause, you know, you hear stories about how lending is gonna be more friendly and you know, and even the president himself is, you know, gonna tell banks that they need to understand what businesses are going through. Theres no banks the banks dont understand anything. They wont loan me a dime. And you went to the bank, and they said what . Come back when you have a couple of good years behind you. Really . cause i wont need you then. [chuckles] theyll offer money to you when you dont need it, but when you need it, you cant get it. Perfect . Okay, we like to hear that. Alan yegge has been losing money at his Jewelry Store on the Courthouse Square for a year and a half. He makes a lot of his own jewelry, and to try to match his customers falling income, he switched from gold to silver, diamonds to beads. His employees Darlene Swank and tina kono even volunteered to cut their hours. Youre gonna have to let tina and darlene go. Its hard. Its hard. Do you remember when you had to sit down and explain it to them . Yeah, i talked to darlene first. I didnt have to say anything. She knew. You know, she does our books. And she knew. And what did the books tell you . Help me understand. You just cant keep doing what youre doing. As hard as it is, we tried. More layoffs reduce demand, which creates more layoffs. Change may be coming again to washington, but in newton, many believe the struggle will stay the same as Family Businesses work to steal another day from the great recession. Congressman Leonard Boswell defeated his republican challenger, brad zaun, in the 2010 midterm elections. He headed back to washington for an eighth term. For boswells constituents in newton, iowa, the fight for economic recovery continues. Coming up, bill gates father on taxing the rich. The real truth of the matter is that the people that own businesses are the people who will be paying the tax, and my analysis is, they dont want to pay the tax. The rich guys dont want the rich guys dont want to pay the tax. Are you saying you just think theyre greedy . No, because it. [chuckles] no. Theyre defensive. Theyrei guess you could call it greed, i suppose, wanting to not write another check, sure. Its billionaires versus billionaires when 60 minutes on cnbc returns. 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Only from xfinity. One of the most hotly contested debates of the 2010 midterm elections concerned raising taxes on the rich as a way to reduce the nations record budget deficit. But for president reagans former budget director David Stockman, raising taxes on the rich isnt nearly enough to cure what ails the u. S. Economy. In october 2010, stockman told lesley stahl that all tax cuts implemented by president george w. Bush should be eliminated, even those on the middle class, and that his own Republican Party has gone too far with its antitax religion. Tax cutting is a religion. What do you mean by that . Well, its become, in the sense, an absolute something that cant be questioned, something thats gospel, something thats sort of embedded in the catechism. And so scratch the average republican today, and hell say, tax cuts, tax cuts, tax cuts. Cut taxes. Cutting taxes. Make the tax cuts permanent. Its rank demagoguery. We should call it for what it is. If these people were all put into a room on penalty of death to come up with how much they could cut, they couldnt come up with 50 billion when the problem is 1. 3 trillion. So to stand before the public and rub raw this antitax sentiment, the Republican Party, as much as it pains me to say this, should be ashamed of themselves. This from Ronald Reagans old budget director, architect of the largest tax cut in American History . But he doesnt let the democrats off the hook. He says he cringes when he hears the president say things like this. I believe we ought to make the tax cuts for the middle class permanent. We have now got both parties essentially telling a big lie, with a capital b and a capital l, to the public, and that is that we can have all this government, 24 of g. D. P. , this huge entitlement program, all of the bailouts, and yet we dont have to tax ourselves and pay our bills. That is athats delusional. For those who say cutting spending is the answer, stockman says both parties have thrown in the towel on that. Finally, even republicans have said, theres nothing significant we want to cut. They dont want to cut Social Security entitlements. They dont want to cut medicare reimbursements of doctors, farm subsidies, education loans for middle class students, certainly not defense. Many of the states are in the same boat, facing huge deficits with few prospects for cutting, which is why Washington State is joining the Movement Across the country to tax the rich. Hey, everybody. Voters will decide on initiative 1098 that would create an income tax but only on the wealthy, of whom there are many 133,000 millionaires and 7 billionaires, including bill gates of microsoft. Thank you. His father, bill gates, sr. , has poured his own money into backing initiative 1098. Some people Say Initiative 1098 is about soaking the rich. The tax would bring in 3 billion a year to be spent mainly on education, which has suffered cutbacks as the state reels under a massive deficit. Vote yes on 1098. Its good for washington. Washington is one of only seven states without any income tax. The proposal would create a 5 rate on income over 200,000 for individuals and 400,000 for couples. A 9 rate kicks in at 1 2 million on individuals and 1 million for couples. Lets say a couple earns 500,000. Okay. How much do you think theyll have to pay . Well, they would pay 5,000 because thats 5 of the 100,000 on which they would pay. Oh, they would only pay on the 100,000. Theyre exempt up to the 400,000. Precisely. So theyd only pay on 100,000. Precisely. Thats not very much. Precisely. If you earn that kind of money. Precisely. His son bill is on his side, along with the Public Employees unions. The other side is a whos who of the states big businesses boeing, amazon, and even microsoft. Bill gates is still chairman, but the ceo, steve ballmer, opposes the initiative, which is why theyre calling this the battle of the billionaires. Is it awkward . The word awkward fits, yes. Ballmers side argues that the soak the rich tax would stifle hightech innovation and lead to businesses moving out of the state. We asked microsoft, amazon, and boeing for interviews, but they all declined. Businesses are saying theyll leave. Yes. The real truth of the matter is that the people that own businesses are the people who will be paying the tax, and my analysis is, they dont want to pay the tax. The rich guys dont want the rich guys dont want to pay the tax. Are you saying you just think theyre greedy . No, because it. [chuckles] no. Theyre defensive. Theyrei guess you could call it greed, i suppose, wanting to not write another check, sure. Steve ballmer . Yeah. Hes worth 14 billion. You dont think hes a very fine guy too. The fact of the matter is, there are 43 states in this country that have a state income tax, and in those states the microsofts or the abcs, whatever, have not fled the state. Its just a gross exaggeration. Coming up, the dire economic state of Washington State. To cut people off hospice i think is immoral. To cut children off health care, to cut their education so they dont have a chance at a decent future, i think that would result in an immoral budget. The governors case for state income tax when 60 minutes on cnbc returns. Theres a reason no one says easy like monday morning. Sundays are the warriors day to unplug and recharge. What if this feeling could last all week . With centurylink as your trusted partner, it can. Our visionary Cloud Infrastructure and Global Broadband network free you to focus on what matters. With Custom Communications solutions and dedicated support, your business can shine all week long. 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Supporters of the Initiative Like bill gates father scoffed at the notion that businesses would flee the state. But entrepreneurs like Brian Mistele were adamant that a state income tax would be very bad for business. This initiative really is a nail in the coffin of Small Businesses and startups in our state. It really impacts the Tech Community very heavily. Nail in the coffin . You mean kill it off . Thats correct. Mistele is the ceo of inrix, the Software Company that monitors traffic around the world and provides data for g. P. S. Systems and sites like mapquest. So this is a map of paris. He says businesses would leave the state, especially hightech Companies Like his that deal in data and arent tied down by factories or assembly lines. Hed consider moving some of his 60 employees to other states where he has offices. And what are the states . Massachusetts, florida massachusetts income tax. Go ahead. California income tax. Texas, florida, michigan, colorado. Okay, four out of the six have income taxes. I mean, ive heard a lot of businessmen say what youre saying, and i keep wondering, well, where are they gonna move if they leave . Well, each state has its own competitive advantages. So by adding this additional burden, it makes us much less attractive. Adam stites is another entrepreneur who opposes the initiative. He moved his company, istores, from portland, oregon, across the Columbia River to vancouver, washington, just nine miles away. It broke down to taxes. Oregon has the highest income tax in the united states, and washington has the lowest at 0 . Istores is the Largest Online retailer of paintball equipment. [paintball gun clicking] stites has been hiring staff for a new company he acquired that sells prank novelties. This for halloween . It is for halloween or for any times that you need to be a maneating shark. Under the new tax, he would have to pay 50,000 a year. And that, he says, would hamper his ability to expand any further. This money, if it passes, will go specifically to education, cause theyve been cutting schools and things like that. So what is Washington State supposed to do about its schools in terms of revenue . I think that the state in aggregate needs to take a look at its expenses. Like . Ive had opportunity in portland to see cars being washed by third party washing firms cleaning cars on the weekends for state vehicles. I dont have someone who comes and cleans my car in a van. Thats in portland . Its in portland, but i think its indicative of government spending. But the state budget has already been cut by 5 billion. And the governor, christine gregoire, says theyre at the bone. To cut people off hospice i think is immoral. To cut children off health care, to cut their education so they dont have a chance at a decent future, i think that would result in an immoral budget. She says she doesnt understand why so many of the states hightech ceos, who are always complaining about the woeful state of american education, are so opposed to paying this tax for schools. These businesses that want the educated workforce, theyre against this. What do they say to you when you challenge them on this . I tell them i have the utmost respect for them. These are great ceos. And i say to them, heres the problem you always want us to invest more in education, and now you say no. So my question to you, if not this, then what . Dont just tell me no. Well, what do they say . They dont have an answer, lesley. The initiative was way ahead in the polls until the opposition started airing ads saying 1098 is a slippery slope. And can be extended to you in just two years. Polls now show the middle class thinks they, too, will be hit with income taxes. And the hightech entrepreneurs we met say theres a fairness issue. Bill gates got to Start Microsoft without an income tax. And this is something you hear a lot, that they find it curious gates is supporting an income tax now. I believe the gateses have already made most of their money, so they wouldnt be taxed under a new income tax structure in our state. They wouldnt be taxed at all . No. Well, for people who have already made their money and paid taxes in this state, that money wouldnt be taxed again. Its only for people who are earning new money in this state. Well, thats ridiculous. I mean. I mean, my son will pay a huge, huge income tax. He will . Come on. Hes the richest man in the country. What no, but im asking how can anybody think he isnt gonna pay a huge income tax . What is the income what does a person with 50 billion have for income . Its on this conversation isnt making any sense. Bill gates would pay multimillions in taxes on the income from his investments. He wants to. Hes told you that. Hes for this. Well, wants to is a little strong. Okay, hes for this. He is for it. Hes very willing. But as David Stockman will tell you, that attitude is hard to find. Weve demonized taxes, all right . Weve created almost the idea that theyre a metaphysical evil. Still he says there should be a onetime 15 surtax on the wealthy that he estimates would cut the National Debt in half. In 1985, the top 5 of the households, the wealthiest 5 , had net worth of 8 trillion, which is a lot. Today, after serial bubble after serial bubble, the top 5 have net worth of 40 trillion. Oh, my god. And top 5 have gained more wealth than the whole human race had created prior to 1980. Of course it would never pass. Theres the rub. Theres the rub. I remember that great expression, lets kick the can down the road. Yes. That became kind of the mantra. Yeah, and it still is today. Just kick it down the road. Well solve it tomorrow. Except its no longer a can. Its a giant junkyard. [chuckles] on november 2, 2010, the week after our story first aired, Washington State voters rejected initiative 1098. The income tax measure failed by a wide margin, with 64 of voters oppos to the measure and only 36 in favor. Thats our edition of 60 minutes on cnbc. Im morley safer. Thank you for joining us. Narrator in this episode of american greed. Theres no place like home and no investor in homes like geoffrey goldman. A man of confidence and bold ambition, goldman says he has an Innovative New way to save desperate homeowners facing foreclosure. Nobody was better than him, and he was going to rule the realestate world. Narrator but this white knight is actually a brazen bandit. Thwas my home. Its not my home anymore. They took it from me. Narrator and later. Young upstart Aaron Vallett wants to see his name in lights in nashville, tennessee. He saw himself being the next edward jones. Narrator he takes 5. 5 million into his investment funds, but his clients dont see the dark soul behind this shining facade. Unfortunately, the best crooks are also