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Old 12-09-2010, 04:53 PM   #161
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Two sides of the same coin, no? One can't exist without the other. So who gets credit?
I don't care about assigning 'credit' to either group. Is my butcher serving me, or do I keep my butcher in business? Who cares? It works.

I'm only interested in seeing things work better, and all these tax complications make it hard to even sort out what direction our policies should take.

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Old 12-09-2010, 05:32 PM   #162
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Really?! I figured a college professor would make a LOT more than that. Heck, I have a friend who's just a teacher in the public school system, with maybe 13-14 years of service, and HE makes about a quarter of that! And I shouldn't say "just a teacher", as his work is important, and he's probably not paid enough...but I just figured a college professor would make more.
I think it matters at what college you teach.... when I got laid off I was going to try and teach at the local college.... and found that the starting pay for someone in their business school was in the $45K range... it was a community college, but still....

I don't think that some small 4 year institutes pay that much more...
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Old 12-09-2010, 06:19 PM   #163
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I know who we can tax! As usual, the Germans do it better.

German town raising cash with "sex tax" - Business - World business - msnbc.com

Ha
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Old 12-09-2010, 06:19 PM   #164
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It is remarkable easy to argue why taxes should be lower. It's also easy for folks to admire their own efforts and acknowledge the correlation between that effort and the rewards they enjoy.

At some point in my working life I have been in each of the deciles of income distribution. I worked hard and made some smart choices, but much of my achievement was good fortune. It is the same for most others. Bill Gates and investment bankers included. The more fortunate need to pay a greater share of taxes (certainly greater than is being paid today) and also invest in ensuring more people have greater access to wealth generating opportunities.

The propserity of the baby boom generation was created by the generations before us, the effort they made and the taxes they paid.

The selfishness of our generation is like a disease and our children will suffer the consequences because we are not investing in the infrastructure they need to prosper.
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Old 12-09-2010, 06:26 PM   #165
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It is remarkable easy to argue why taxes should be lower. It's also easy for folks to admire their own efforts and acknowledge the correlation between that effort and the rewards they enjoy.

At some point in my working life I have been in each of the deciles of income distribution. I worked hard and made some smart choices, but much of my achievement was good fortune. It is the same for most others. Bill Gates and investment bankers included. The more fortunate need to pay a greater share of taxes (certainly greater than is being paid today) and also invest in ensuring more people have greater access to wealth generating opportunities.

The propserity of the baby boom generation was created by the generations before us, the effort they made and the taxes they paid.

The selfishness of our generation is like a disease and our children will suffer the consequences because we are not investing in the infrastructure they need to prosper.
The trouble is that our taxes will not ever be spent on infrastructure- they will be spent on vote buying.

We are on a downward path. Lower taxes at least keep some money in private hands where there is some chance that it will be used productively. At this point in US history, there is zero chance that government will use money for the general benefit and especially for the future, where there is no unionized or other powerful voting block.

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Old 12-09-2010, 07:01 PM   #166
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Calling oneself "rich" is tacky. Calling others "rich" is rude. So no one is "rich" and we are all middle class. Some of us are just more "comfortable" than others, that's all.
On this board we can't even agree on a definition of "net worth", so I suppose "rich" is a term way out of our comprehension.

I can pretty well guarantee that to the state of Hawaii and the federal government, we look darn poor. And it's all by their rules.
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Old 12-09-2010, 07:13 PM   #167
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At this point in US history, there is zero chance that government will use money for the general benefit and especially for the future, where there is no unionized or other powerful voting block.
Yes, I believe the Citizens United decision will see to that. I never knew corporations and unions were people with First Amendment rights, but hey, what do I know?
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Old 12-09-2010, 08:53 PM   #168
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we have "such a low tax rate" because we have not yet woken up and smelled the coffee. our low tax rate isnt sufficient to pay for our significant safety net. so by your logic we need to get rid of welfare, SS, medicaid, medicare, unemployment insurance, the new health care reform, etc. and maybe even some of our military and then our people will be more successful. well if we do that then our low tax rates might be sufficient to pay for our government. while that might be an interesting discussion but i am not willing to part with all of those programs (that is not to say that i dont think they need some changes) so i am thinking tax rates (more specifically the tax rates on higher income) will need to go up.
I don't recall giving an opinion on the point the economist was making, so by my logic, I provided no opinion for you to comment on. I was simply providing information I had heard.
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Old 12-09-2010, 08:58 PM   #169
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Yes, I believe the Citizens United decision will see to that. I never knew corporations and unions were people with First Amendment rights, but hey, what do I know?
Well, they do pay taxes just as humans do. I wonder when unions and corporations will start serving on juries and signing up for Selective Service?
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Old 12-09-2010, 09:15 PM   #170
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Tax Plan Spurs Deal Making - WSJ.com
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Old 12-10-2010, 09:32 AM   #171
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Old 12-10-2010, 09:58 AM   #172
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Old 12-10-2010, 10:08 AM   #173
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That seems true, but I don't think that is where the phrase "A poor man never gave me a job or a paycheck, son" is targeted. It's about creating businesses that hire the people to serve that consumption. Yes, the workers are being hired to build houses, but they are not each individually getting their paychecks from the homeowner. A contractor is dealing with their payroll, insurance, scheduling, taking on risk, etc, so that all those workers can be organized to complete a job. For that, I expect the contractor to make more money, even become 'rich' ahead of the laborers.

So in general, it is the 'rich man' and not the 'poor man' providing the paycheck. And most of them earn it, because they are a little more motivated, a little more risk taking, a little more organized to do that kind of work. Many of the laborers just want to show up and do their job and that's fine. But don't expect to get 'rich' that way.

Many other businesses really take an influx of capital to get off the ground. A group of 'poor' people just aren't likely to to get that going.

I think there was a circular discussion on this earlier, with someone saying without all this consumption there are no jobs, but without the business there is no product to consume, and round-round. It seems clear that it takes all the pieces of the puzzle, but I'd wager that on average, employers are richer than employees. Hence the phrase.

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I think you're putting the most positive possible interpretation on the phrase, and I agree with much of what you say.
IMO, the phrase usually gets corrupted into "We shouldn't tax rich people because they 'create' jobs." And taxes are the topic of this thread.

It reminds me of a Peanuts strip where Snoopy was jogging and his heart and legs were arguing about who was "more" important. Or, arguing which wheel on a bicycle is more important.

I'd say that in our complex economy, we need lots of specialists - plumbers, engineers, accountants, salespeople, customer service reps, managers, etc.

Like you say, in most businesses managers bring all the other people together into a coordinated team. That's an important contribution to the whole and is usually well compensated. In smaller businesses, the owner is often the top manager.

Most businesses also need financial capital, and that may come from middle class stockholders or savers, middle class sole proprietors, rich successful entrepreneurs, rich heirs, etc.

When I look at the economy, it seems that most wage earners do not work for businesses that are owned and managed by a successful proprietor/entrepreneur. Most work for stockholder owned corporations, partnerships, sole proprietorships, etc.

My problem with the phrase is the notion that the rich owner/manager is somehow so important that they need to have special tax rules for all rich people (not just the owner/managers). I think we need all types of labor and all types of capital.

I don't think that progressive taxes cause any harm to our economy just because they sometimes impact successful manager/owners. The before-tax rewards of those jobs are high enough to attract plenty of people even with progressive taxes.

(This is a little like saying NFL teams will have no trouble filling their rosters even if the most successful players pay pretty high taxes. The after-tax rewards still far exceed anything else those individuals might do.)
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Old 12-10-2010, 10:22 AM   #174
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I think you're putting the most positive possible interpretation on the phrase, and I agree with much of what you say.
IMO, the phrase usually gets corrupted into "We shouldn't tax rich people because they 'create' jobs." And taxes are the topic of this thread.

It reminds me of a Peanuts strip where Snoopy was jogging and his heart and legs were arguing about who was "more" important. Or, arguing which wheel on a bicycle is more important.

I'd say that in our complex economy, we need lots of specialists - plumbers, engineers, accountants, salespeople, customer service reps, managers, etc.

Like you say, in most businesses managers bring all the other people together into a coordinated team. That's an important contribution to the whole and is usually well compensated. In smaller businesses, the owner is often the top manager.

Most businesses also need financial capital, and that may come from middle class stockholders or savers, middle class sole proprietors, rich successful entrepreneurs, rich heirs, etc.

When I look at the economy, it seems that most wage earners do not work for businesses that are owned and managed by a successful proprietor/entrepreneur. Most work for stockholder owned corporations, partnerships, sole proprietorships, etc.

My problem with the phrase is the notion that the rich owner/manager is somehow so important that they need to have special tax rules for all rich people (not just the owner/managers). I think we need all types of labor and all types of capital.

I don't think that progressive taxes cause any harm to our economy just because they sometimes impact successful manager/owners. The before-tax rewards of those jobs are high enough to attract plenty of people even with progressive taxes.

(This is a little like saying NFL teams will have no trouble filling their rosters even if the most successful players pay pretty high taxes. The after-tax rewards still far exceed anything else those individuals might do.)
Here are a few facts about those insignificant small business owners; many of whom would be negatively impacted by higher taxes, from the US Department of Commerce to chew on... (#4 is especially interesting with unemployment hovering around 10%)

How important are small businesses to the U.S. economy?
Small firms:
• Represent 99.7 percent of all employer firms.
• Employ half of all private sector employees.
• Pay 44 percent of total U.S. private payroll.
• Generated 65 percent of net new jobs over the past 17 years.
• Create more than half of the nonfarm private GDP.
• Hire 43 percent of high tech workers (scientists, engineers, computer programmers, and others).
• Are 52 percent home-based and 2 percent franchises.
• Made up 97.5 percent of all identified exporters and produced 31 percent of export value in FY 2008.
• Produce 13 times more patents per employee than large patenting firms.

Source: U.S. Dept. of Commerce, Census Bureau and Intl. Trade Admin.; Advocacy-funded research by Kathryn Kobe, 2007 (www.sba.gov/advo/research/rs299tot.pdf) and CHI Research, 2003 (www.sba.gov/advo/research/
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Old 12-10-2010, 10:37 AM   #175
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My problem with the phrase is the notion that the rich owner/manager is somehow so important that they need to have special tax rules for all rich people (not just the owner/managers). I think we need all types of labor and all types of capital.
Point of fact, I agree. Rich people should not have special tax rules. Unfortunately, the Federal Tax code does not agree, and so "rich" people are taxed at a special (ie., higher) tax rate than the "average Joe".

So, if you don't want the rich to be taxed at a special rate, do you advocate a flat tax for everyone?
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Old 12-10-2010, 10:49 AM   #176
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Here are a few facts about those insignificant small business owners from the US Department of Commerce to chew on...

How important are small businesses to the U.S. economy?
Small firms:
• Represent 99.7 percent of all employer firms.
• Employ half of all private sector employees.
• Pay 44 percent of total U.S. private payroll.
• Generated 65 percent of net new jobs over the past 17 years.
• Create more than half of the nonfarm private GDP.
• Hire 43 percent of high tech workers (scientists, engineers, computer programmers, and others).
• Are 52 percent home-based and 2 percent franchises.
• Made up 97.5 percent of all identified exporters and produced 31 percent of export value in FY 2008.
• Produce 13 times more patents per employee than large patenting firms.

Source: U.S. Dept. of Commerce, Census Bureau and Intl. Trade Admin.; Advocacy-funded research by Kathryn Kobe, 2007 (www.sba.gov/advo/research/rs299tot.pdf) and CHI Research, 2003 (www.sba.gov/advo/research/
How much does the typical small business owner earn? I really don't know, but a lot is stated about the effect of income tax on small businesses owners since they earn taxable income over $250k.

Is this because a small business owner pays himself a salary which, after deductions ends up being over $250k/year? Does not the small business exist as an entity in its own right and get taxed on its net profits through Corporate taxes? Residual profits being saved / invested for future growth or to weather bad business years etc.

The small business owner could also shelter some of his income with company cars, group health insurance and many other means I'm not aware of.
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Old 12-10-2010, 11:05 AM   #177
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How much does the typical small business owner earn? I really don't know, but a lot is stated about the effect of income tax on small businesses owners since they earn taxable income over $250k.

Is this because a small business owner pays himself a salary which, after deductions ends up being over $250k/year? Does not the small business exist as an entity in its own right and get taxed on its net profits through Corporate taxes? Residual profits being saved / invested for future growth or to weather bad business years etc.

The small business owner could also shelter some of his income with company cars, group health insurance and many other means I'm not aware of.
Virtually all small businesses are formed as income tax pass-through entities (LLC, S-Corp, partnership, sole proprietor, etc.) so there are no corporate level taxes for these entities. The owners will pay tax on their pro rata share of taxable income regardless of whether that income is distributed.

I don't know that this matters for the point. Small business owners make the sole decision on whether to hire more people so their perception and behavior are important to jobs regardless of whether it is reasonable or not in light of other tax deductions available.

If an owner decides they need $300K a year to maintain their lifestyle at current tax rates but need $350K at higher tax rates, they will eliminate expenses or decide to eliminate additional expenses - employee salaries are the costliest of expenses for most businesses. Aggregate this across all small business in US and you have the key to job growth or shrinkage.
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Old 12-10-2010, 11:09 AM   #178
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Virtually all small businesses are formed as income tax pass-through entities (LLC, S-Corp, partnership, sole proprietor, etc.) so there are no corporate level taxes for these entities. The owners will pay tax on their pro rata share of taxable income regardless of whether that income is distributed.

I don't know that this matters for the point. Small business owners make the sole decision on whether to hire more people so their perception and behavior are important to jobs regardless of whether it is reasonable or not in light of other tax deductions available.

If an owner decides they need $300K a year to maintain their lifestyle at current tax rates but need $350K at higher tax rates, they will eliminate expenses or decide to eliminate additional expenses - employee salaries are the costliest of expenses for most businesses. Aggregate this across all small business in US and you have the key to job growth or shrinkage.
Thanks for the explanation. Having only ever being employed by large companies I did not know how small companies were taxed.
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Old 12-10-2010, 11:16 AM   #179
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I'm convinced of the importance of small businesses to our economy, but since not all small business owners are rich and not all rich people are small business owners, I don't think it is clear that increasing taxes for the rich will harm the economy.
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Old 12-10-2010, 11:17 AM   #180
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My problem with the phrase is the notion that the rich owner/manager is somehow so important that they need to have special tax rules for all rich people (not just the owner/managers). I think we need all types of labor and all types of capital.

Like you say, in most businesses managers bring all the other people together into a coordinated team. That's an important contribution to the whole and is usually well compensated. In smaller businesses, the owner is often the top manager.

I don't think that progressive taxes cause any harm to our economy just because they sometimes impact successful manager/owners. The before-tax rewards of those jobs are high enough to attract plenty of people even with progressive taxes.

...
It's all a matter of degrees, and you seem to want to turn it into all-or-nothing. So you agree that (in general) the business managers and/or owners have a rarer skill set (and/or work harder or whatever) and are generally better compensated for that. No one should be saying that increasing the marginal rate on them is going to stop them dead in their tracks. But it is just a simple economic fact of life that if you reduce the effective compensation for a position, you are going to reduce the demand for that position. Just as raising the price of a product reduces demand for the product. How can anyone argue that? On average, people just aren't going to work as hard and top people won't compete for those positions as much if you offer them less.

Again (and again) - we don't know where we are on the Laffer curve, so we can't say whether increasing marginal rates would drag the economy more than it takes in or not. But I can't see how anyone can reasonably argue that it would not be somewhat of a drag on the economy. And that includes encouraging companies to move off-shore. I think we need to proceed with caution rather than just automatically assume that taxing the 'rich' is the answer.

The more I think about something I said earlier, the more I'm beginning to believe in it - if we want people to really understand this whole Federal deficit and spending issue, maybe we need to raise Federal Income Taxes on everyone. If that 50% of filers that on average provide only 1 or 2% of the FIT revenue (or get a credit) suddenly saw they had to pay a flat 10% because of all the government spending and interest, there might be a whole lot more people pushing for real solutions when they go to the ballot box. As long as some 'rich guy' is paying the bill, why should the majority of voters give a hoot about Federal spending?

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Point of fact, I agree. Rich people should not have special tax rules. Unfortunately, the Federal Tax code does not agree, and so "rich" people are taxed at a special (ie., higher) tax rate than the "average Joe".

So, if you don't want the rich to be taxed at a special rate, do you advocate a flat tax for everyone?
Touche' !

Or we could up the ante' - how about a head tax for everyone? Now there is a 'flat tax' for you - everyone share equally, amount-wise rather than %-wise!

-ERD50
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