Is that like Ebola or something ?
Worse, it means you are turning into socialists
Is that like Ebola or something ?
Worse, it means you are turning into socialists
Something DW does quite well ..So, the solution, it seems to me, is to not tax that money sitting around doing nothing, but to figure out a way to get it into the economy.
Large corps with buttloads of cash they have no productive use for should be encouraged to return that money to shareholders, who would either use it more "productively", or spend it on "stuff", increasing aggregate demand, possibly resulting in higher employment and increased tax revenues for the gubmit.
I don't know, a one-time distribution at a low/no tax rate seems plenty "supply-side" to me.
I should know better than to frequent this forum...
We are thinking as shareholders, not corporate management. If I can build a facility in Ireland at 1/3 the US corporate tax rate, why would I fight OSHA and EPA and those nice folks to build it here for a lot more money?
Large corps with buttloads of cash they have no productive use for..
...is what I said. If they're building in Ireland, I'll assume that is a productive use. I did not say anything about the government taxing/confiscating it.
I know you didn't, but that is WHY these things are happening. The uncertainty in what direction Congress is going makes those businesses with cash nervous, so they are acting like consumers are cutting back and holding tight.
U.S. companies are holding more cash in the bank than at any point on record, underscoring persistent worries about financial markets and about the sustainability of the economic recovery.
The Federal Reserve reported Thursday that nonfinancial companies had socked away $1.84 trillion in cash and other liquid assets as of the end of March...
While renewed confidence in corporate-bond markets has allowed big companies to raise a record amount of money, many are still hesitant to spend the cash on hiring or expansion amid doubts about the strength of the recovery.
We are thinking as shareholders, not corporate management. If I can build a facility in Ireland at 1/3 the US corporate tax rate, why would I fight OSHA and EPA and those nice folks to build it here for a lot more money?
jdw - I responded that your example was flawed, as it ignored the after-tax value of the profits. You can't ignore the after-tax values, in a discussion on the effects of tax rates! I gave the following example in post #69 - (I added a few notes in "()" for clarity in this context and some underlining for emphasis. Note that we agreed that the increased profits would increase the business value at a 10x rate), showing the effects of tax rates:
The above shows that at higher tax rates, the business persons income is lower (a demotivator), and that the value of added investment in the business is lower (a demotivator).
You said in post #71:
And I responded in post #74:
Maybe you missed all that in the flurry of posts and cross-quoting. I tried to break it out here as concisely as I could, so hopefully it is clear. So, how can higher tax rates motivate a business person to invest in their business more than lower tax rates would, when those higher tax rates bring fewer $ into their pocket, whether they sell their business or not?
-ERD50
this isnt correct. the taxes due on the business' profit by the potential buyer of the business may influence whether that buyer does in fact buy it but when the business owner is do an analysis of his/her business to determine its value for sale a business owner doesnt include the personal income taxes s/he would be paying on the profit if s/he still owned it.
at the moment companies are having good revenue reports and, as i said in my 1st post on this thread, the highest profits/GDP in 60 years. why have they been realizing these profits instead of investing in their companies? maybe it is because the tax rates are so low that it makes more sense to book the profit.
i dont understand how you cant see the tax payer psychology i am pointing out when you actually give examples of that very psychology in your post. i highlighted in red where you give an example of a business owner making a decision about his businesses based overwelmingly on the tax implications. you also mentioned lot of schemes that were used to reduce taxes, which you called "stupid". so therefore you are acknowledging that tax payers will do "stupid" things to avoid paying taxes. that is exactly the tax payer psychology i based my premise on.
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so i will try to address what i think you are thinking by first suggesting you look at my last 2 posts, in which i try to get my point across that i am talking about a tax payer psychology. i have said this to you over and over again and since it is a psychology the proof may not be in the dollar and cents numbers.
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it is clear you dont agree with, nor like my idea, and unfortunately you also seem to not be seeing the tax payer psychology i have been talking about. granted the example that i highlighted in red was a CG example but so what? i pointed it out because it shows the psychology i am trying to get you all to see. just because it is a CG example doesnt invalidate it in showing that psychology. the other "stupid" schemes to lowering taxes that were also in the post i highlighted, also show that psychology. i have to believe he used the word "stupid" when mentioning those schemes because, to him, they didnt make financial sense. so if people are willing to follow "stupid" schemes to avoid paying personal income taxes, how can you all claim that they wont do something like just plowing those expected profits back into their company (making them expenses instead) in order to reduce their personal income taxes when it carries the added benefit of growing their business?
Yes, but I feel that any view of tax payer psychology is too subjective to be used to convince anyone. So I keep saying (over and over), show me the kinds of numbers a business person would review with an accountant to say "Yes, let's make this investment!"
it is the tax payer psychology that will provide the stimulus because tax payers in high tax brackets where the actual rates are high will want to pay less in taxes and when they have a small business, an easy way to do that is spend dollars that would otherwise be taxed on something that can be deducted. other posters in this thread have also provided examples of people doing this so i dont see why it wouldnt cause the same reaction if the higher tax brackets had their rates raised now.
It would seem that for any corporation to pay ZERO in taxes, that corporation has enough deductions, depreciation and tax credits that bring their profit to zero. Now ...when one thinks about this ...one might realize that all those credits and/or depreciation for capital equipment either 179 or otherwise and/or other loop holes go into the "economy to stimulate growth".
So the question becomes which do we want? Do we want all the tax credits and depreciation and/or so called loop holes to go away which results perhaps in corporations paying more effective tax but leads to less economic stimulation because the corporations won't buy things or do things that stimulate the economy...or do you want it similar to the way it is today...where the corporations get some benefit via the reduced taxation granted them by the federal government for doing their part in stimulating the economy. We can't have both IMHO.
We should be reminded that "for every action there is a reaction" and "consequence".
Now that said, it is extremely "one sided" to present one side of the data by saying they pay zero in taxes. The other side of that are the reasons why...and what those reasons stimulate. They stimulate the economy.
JDW...Hamlet has brought up another key issue that is important to your original concept....in that...increasing tax rates on profits will not do anything for the megacorps that keep their profits offshore. They still legally will owe little or no tax to the U.S.
i stand by my response of
this isnt correct. the taxes due on the business' profit by the potential buyer of the business may influence whether that buyer does in fact buy it but when the business owner is do an analysis of his/her business to determine its value for sale a business owner doesnt include the personal income taxes s/he would be paying on the profit if s/he still owned it.
however i have noticed that all the posts arguing against my premise dont even attempt to really address it. my premise is basicly that tax payer psychology is the main driver for the investment in small business...
... and the type of response to that i got was an off handed dismissal
well i have allowed you all to do that by not bringing that part of the premise to the forefront and instead i actually provided you with numbers supporting my view.
I think you have a number of steps to make your case:
A) That it is possible for most businesses to consistently (year after year) shift their income from a higher tax rate classification to a lower tax rate classification.
B) That this shift would generally result in economic/job growth.
C) That increasing the tax rates would create more of this activity than would occur at lower tax rates.
i said earlier
and here another poster provides explanation of that very thing, i.e. taxpayers (in this case corps.) spending money (expenses, capital investment) to reduce their tax burden via "deductions, depreciation and tax credits".
and to top it off, she even says (see the red highlight above) that such spending "stimulate(s) the economy". my premise seems well defended by the above post.
I'm bowing out as well. JDW...if you don't understand that buying equipment and taking immediate 179 depreciation or hiring an employee or two and receiving a tax credit for it......STIMULATES the economy there is no point in further discussion.
All of those things result in money back into the economy ! Why do you think the government grants it !
I give up.
LOL!!!!! i agree, i have making that point exactly. what you said, in essence, was that you realize that people will look for ways to reduce their taxes and "buying equipment and taking immediate 179 depreciation or hiring an employee or two and receiving a tax credit for it" will stimulate the economy while reducing their taxes. all i have added to that is the premise that the higher the top tax rates are, the more motivation small business owners will have, and hence they will be more likely, to look for ways to reduce their taxes, and therefore more of them will start "buying equipment and taking immediate 179 depreciation or hiring an employee or two". i find it amazing that you choose this (me agreeing with you) as a reason to bow out!
A) That it is possible for most businesses to consistently (year after year) shift their income from a higher tax rate classification to a lower tax rate classification.
B) That this shift would generally result in economic/job growth.
C) That increasing the tax rates would create more of this activity than would occur at lower tax rates.
i stand by my response of
this isnt correct. the taxes due on the business' profit by the potential buyer of the business may influence whether that buyer does in fact buy it but when the business owner is do an analysis of his/her business to determine its value for sale a business owner doesnt include the personal income taxes s/he would be paying on the profit if s/he still owned it.
And as I replied at the time - your numbers ignore the effect (on income) of the very taxes that you apply. So no, they don't support your view, they counter it. I'll repeat the criteria this needs to meet to be convincing:
Since I didn't provide closure on that part of your position, allow me bow back in long enough to do so.
Yes, lower taxes on specific forms of income can stimulate a shift to those forms. But what you didn't prove, was part C of my earlier statement:
My numeric example showed that the higher tax rates on income lowered the value of the investment and lowered total income to the business owner. That is not an incentive. IOW, yes, lower cap gains tax rates will tend to shift income to cap gains. But further increases in income tax rates lowers incentives across the board, and does not make up the difference to the point the business owner ends up with MORE money in his pocket after taxes. If it did, my numeric example would show that.
You show me a legitimate after-tax numeric example that shows that, and we will talk.
-ERD50
LOL!!!!! i agree, i have making that point exactly. what you said, in essence, was that you realize that people will look for ways to reduce their taxes and "buying equipment and taking immediate 179 depreciation or hiring an employee or two and receiving a tax credit for it" will stimulate the economy while reducing their taxes. all i have added to that is the premise that the higher the top tax rates are, the more motivation small business owners will have, and hence they will be more likely, to look for ways to reduce their taxes, and therefore more of them will start "buying equipment and taking immediate 179 depreciation or hiring an employee or two". i find it amazing that you choose this (me agreeing with you) as a reason to bow out!
LOL!!!!! i agree, i have making that point exactly. what you said, in essence, was that you realize that people will look for ways to reduce their taxes and "buying equipment and taking immediate 179 depreciation or hiring an employee or two and receiving a tax credit for it" will stimulate the economy while reducing their taxes. all i have added to that is the premise that the higher the top tax rates are, the more motivation small business owners will have, and hence they will be more likely, to look for ways to reduce their taxes, and therefore more of them will start "buying equipment and taking immediate 179 depreciation or hiring an employee or two". i find it amazing that you choose this (me agreeing with you) as a reason to bow out!
how does any of this
in any way address this?
there is no mention of "lower taxes on specific forms of income" in the post of mine you quoted.