Rshermr
VIP Member
Never has, which is why you get no meaningful replies In an economy with low aggregate demand, you will always have high unemployment. Dropping tax rates will do little to impact demand as Reagan's team found in 1981-1982.Yawn, 2 pages and not one direct answer.
Danielpalos - Brilliant point. That's why Buffalo NY is such a hot bed of entrepreneurial growth - an abundant supply of empty factories.
Edwardbai - incorrect in regards to small/mid entrepreneur owned mfg companies in the last several years.
Bodicka - nice personal attack
Toro - Thank you for the attempt but I think you resorted to extremes to make a point. If you used a 100% tax versus zero your point would be even stronger. Kidding aside, your response is well reasoned and thought out which is what I was looking for - thanks.
Since Reagan I've bought into this conservative dogma almost like religion but more and more have been scratching my head trying to understand just how it makes sense. I can come up with a convoluted explanation but nothing that makes real sense. I do believe that supply side infrastructure investment should happen but don't see the benefit (other than me personally) for business supply side tax cuts.
SERIOUSLY, I want to believe this but can't find a way - and can't find anyone to show me how it makes sense.
So, here we go; $10M revenue, employ 100 people, 5% ebitda and let's say $300k net income. An average successful US mfg company. Let's say I use good tax planning and work my taxable income down to $200,000. 40% of that is $80,000 in taxes. The most these taxes could go up or down (politically) are 10% of rate (so 4% which means we have $8,000 at play). Liberals scream to see it higher out of success-envy or something equally evil. Conservatives scream it will kill the economy, muslim socialist foreign born President, etc.
So, if I had that $8,000 - would I hire anyone new - no. Okay, let's multiply this by 10X to give us a decent number. $100M revenue, 1,000 employees, I keep $1.6M and tax cut could put an extra $80,000 in my pocket.
First off, the economy is under-demand and over-supply so in general there is no net need for new productive capacity.
But, let's say my business was growing beyond productive capacity;
- Would I invest in new equipment? Maybe. Some would but they would do it with pre-tax income first, debt second, earnings (the $1.6M) third and reduced-tax 'bonus' income fourth.
If US businesses were growing SO fast to outstrip the funding ability of pre-tax, debt and income - then Yes, makes sense (and affordable to US Treasury). But that's not the case.
So, please, "how would a cut in corporate income taxes stimulate growth in our low-demand/over-supply economy?"
A deep and appreciative Thank You for serious replies.
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