Republicans LIE about the tax hike hurting small businesses

[ilia25]

Let me get this straight... People actually believe a small business owner who gets slammed with higher Taxes isn't going to buckle down and send an employee or two packing?

Of course not -- sizing down his business would reduce his income.

How many people would welcome a pay cut because it would reduce their taxes?

 

[Koios]

So there's no chance the business owner who takes a $250k salary for him and his family won't need to take a bit more from his company to maintain his current standard of living following a tax rate hike? I suspect that's exactly what he'll do. Alternatively, he can lay off a worker, not expand or hire as may have been previously planned, or perhaps raise his prices, if the market will stand it. Whatever he does, the owner has his bills to pay and a return to expect for the investment that created the business. If he doesn't continue to collect his normal salary, he will end up with less, which means he'll spend less. Not so good for the other business he won't be buying from.

No matter how you spin this, there is NO WAY raising taxes helps small business.

They don't take more. The profit accrues to them as personal income.

That depends. Not all profit always goes into the shareholder's pockets. Some can be reinvested in the company or held for future expansion, etc.

And if that profit matches, mirculously, to the $250K they set as their salary, what additional tax will they pay, when only income north of $250K is taxed at slightly more than a 4% higher rate?

Obviously, if we're talking about rate increases for income north of $250k, no change would occur in your scenario. I don't see your point however.

Certainly, for those business owners that would get hit with a tax rate increase, you cannot claim it to be a good thing for the business, their employees, or potential customers of the business or its owner.

Yes, albeit, that's not a pure savings. It's often an asset, that depreciates over time. It's not a pure expense, such as paying out year-end bonuses.

And consider this: what if income above a certain amount, say $400 grand and above, were highly taxed; circa 70% or more. Wouldn't the company owner be more inclined to plow the earnings above $400 grand back into the company, or even better, paying bonuses to employees?

 

[eflatminor]

How many people would welcome a pay cut because it would reduce their taxes?

Depends on the net after taxes.

 

[Stephanie]

Leave it to slate to push this garbage, and the sheep eat it up

 

[Toronado3800]

Trust me, $250,000 a year is enough money to live quite well...

Who gets to determine that? You?

And how do you know what investment was originally made to create the business? Is the return on capital invested not to be considered in what an owner pays himself?

Pass.

Yep. The majority get to determine $250,000 a year is a pretty good amount of money.

If it is complicated try to figure out

1st, the poverty line,family of three, what, $40k you are suffering if you are below?

2nd then the line to live comfortably with a used car type life $60k? That's 20k more than it takes to just feed yourself.

3rd when you can afford luxuries like depreciating new cars... 70-80k? Then you are doing ok.

(my numbers are up for adjustment btw)

So, by the time $250k hits I have no sympathies for those who fall bankrupt or the like. Imagine being able to buy a new car and a home with cash every year and loosing it all.

 

[ABikerSailor]

You know................Buffet said it best last night on Jon Stewart's show. He said that people like him who make a lot of money are STILL going to invest, whether the profit is 85 percent (15 percent tax rate) or 65 percent (35 percent tax rate), because they are STILL MAKING MONEY.

Besides, NOBODY in this country under the Obama tax plan will pay any more on the first 250,000. It's only on the money that you make ABOVE that rate that is taxed.

If you think that you're going to have to cut your own income to avoid the extra tax, you're stupid, because profit is still profit, whether it's 30 percent or 60 percent or 85 percent, it's still more money than you had.

 

[eflatminor]

They don't take more. The profit accrues to them as personal income.

That depends. Not all profit always goes into the shareholder's pockets. Some can be reinvested in the company or held for future expansion, etc.

And if that profit matches, mirculously, to the $250K they set as their salary, what additional tax will they pay, when only income north of $250K is taxed at slightly more than a 4% higher rate?

Obviously, if we're talking about rate increases for income north of $250k, no change would occur in your scenario. I don't see your point however.

Certainly, for those business owners that would get hit with a tax rate increase, you cannot claim it to be a good thing for the business, their employees, or potential customers of the business or its owner.

Yes, albeit, that's not a pure savings. It's often an asset, that depreciates over time. It's not a pure expense, such as paying out year-end bonuses.

And consider this: what if income above a certain amount, say $400 grand and above, were highly taxed; circa 70% or more. Wouldn't the company owner be more inclined to plow the earnings above $400 grand back into the company, or even better, paying bonuses to employees?

No, he would not. He'd be more inclined to either defer income (stock options, etc) or if he requires that income to pay his bills, he'll find a way to make the company more efficient, which usually means laying someone off.

You also overlook the capital need to earn a reasonable return on investment. You may think making $400k a year is a lot, but that depends entirely on the investment required to generate that revenue.

 

[Charles_Main]

John Boehner:
"In my view, raising taxes on the so-called top 2 percent, half of those taxpayers are small-business owners that pay their taxes through their personal income filing every year... you're not going to grow the economy if you raise the top 2 percent rates. It'll hurt small businesses, and it'll hurt our economy..."

But the truth is that a personal tax hike does NOT hurt the small business, because only the company profits are counted as the owner's income and are taxed accordingly -- not the whole revenue. So the tax hike only penalizes those appropriating more than 250,000 of their company revenue. It has no effect on the business solvency -- quite the opposite, it encourages the owner to spend more revenues on expanding their business.

So the question is not whether Boehner treats Americans as a bunch of illiterate fools -- he obviously does.

The question is whether he will get away with it -- again.


See also:
Small Business tax myths: Most firms are not affected by Obama tax proposals. - Slate Magazine

Democrats are being silly when they pretend raising taxes on the Rich is a serious step toward fixing our Debt Problems.

were spending money so fast, returning to the Bush rates on the Top Bracket only brings enough money to run the Government for 10 days, using the most favorable estimates.

 

[ABikerSailor]

just where did the king Obama come up with this 250,000 as rich?

and I can't believe they are trying to sell this tax won't be hitting small business

the propaganda from the LEFT is in high gear for their Dear Leader

Actually, according to the government office that looks at these things, the median income (middle class) in this country is about 48,500/yr.

250,000 is 5 times what the average income is.

Yeah, I'd say that if you make 250,000/yr, you're not gonna starve.

 

[Koios]

That depends. Not all profit always goes into the shareholder's pockets. Some can be reinvested in the company or held for future expansion, etc.



Obviously, if we're talking about rate increases for income north of $250k, no change would occur in your scenario. I don't see your point however.

Certainly, for those business owners that would get hit with a tax rate increase, you cannot claim it to be a good thing for the business, their employees, or potential customers of the business or its owner.

Yes, albeit, that's not a pure savings. It's often an asset, that depreciates over time. It's not a pure expense, such as paying out year-end bonuses.

And consider this: what if income above a certain amount, say $400 grand and above, were highly taxed; circa 70% or more. Wouldn't the company owner be more inclined to plow the earnings above $400 grand back into the company, or even better, paying bonuses to employees?

No, he would not. He'd be more inclined to either defer income (stock options, etc) or if he requires that income to pay his bills, he'll find a way to make the company more efficient, which usually means laying someone off.

You also overlook the capital need to earn a reasonable return on investment. You may think making $400k a year is a lot, but that depends entirely on the investment required to generate that revenue.

C Corps are not small businesses.

 

[eflatminor]

Trust me, $250,000 a year is enough money to live quite well...

Who gets to determine that? You?

And how do you know what investment was originally made to create the business? Is the return on capital invested not to be considered in what an owner pays himself?

Pass.

Yep. The majority get to determine $250,000 a year is a pretty good amount of money.

If it is complicated try to figure out

1st, the poverty line,family of three, what, $40k you are suffering if you are below?

2nd then the line to live comfortably with a used car type life $60k? That's 20k more than it takes to just feed yourself.

3rd when you can afford luxuries like depreciating new cars... 70-80k? Then you are doing ok.

(my numbers are up for adjustment btw)

So, by the time $250k hits I have no sympathies for those who fall bankrupt or the like. Imagine being able to buy a new car and a home with cash every year and loosing it all.

And how much did that owner invest to get the company up and running and into a position to generate enough revenue to pay him a salary?

Do you intend to completely overlook the importance of capital markets?

 

[WillowTree]

but then you stupids totally ignore the added expenses the rammed down our throats bamiecare is gonna put on business..

 

[eflatminor]

Yes, albeit, that's not a pure savings. It's often an asset, that depreciates over time. It's not a pure expense, such as paying out year-end bonuses.

And consider this: what if income above a certain amount, say $400 grand and above, were highly taxed; circa 70% or more. Wouldn't the company owner be more inclined to plow the earnings above $400 grand back into the company, or even better, paying bonuses to employees?

No, he would not. He'd be more inclined to either defer income (stock options, etc) or if he requires that income to pay his bills, he'll find a way to make the company more efficient, which usually means laying someone off.

You also overlook the capital need to earn a reasonable return on investment. You may think making $400k a year is a lot, but that depends entirely on the investment required to generate that revenue.

C Corps are not small businesses.

Bullshit. C corps can be any size with any amount of revenue, or none. Same for S corps or limited liability companies.

 

[ilia25]

So there's no chance the business owner who takes a $250k salary for him and his family won't need to take a bit more from his company to maintain his current standard of living following a tax rate hike?

No chance at all, if only because a guy taking home $250K is not affected under Obama plan.

He would have to take a $500K salary to pay 10K more in taxes.

Thanks for making my point. Anyone making north of $250k WOULD get hit. Now tell us again how that helps the business, it's employees, or the companies that will not sell their product or service to the small business owner because he has less take home pay.

That is a very different point -- one that has nothing to do with assertion that the small business will suffer.

But I can answer that. As Warren Buffet said yesterday, taxes on the rich will not hurt the economy. The reason is that the rich have more money that they are willing to either spend, or invest in expanding the production capacity.

The US economy has hundreds of billions dollars sitting idle. That, by the way, is the primary reason why the government can continue to borrow at ultra-low rates despite all that talk about unsustainable debt and trillion deficits.

Investors are begging the government to borrow their idle cash at rates below inflation. Taking those money in taxes instead will have no effect on aggregate spending.

 

[Avatar4321]

Tell that to my friend who is struggling with her business because of the tax hikes

What tax hikes?

Obamacare.

You know, the tax hike.

 

[eflatminor]

The majority get to determine $250,000 a year is a pretty good amount of money.

Ah yes, rule my majority. Two foxes and a sheep deciding what's for dinner. Works every time...

 

[WillowTree]

Tell that to my friend who is struggling with her business because of the tax hikes

What tax hikes?

Obamacare.

You know, the tax hike.

How is she dealing with that?

 

[WillowTree]

The majority get to determine $250,000 a year is a pretty good amount of money.

Ah yes, rule my majority. Two foxes and a sheep deciding what's for dinner. Works every time...

well, it'll work for demoncraps until the Republicans are in the majority,, then,, not so much.

 

[eflatminor]

No chance at all, if only because a guy taking home $250K is not affected under Obama plan.

He would have to take a $500K salary to pay 10K more in taxes.

Thanks for making my point. Anyone making north of $250k WOULD get hit. Now tell us again how that helps the business, it's employees, or the companies that will not sell their product or service to the small business owner because he has less take home pay.

That is a very different point -- one that has nothing to do with assertion that the small business will suffer.

But I can answer that. As Warren Buffet said yesterday, taxes on the rich will not hurt the economy. The reason is that the rich have more money that they are willing to either spend, or invest in expanding the production capacity.

The US economy has hundreds of billions dollars sitting idle. That, by the way, is the primary reason why the government can continue to borrow at ultra-low rates despite all that talk about unsustainable debt and trillion deficits.

Investors are begging the government to borrow their idle cash at rates below inflation. Taking those money in taxes instead will have no effect on aggregate spending.

You said it would help businesses, increase aggregate spending. Backing off that now?

 

[tjvh]

just where did the king Obama come up with this 250,000 as rich?

and I can't believe they are trying to sell this tax won't be hitting small business

the propaganda from the LEFT is in high gear for their Dear Leader

Actually, according to the government office that looks at these things, the median income (middle class) in this country is about 48,500/yr.

250,000 is 5 times what the average income is.

Yeah, I'd say that if you make 250,000/yr, you're not gonna starve.

No, he probably wont starve... But the extra waitress at that restaurant owned by that guy making 250k who gets laid off just might.