Tax Cuts

[Jomama]

Go ahead, explain this great myth - how would a cut in corporate income taxes stimulate growth in our low-demand/over-supply economy.

Not republican talking points, I'm a lifelong entrepreneur - explain this so I understand it.

Use this scenario, US Mfg doing $10mm in revenue and 5% EBITDA.

Thanks

 

[1stRambo]

Go ahead, explain this great myth - how would a cut in corporate income taxes stimulate growth in our low-demand/over-supply economy.

Not republican talking points, I'm a lifelong entrepreneur - explain this so I understand it.

Use this scenario, US Mfg doing $10mm in revenue and 5% EBITDA.

Thanks

Yo, it would do one thing first? It would keep them businesses from going overseas, and less unemployment!!! Hey, not to worry though, the Fed will raise interest rates soon, than we can all bitch and moan!!!

"GTP"

 

[EdwardBaiamonte]

It would keep them businesses from going overseas, and less unemployment!!!"

by eliminating the highest liberal taxes in the world that virtually force them to move off shore???

 

[TheOldSchool]

Holy crap!!!!! I haven't heard a republican talk about tax cuts in YEARS!!!

Are you sure you all don't want to say something insane about Obama? Or invent some more nonsense about Hillary???

Republicans with IDEAS??? Holy crap I never thought I'd see it again!!!

 

[Jomama]

Really Rambo, a $10M us mfg firm is going to move overseas? Foreign labor is up, US energy prices are down and 'onshoring' is gaining strength - and some entrepreneur is going to ... what, sell his factory, ship equipment to China and start operations there?

Next.

 

[1stRambo]

Really Rambo, a $10M us mfg firm is going to move overseas? Foreign labor is up, US energy prices are down and 'onshoring' is gaining strength - and some entrepreneur is going to ... what, sell his factory, ship equipment to China and start operations there?

Next.

Yo, no, just his money! If he sees he can make more money offshore? Yes, he will!

"GTP"

 

[danielpalos]

In other words, a capitalist is going disinvest from his Firm, and move his money overseas.

 

[Jomama]

Yea, but he can't. He cant make more money offshore. That's at least 95% accurate for small/mid sized mfgs in the US in 2015. We can fantasize about it but it's not true any more, was in 1990's, not now.

But, don't avoid the OP for too long, tell me how; "a cut in corporate income taxes stimulate growth (or investment) in our low-demand/over-supply economy".

 

[Mr. H.]

Go ahead, explain this great myth - how would a cut in corporate income taxes stimulate growth in our low-demand/over-supply economy.

Not republican talking points, I'm a lifelong entrepreneur - explain this so I understand it.

Use this scenario, US Mfg doing $10mm in revenue and 5% EBITDA.

Thanks

As a lifelong entrepreneur, why don't you just make us an argument for raising taxes on your operations while disallowing any of your your expenses as a reduction of taxable revenues.

Keep it simple, stupid.

 

[1stRambo]

In other words, a capitalist is going disinvest from his Firm, and move his money overseas.

Yo, cheap labor and no regulations, sounds good to me!

"GTP"

 

[danielpalos]

In other words, a capitalist is going disinvest from his Firm, and move his money overseas.

Yo, cheap labor and no regulations, sounds good to me!

"GTP"

Doesn't that mean that there is some vacated property or facility for some other entrepreneur to use?

 

[EdwardBaiamonte]

Go ahead, explain this great myth - how would a cut in corporate income taxes stimulate growth in our low-demand/over-supply economy.

dear, our companies are moving off shore, keeping their profits offshore and investing off shore all because of the high taxes here.

 

[boedicca]

Go ahead, explain this great myth - how would a cut in corporate income taxes stimulate growth in our low-demand/over-supply economy.

Not republican talking points, I'm a lifelong entrepreneur - explain this so I understand it.

Use this scenario, US Mfg doing $10mm in revenue and 5% EBITDA.

Thanks

Nobody pays corporate income taxes on EBITDA - the tax code is much more complicated than that.

And if you don't understand how keeping profits instead of paying taxes enables growth, you must succeed in business by pure dumb luck.

 

[Toro]

Go ahead, explain this great myth - how would a cut in corporate income taxes stimulate growth in our low-demand/over-supply economy.

Not republican talking points, I'm a lifelong entrepreneur - explain this so I understand it.

Use this scenario, US Mfg doing $10mm in revenue and 5% EBITDA.

Thanks

Lets look at this the opposite way. Lets see what happens when your taxes are increased.

Your taxes go ip from 0% to 50%. You finance your business with debt and your debt service coverage ratio is 1.25x before the tax increase. You have no D&A. You pay yourself out of profits.

0% tax

EBITDA = $500,000
Interest = $400,000
EBT = $100,000
Taxes = $0
Net Income = $100,000

50% tax

EBITDA = $500,000
Interest = $400,000
EBT = $100,000
Taxes = $50,000
Net income = $50,000

Your income has been halved. That's bad for the economy.

I hope this helps.

 

[danielpalos]

Why would it be bad for the economy; if, those tax monies being raised went to pay the debts of the several United States?

 

[Dont Taz Me Bro]

Go ahead, explain this great myth - how would a cut in corporate income taxes stimulate growth in our low-demand/over-supply economy.

Not republican talking points, I'm a lifelong entrepreneur - explain this so I understand it.

Use this scenario, US Mfg doing $10mm in revenue and 5% EBITDA.

Thanks

Why would anybody here waste their time when you've already decided what you believe regardless of what they say?

 

[danielpalos]

Only the right is disingenuous enough to claim we win our wars on crime, drugs, "illegals", poverty, and terror, by lowering taxes.

 

[HereWeGoAgain]

Go ahead, explain this great myth - how would a cut in corporate income taxes stimulate growth in our low-demand/over-supply economy.

Not republican talking points, I'm a lifelong entrepreneur - explain this so I understand it.

Use this scenario, US Mfg doing $10mm in revenue and 5% EBITDA.

Thanks

Yo, it would do one thing first? It would keep them businesses from going overseas, and less unemployment!!! Hey, not to worry though, the Fed will raise interest rates soon, than we can all bitch and moan!!!

"GTP"

I'm looking forward to it.

 

[Jomama]

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.

.

 

[danielpalos]

I believe reducing red tape would be more effective than micromanaging our tax codes.