Tax Cuts

[Rshermr]

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.

.

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.

 

[danielpalos]

Why not stimulate demand through unemployment compensation that clears our poverty guidelines and solves for simple poverty and a natural rate of unemployment; simply Because, supply side economics should be supply us with better governance at lower cost.

 

[Rshermr]

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.

Uh, doubling a single level income tax rate would indeed be an issue. But then no one suggested doing so. But the real problem with your "analysis" is that spending was not considered. For example, when the unemployment rate went up several points, to the second highest in history since the great depression during the two years after Reagan's tax cuts his team raised taxes and spent it on stimulative projects, growing the national debt to about double what It was when he took office. Deficit spending increased the size of the gov, but unemployment went WAY down, causing the deficit to decrease.
Anyone have an example of a tax decrease making a bad economy better. Many of you Say it will, but where is the example???

 

[Penelope]

You really think the elitist are going to bring their manufacturing plants back , dream on. We are a consumerism country and most of us have a hard time consuming anymore. Time to tax the weathy, and since they took the jobs away , they can pay an increase in taxes. Also cut out their non profit organizations they open and fund as a money haven. No more charitable non tax contributions.

If they do not like it let them move somewhere else, Saudi Arabia, Israel, Russia, China, wherever they want. Good riddance.

 

[Toro]

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.

.

There is a fair amount of empirical evidence in the economic literature that corporate income tax cuts both increases economic activity AND increases overall tax revenues (unlike personal income tax cuts, which increases economic activity but generally decreases overall tax revenues.)

Whether they are as effective during a balance sheet recession, I don't know.

 

[danielpalos]

Should we end personal income tax in favor of easier collection of taxes from Firms?

 

[Jomama]

Time to tax the wealthy, and since they took the jobs away, they can pay an increase in taxes..

And those jobs came from where? Day 8 God created jobs? Hippies created the jobs, poor folks, unions? You make it very clear that the wealthy took away jobs but who created them, who built those factories in the first place?

 

[Freemason9]

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.

.

There is a fair amount of empirical evidence in the economic literature that corporate income tax cuts both increases economic activity AND increases overall tax revenues (unlike personal income tax cuts, which increases economic activity but generally decreases overall tax revenues.)

Whether they are as effective during a balance sheet recession, I don't know.

I suppose I should ask you to provide examples of how corporate tax cuts--alone--stimulated economic activity at all. In general, those times of tax cuts have coincided with times of increased federal spending, and I would argue that the increased spending is what was responsible for economic growth during those periods--increased spending created more demand, which is the primary driver of our economy.

 

[EdwardBaiamonte]

I suppose I should ask you to provide examples of how corporate tax cuts--alone--stimulated economic activity at all.y.

dear if you eliminate corporate taxes corporations would come back to the the USA and bring tons of money with them to invest here in new factories, for example, to greatly stimulate the economy. Also lower taxes would mean lower prices and that people could buy more thus stimulating the economy.
Do you understand?? This is econ 101, class one day one minute one.

 

[danielpalos]

I suppose I should ask you to provide examples of how corporate tax cuts--alone--stimulated economic activity at all.y.

dear if you eliminate corporate taxes corporations would come back to the the USA and bring tons of money with them to invest here in new factories, for example, to greatly stimulate the economy. Also lower taxes would mean lower prices and that people could buy more thus stimulating the economy.
Do you understand?? This is econ 101, class one day one minute one.

local governments are already doing that, without the gains claimed by the right being realized.

 

[EdwardBaiamonte]

local governments are already doing that, without the gains claimed by the right being realized.

way too stupid, dishonest, and liberal, of course. Federal rates are 35% while state rates are 5% or less. You are little more than a liar, which is typical of a liberal. You want to be right far more than you care about the facts.

Liberalsim is one part stupidity and one part bad character.

 

[danielpalos]

local governments are already doing that, without the gains claimed by the right being realized.

way too stupid, dishonest, and liberal, of course. Federal rates are 35% while state rates are 5% or less. You are little more than a liar, which is typical of a liberal. You want to be right far more than you care about the facts.

Liberalsim is one part stupidity and one part bad character.

Got any old books with John's name on them so you claim some form of "gospel Truth"; person on the right?

For years, mayors and governors anxious about local jobs had agreed to G.M.’s demands for cash rewards, free buildings, worker training and lucrative tax breaks. As late as 2007, the company was telling local officials that these sorts of incentives would “further G.M.’s strong relationship” with them and be a “win/win situation,” according to town council notes from one Michigan community.

Yet at least 50 properties on the 2009 liquidation list were in towns and states that had awarded incentives, adding up to billions in taxpayer dollars, according to data compiled by The New York Times.--Source: http://www.nytimes.com/2012/12/02/us/how-local-taxpayers-bankroll-corporations.html?_r=0

 

[EdwardBaiamonte]

local governments are already doing that, without the gains claimed by the right being realized.

way too stupid, dishonest, and liberal, of course. Federal rates are 35% while state rates are 5% or less. You are little more than a liar, which is typical of a liberal. You want to be right far more than you care about the facts.

Liberalsim is one part stupidity and one part bad character.

Got any old books with John's name on them so you claim some form of "gospel Truth"; person on the right?

For years, mayors and governors anxious about local jobs had agreed to G.M.’s demands for cash rewards, free buildings, worker training and lucrative tax breaks. As late as 2007, the company was telling local officials that these sorts of incentives would “further G.M.’s strong relationship” with them and be a “win/win situation,” according to town council notes from one Michigan community.

Yet at least 50 properties on the 2009 liquidation list were in towns and states that had awarded incentives, adding up to billions in taxpayer dollars, according to data compiled by The New York Times.--Source: http://www.nytimes.com/2012/12/02/us/how-local-taxpayers-bankroll-corporations.html?_r=0

dear the federal tax rate is 37% each and every year!! Do you understand?

 

[danielpalos]

yes, dear, it may be a cumulative effect for some; but others actually got that much bailout from the People.

adding up to billions in taxpayer dollars

 

[EdwardBaiamonte]

yes, dear, it may be a cumulative effect for some; but others actually got that much bailout from the People.

adding up to billions in taxpayer dollars

it???? you idiot what is "it"??????

 

[danielpalos]

yes, dear, it may be a cumulative effect for some; but others actually got that much bailout from the People.

adding up to billions in taxpayer dollars

it???? you idiot what is "it"??????

37% each and every year!

Yet at least 50 properties on the 2009 liquidation list were in towns and states that had awarded incentives, adding up to billions in taxpayer dollars, according to data compiled by The New York Times.

 

[EdwardBaiamonte]

yes, dear, it may be a cumulative effect for some; but others actually got that much bailout from the People.

adding up to billions in taxpayer dollars

it???? you idiot what is "it"??????

37% each and every year!

Yet at least 50 properties on the 2009 liquidation list were in towns and states that had awarded incentives, adding up to billions in taxpayer dollars, according to data compiled by The New York Times.

and your point is???

 

[danielpalos]

yes, dear, it may be a cumulative effect for some; but others actually got that much bailout from the People.

adding up to billions in taxpayer dollars

it???? you idiot what is "it"??????

37% each and every year!

Yet at least 50 properties on the 2009 liquidation list were in towns and states that had awarded incentives, adding up to billions in taxpayer dollars, according to data compiled by The New York Times.

and your point is???

"adding up to billions in taxpayer dollars" In gains not realized as claimed by the right from "income transfers" from the People and tax preference.

 

[EdwardBaiamonte]

yes, dear, it may be a cumulative effect for some; but others actually got that much bailout from the People.

adding up to billions in taxpayer dollars

it???? you idiot what is "it"??????

37% each and every year!

Yet at least 50 properties on the 2009 liquidation list were in towns and states that had awarded incentives, adding up to billions in taxpayer dollars, according to data compiled by The New York Times.

and your point is???

"adding up to billions in taxpayer dollars" In gains not realized as claimed by the right from "income transfers" from the People and tax preference.

dear please try English

 

[danielpalos]

yes, dear, it may be a cumulative effect for some; but others actually got that much bailout from the People.

adding up to billions in taxpayer dollars

it???? you idiot what is "it"??????

37% each and every year!

Yet at least 50 properties on the 2009 liquidation list were in towns and states that had awarded incentives, adding up to billions in taxpayer dollars, according to data compiled by The New York Times.

and your point is???

"adding up to billions in taxpayer dollars" In gains not realized as claimed by the right from "income transfers" from the People and tax preference.

dear please try English

no clue and no Cause; i got it, pumkin.