Chiff and Fipple Forums

Nanohedron wrote:

rhulsey wrote:Choosing to lurk on this one, I am.

...he said as he hit "Submit".

You mean ... "Submit" is not just a simple affirmation of humility and fealty to the Great Chiff, but it actually makes your stuff visible online???

Jeez, I'm going to have to re-think the last 13 thousand times or so I hit that damn button ...

The corrupt coffee example adds a separate issue of corruption and misuse of tax dollars and does not go with the original question. For every corrupt politician, there is a business man that dumps his money into worthless offspring that destroys the business. Sometimes business do not scale and a good manager of one store cannot manage a chain. All of which is a side issue and is separate from the main question.

The actor example also seems off the mark for modern times. Actors, sports stars and others that do something other than invest may choose to spend their time elsewhere, but for the investors (who actually pay less than those that earn money by their actions independent of wealth) there is little risk (Losses count against "earnings" etc. ) and still a gain. It seems different than the 1970's (?) Reagan situation.

Easy on the irony there, MTGuru. I'm feeling a crushing sensation and it's hard to breathe.

lurking good


dancing on eggs, too

OK-- I TRULY didn't want to start a ruckus, just get some clarification. Nano, if you think this has gone too far astray, please yank the thread with my blessing.

We've opted to just observe for now, despite the rocky beginnings. Moderatorial consensus is that the topic is entirely capable of being divorced from politics, so it's salvageable. But that's up to you guys.

I've been following this thread because the original question got me wondering about how taxes are calculated and why various methods of stimulating the economy supposedly work. I'll try to avoid any opinions on whether any of those methods work and just give things as I've researched and as makes sense to me.

I started off by looking into the regulations on taxes for businesses. The first relevant and readable article I found was this, which is a bit old. Even at a bit old, it probably gives a decent idea of how things are because I don't think the tax laws have changed much except for the amount owed. It seems that the tax is indeed based on net income, which comes after subtracting out things like wages and materials or other business expenses. So my understanding is that since the workers have their income taxed directly and sales of items are often taxed directly, they don't tax the business again for those expenses. So the shareholders or owners of a business are the ones who are affected by tax increases on businesses.

Now as for how cutting those taxes, or at least raising them less, is supposed to help the economy, I'll turn to my own logic rather than an outside source. America is a capitalist country. That means that people can earn different wages for different jobs and except for setting a minimum wage the government doesn't have much say in what a person should earn. Obviously people want to earn more and they work for that. Some people manage to do it and some don't. I don't even want to think about going into the reasons why that happens but it does. The people who do get to the top are often in positions of hiring other people and deciding how much they make. Now remember, those people in charge are driven by a desire for more money. At least most of the time. So if they find that they are making less money because the government takes more of the money they make, they will start to look for ways to reduce expenses while still making income so they can get the same amount of money into their pocket. If they cut a worker and still hold productivity, now those wages go to the owner or shareholders instead of to that individual. It is now taxed at the higher rate for the company instead of the individual but it is still more money in the owner's pocket. I think that is the logic behind not increasing taxes on business owners to help the economy. If the taxes stay the same or are lowered, they are not guaranteed to hire more workers. But if they have extra revenue they will be more likely to look for ways to turn that money into more money. If they are getting less money they will look for ways to offset it, and often that means someone else loses out.

Maybe my logic is flawed. Maybe I'm a bit pessimistic about humanity. But that makes sense to me. I hope it avoided any of the political leanings that this topic is almost guaranteed to bring out.

kokopelli wrote:I hope it avoided any of the political leanings that this topic is almost guaranteed to bring out.

I think it did.

Here's the irony, folks: Those of you recognising certain economic philosophies as coming from certain political camps will surely say, "Well, obviously that is the position of Thus-and-Such." But better IMO to keep it that way - implicit for those in the know - rather than trot out political camps, which is sure to polarise opinion and lead to needless acrimony instead of prompting actual critical thinking. I for one would rather read purely about economic models and practices, and come to my own conclusions based on reasoning, instead of succumbing to my own emotional predispositions based on mere party politics. How much more reasonable can you get?

Again, we'll see if this approach for this thread is actually sustainable. But why not? Think of it as an exercise, if nothing else. And you never know; I might find to my surprise that with pure information to go by, my conclusions from this discussion will change my alliances. But baldly bringing party politics and candidates into it will never do that.

The problem is that most philosophies and political stances have become close to dogmas. There are things that the government just does better, and things that you want the government have no part in, but that ambiguity makes for messy politics. In the real world abstract concepts put into action often are demonstrated to be nonproductive or counter productive to the desired goal, but the emotional attachment to a philosophy prevents the recognition of the working solution to a problem. At some point it all starts looking like a spherical cow in a vacuum...

Right. And this is why I call for examination of the operative principles themselves, free of baggage.

And if I should say - hypothetically - "This makes sense to me!", and another should say, "Aha. It would seem Nano hews unbeknownst to the philosophies and tenets of my own dearly beloved XYZ party," or somesuch, well, then do PM hypothetical me about it.

Very simply, if there is money that tends to be used for investments that create jobs, and you increase taxes on it,
less of it will be available and so there will tend to be fewer jobs. According to some, the people who have that money
tend to be more wealthy. If you increase taxes on them, it's recessionary. If you reduce their taxes, it's
anti-recessionary. As to the stimulus, one concern I've heard expressed (by conservatives) is that the money
was mostly borrowed, e.g. from abroad, and the debt, as it increases, must be paid; hence businesses tended not to view it as real and stable. Unlike money you earn that you get to keep because the government doesn't take it in the first place.

"if you raise income taxes on the wealthy "job creators" (business owners), this will result in the loss of jobs or delay in the creation of new ones."

An example using extremes will make this easy to understand. Suppose that you have no employees, but need one, and the tax rate was 100%. You would not ever be able to hire an employee, as there is no excess cash. But suppose the tax rate was dropped to zero, the money you have been paying the government could be used to pay an employee. In fact, with the excess funds you could expand your business and hire more employees. Obviously we need to pay for government, so we can't have a zero rate. But, if we lowered tax rates a little, we could wipe out unemployment. Also, cutting government waste and cutting government spending would help as well. Remember, every tax cut this century has lead to lower unemployment and an improved economy.

Word from Europe is that Wealthy Business Owners are NOT in any sense, wealth creators.
It's the educated middle-class - Doctors, Lawyers, Teachers, Dentists and the like, and the environment they promote, that creates wealth - that is to say, create employment and new businesses. The Big Businesses just accumulate wealth in one place. That is the political sleight-of-hand, here.

Innocent Bystander wrote:Word from Europe is that Wealthy Business Owners are NOT in any sense, wealth creators.
It's the educated middle-class - Doctors, Lawyers, Teachers, Dentists and the like, and the environment they promote, that creates wealth - that is to say, create employment and new businesses. The Big Businesses just accumulate wealth in one place. That is the political sleight-of-hand, here.

Do you agree with "Europe" and if so, can you explain what you mean above? Are you saying, for instance, that the educated middle-class are, perhaps, "Wealthy Consumers" and this environment they "promote" is one of consumption, thereby enriching the Big Business wealth accumulators (and product suppliers)?

kkrell wrote:

Innocent Bystander wrote:Word from Europe is that Wealthy Business Owners are NOT in any sense, wealth creators.
It's the educated middle-class - Doctors, Lawyers, Teachers, Dentists and the like, and the environment they promote, that creates wealth - that is to say, create employment and new businesses. The Big Businesses just accumulate wealth in one place. That is the political sleight-of-hand, here.

Do you agree with "Europe" and if so, can you explain what you mean above? Are you saying, for instance, that the educated middle-class are, perhaps, "Wealthy Consumers" and this environment they "promote" is one of consumption, thereby enriching the Big Business wealth accumulators (and product suppliers)?

Yes, I agree with Europe, and the job-creation is not one of "consumption" but rather of fostering initiative. It appears from studies the Big Business does not do much of this. Or at least, not on a neighbourhood scale.