Posted on 10/17/2012 9:02:46 AM PDT by The Louiswu
Romney loves to say that lowering taxes on companies
will create jobs. This is spoken like some gospel truth.
I actually stopped to think this through
tonight and came to a much different conclusion.
I believe that higher taxes actually encourages
increased hiring and investment. Why? Because, as a
small biz employer
(structured as an S Corp) all company profit flows
through to my (and Joe Downey's) personal taxes. As
both candidates regularly note, 90%+ of all businesses are structured this way.
So if you reduce my tax rate then I'm more likely to
take money out of the company since the penalty for
doing so (taxes), is reduced. Whereas a higher tax
rate means I'm incentivized to take a reasonable
salary and reinvest the money in the business- new
hires, marketing, etc, instead of taking it out and
paying the taxes. This will then grow my business.
So I hire more people, the economy grows and the
value of my business also grows. Everyone wins.
Also, consider what happens to the profit business
owners take out of their companies with this lower
tax rate. Will they reinvest it here or overseas?
Chances are they will do some of both leading to an
exodus of cash.
I am, of course, writing from the perspective of running
small businesses. An enterprise (think
Walmart) business may see this differently but from
where I'm sitting: higher taxes=encourage
reinvestment=more hiring.
Makes no sense to me. You are biting the hand that feeds you.
Yeah, this guy is a succesful businessman. What a dumb ass, he “grows” his business not on demand of his product but on how much money he has “laying around”?
I believe in a sub chapter S corporation the corporate profits are taxed as individual income weather you take them out or not.
This is the stupidest argument I’ve ever read. That money is taxed regardles of whether you pay yourself a salary. On top of that, a rational business owner will judge a business venture on the net present value of expected future cash flows. Those future cash flows are always lower when taxes are higher.
Moreover, basically what he’s saying is, “If taxes are higher, I’m not going to pay myself out as much from the business. Therefore, it will make my business more valuable.” The problem with this is that the real thinking is, “If taxes are higher, I can’t pay myself out as much from the business. Therefore, the net present value of cash flows to me is less, and as such it is less rewarding to expand my business.”
The fallacy of this argument hits home when you do an argumentum ad absurdum by assuming 100% tax rates.
Guy has obviously never created a single job or met a payroll or taken out a business loan in his entire life.
it only makes sense if your a DC insider higher taxes only helps people in Washington.....and their co conspirators!
weather=whether
As an Ex owner of several sub SS corps: The profits are taxed whether you take them or not. They are taxed whether they are real or not. they are taxed period. What do I mean by real? Realized would be a better term. Paid for inventory is counted as profit even though it is sitting in the warehouse because it is an asset
Posts Like this just make me want to “Go Galt” and encourage the dumbasses to raise taxes on anyone making over 200K to 100% and then get the hell out of the country and let it all burn, maybe the laws of the copybook headings will rear their ugly heads and purge such dumbness from the minds of such idiots...
At some point, Going Galt will BE THE ONLY OPTION, the big question is WHEN?
At what point do the producers decide that the leeches need to start starving?
A 100% tax rate means full employment!
It’s coming out of Facebook.
Of course it makes no sense.
One more point. Profits are taxed in the year they are made, but major captial investments must be deducted over several years. So if you invest in new equipment for your new employees, you have to pay out of pocket using after tax dollars, and only get the deduction in future years-assuming you have profits to deduct.
Indiana has some really dumbass libs.
Additionally, implicit in the assumption is the idea that, once he takes cash out of his business, he's going to burn it in his fireplace or something. Reality is, any money he doesn't re-invest would be used to buy goods and services, which would increase the profits of other companies. Their owners would, in turn, either expand their businesses or use the profits to consume more goods and services. Etc. etc.
In economics, this principle is called the "Rule of DUH!"
This is a convoluted way to justify voting for Obama. It totally goes against reality.
That was my understanding. There's no such thing as a "salary" for the owner. Everything left over after the expenses and deductions are subtracted is the owner's tax liability.
That is one of the most idiotic things I’ve read....Evuh.
he is obviously someone who signs the back of a paycheck.
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