Skip to comments.From Facebook...Does this make sense to you?
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
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!
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.
If I have more money by way of lower taxes, I’m reinvesting that into the company and/or hiring more people to more work.
The bigger your army the bigger the wars you can fight.
An observation, small business is like the middle class. Without large engine businesses and large scale entrepreneurs, there is much less, or smaller scale opportunity to grow. Make it difficult for the larger businesses/entrepreneurs to forge a path through high taxes, silly useless regulations (with the force of law), and a hostile environment in which to conduct business, rather than expand to fill the volume, they will run closer to the bone.
Same thing goes for the middle class/small business. If it gets harder to expand due to artificial constraints (gov intervention) vs. market forces, of course it is going to be a closer to the bone operation.
calling it the middle class seems incorrect. In the real vice imagined-by-the-left class warfare, there are only two real classes, producers and consumers (makers and takers). The government taxes one to support the other.
Taking money out of an S corporation is not usually a taxable event. Increasing taxes may encourage S corporation stock holders to take more out of their corporations to pay the taxes.
a web design and marketing firm statrted in 2006
He has a web site http://www.jebbanner.com/
Some of the Article Titles
Raising Taxes To Create Jobs
The Case For Redistribution Of Wealth
Betting On Mitt Romney
Not worth the visit really. He is a Liberal
Higher taxes are passed on to the consumer which means higher prices which means less buying which means less business which means layoffs.
Increases in production depends on increases in productive expenditure which depends on increases in investment which depends on both increases in savings and decreases in consumption. Savings is increased and consumption is decreased when tax rates are decreased and time preference (compelling present) is decreased.
Having lived in Indianapolis and still having many contacts there, I’m glad that this idiot has outed himself as socialist scum. I’ll definitely tell people I know not to do business with him.
Businesses don’t pay taxes. There is no such thing as a business tax. Businesses merely collect taxes from their customers and investors.
I didn’t know Paul Krugman had a facebook page.
“Why? Because, as a
small biz employer”
I call BS.
All “profits” at the end of every year are taxed - you are not allowed to keep a “business slush fund” at all. They flow through from the business to the company owners. Individuals pay taxes on their “salary” plus “profits” - anything that is not “expensed” as the cost of doing business (unlike a C-corp, where salaries are part of the cost of doing business).
Therefore, if you lower the individual tax rate on people making more money (small-business owners in S-corps) then they have more money “on hand” to hire more people.
In fact - although this person seems “stupid” it does show what I have been saying to all who will listen:
ROMNEY NEEDS TO DO A BETTER JOB OF EXPLAINING THIS.
Not every voter in the US has ever had an S-corp or an LLC, and they do not know he means when he says “small business owners are taxed as individuals.”
At the least he should say “small businesses are taxed as individuals - not as corporations, so lowering the tax rate on all incomes means you are lowering the tax rates on small business.”
The typical liberal nonsense. I own and operate a business myself. Obama’s plan to raise taxes (already raised payroll deduction amounts for funds they are already robbing), increase regulations (which he has to a great degree already), and make business with 50 or more employees required to facilitate Obamacare coverage is going to kill the economy. In fact the fear of what he is implementing is scaring business, both large and small, and its making them afraid to hire any employees. We already have one of the highest corporate tax rates in the world as it us. This man knows nothing about running a successful business other than to rob others and line his own nest. That’s what elite socialists do; all the rules apply to “everyone else” but them.
To the OP - running a car detailing or window washing business is nothing like running a real business with overhead and employees.
I stopped reading at Facebook...
^ Also applies to running a home based Internet website design business. It’s not like running a “real” business. I know...my wife owns one too and it sure isn’t paying the bills. I bet you’re collecting welfare benefits and getting paid online through Paypal and not claiming it as income. Liberal jerk off. I should look him up and tell one of my buddies at the IRS to take a look at him. Oh wait that would be too Obamalike...
You can write off all the Wages, the Back Braces and the Workman's Comp Claims, so your Taxes will be less.
BTW - I actually know a Lawyer who basically parrots the same logic in this article. I get a headache whenever we discuss anything but the Family Pets.
All money coming out of a Sub S is taxed as ordinary income.
The author gives away his ignorance when he states that money left in the company isn't taxed. That's not true for an S corporation since the tax is on the corporation's book income, not cash dividend payments to the owners.
High tax rates on corporate earnings slow job growth, increase prices for consumers, and lead to wasted use of resources. Put another way, if you have to pay a high enough tax rate on your S corporation or LLC, then you might as well do whatever you can to steer as much of the profit of the corporation into fancy office furniture, nice company cars, boats and planes, and sales offices in warm climates so you can enjoy your work day without paying as many taxes as you would otherwise. Needless to say those kinds of decisions result in fewer jobs in the USA.
Less profit from taxation = more money to expand business?
Pass the blunt Barry Bogart!
“All money coming out of a Sub S is taxed as ordinary income.”
That’s wrong. Income that is previously taxed as s corp profits are not taxed when taken out of the corporation by the stockholders.
During the Bush Years, a very small local business (music store) was able to expand into twice their size, hire a manager, hire at least six music teachers, and have a store plus a busy music school.
2 years into the Obama Administration, the whole thing folded.
The two store fronts are STILL empty.
Crap. I could post enough libertard incoherence from Facebook to bring JR’s servers to their knees.
This actually makes more sense than most!
BTW a good article that answers this rambling post and explains the Laffer Curve is this one:
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