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To: SeekAndFind

One does not need any advanced logic to come to this conclusion.

IF: Obama said it won’t hurt the 98%
THEN: It most definitely will hurt the 98%.


Because the Obamadork is an ill-educated, quota baby lying piece of excrement...on his best days.

3 posted on 12/04/2012 7:04:34 AM PST by Da Coyote
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To: Da Coyote

The article explains it quite well:

Think of an item that costs $100 that is suddenly subject to a 10% sales tax. Imposing the sales tax initially raises the price of the good to $110. When the price paid of a good goes up, the demand for that good goes down.

However, the price received is unlikely to remain at $100. At this price, the producer is willing to produce more than enough to meet the now lower demand. What happens next is never discussed by politicians, and mentioned only by a few pundits. Faced with less demand, the producer has to either produce less, or lower her price.

If both the buyer and seller have equal responses to the change in price, then the tax will be split: the producer would lower her price to $95 – a price at which she is willing to produce less, and the buyer would face a price of $104.50 – a price at which demand now equals the lower supply.

How does raising tax rates on the affluent (and rich) hurt the working class? For an individual such as a contractor or gardener, taxi driver or hair stylist to take home $30,000 after tax, their non-business employers or customers would have to supply nearly $60,000 of goods or services in exchange! And, that is in a state with no income tax.

Here is how it works....

To clear $30,000 after payroll and federal income taxes a married individual filing a joint return with no dependents has to be paid nearly $37,000 to cover $4921 in payroll taxes and $1779 in federal income taxes. But, to produce $37,000 net of the income (35%) and the Medicare payroll tax (2.9%), an individual in today’s top tax bracket has to earn an additional $59,581.

Under Obama’s proposal, individuals earning $37,000 would see no increase in their taxes. But, the combined income/payroll tax rate on their customer would rise to 43.4% (39.6+3.8). That means, their customers would now have to earn $65,371 to net the $37,000, an increase of $5790, or 10%.

So, the contractors, gardeners and all others who provide services to the “2%” now face a double whammy. First, their customers have less money to spend after tax. And second, their pre-tax price just went up 10%. Like it or not, such a price increase on families with less disposable income will lead to a combination of less employment and lower wages for those who do business with the 2%.

7 posted on 12/04/2012 7:19:06 AM PST by SeekAndFind
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