Government shut down. You worried?
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This is what I've always felt instinctively, but I heard a counter-argument that seems at least on the surface to have some logic to it. (Not that I want higher taxes, I'm just wondering whether the original argument is really valid.) Anyway, here's the counter-argument:
Business owners pay income taxes only on the money they have left after covering their expenses (i.e. their profits). By definition, the profits are not where the money for investing and employing people is coming from, because the money used for investments and employee pay is considered expense (and thus is not taxed) as opposed to profit (which is distributed to the owners and taxed).
So while raising tax rates might reduce the owner's own disposable income, it should not reduce their incentive to invest in the business and hire workers. One could even argue that higher tax rates on their profits might make the owner more likely to invest and hire (since doing so is not costing them as much personally as it would with lower tax rates).
Where's the flaw?
Business owners pay income taxes only on the money they have left after covering their expenses (i.e. their profits). By definition, the profits are not where the money for investing and employing people is coming from, because the money used for investments and employee pay is considered expense (and thus is not taxed) as opposed to profit (which is distributed to the owners and taxed).
So while raising tax rates might reduce the owner's own disposable income, it should not reduce their incentive to invest in the business and hire workers. One could even argue that higher tax rates on their profits might make the owner more likely to invest and hire (since doing so is not costing them as much personally as it would with lower tax rates).
Where's the flaw?
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From: Western Massachusetts
For me it's frustratuing, because I've seen things from a place similar to where you seem to be at, but I've come through the other side. It's clear to me that what I saw then, and likely what you are seeing now, was/is through kaleidoscope eyes.
No one here is going to change your views. I think that some of us just feel it necessary to try to bring even a speck of clarity. Some of us are concerned about our future. About your future. You are going to play a part in our future, and we'd like to think that of the many things that motivate future generations, reason and common sense are included.
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From: Western Massachusetts
I believe that there are a lot of assumptions made with this counter-argument. The business that I work for, that my father started more than thirty years ago, is adversely effected by increased corporate taxes, as well as increased regulation, increased costs of health, liability, unemployment, workers comp, auto, and other insurances that a business is required to purchase. Increased fuel costs have a huge effect. Increasing material costs have a real effect on a businesses ability to be competetive.
Oh, my father, the business owner, he has to file an income tax return just like most people do. The business is seperate. The businesses disposable income and his disposable income are not one in the same. Well that is assuming that either he or the business has any disposable income.
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From: Under the flightpath of old ORD 22R
And you still wonder how deficits happen ?
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From: Under the flightpath of old ORD 22R
...<snip>...
I was laughing at and mocking those who claim 'class warfare' against Ryan, just because he wants to 'cut energy assistance to the poor'. In reality, Ryan's plan will leave $5 billion +- in energy assistance for the poor.
Can anyone find another nation on the face of the earth that spends more than $5 billion on energy assistance to the poor? Probably not.
I was laughing at and mocking those who claim 'class warfare' against Ryan, just because he wants to 'cut energy assistance to the poor'. In reality, Ryan's plan will leave $5 billion +- in energy assistance for the poor.
Can anyone find another nation on the face of the earth that spends more than $5 billion on energy assistance to the poor? Probably not.
You can say that again, "only" $ 5B in assistance...
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Joined: Apr 2001
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From: Gulf Coast
This is what I've always felt instinctively, but I heard a counter-argument that seems at least on the surface to have some logic to it. (Not that I want higher taxes, I'm just wondering whether the original argument is really valid.) Anyway, here's the counter-argument:
Business owners pay income taxes only on the money they have left after covering their expenses (i.e. their profits). By definition, the profits are not where the money for investing and employing people is coming from, because the money used for investments and employee pay is considered expense (and thus is not taxed) as opposed to profit (which is distributed to the owners and taxed).
So while raising tax rates might reduce the owner's own disposable income, it should not reduce their incentive to invest in the business and hire workers. One could even argue that higher tax rates on their profits might make the owner more likely to invest and hire (since doing so is not costing them as much personally as it would with lower tax rates).
Where's the flaw?
Business owners pay income taxes only on the money they have left after covering their expenses (i.e. their profits). By definition, the profits are not where the money for investing and employing people is coming from, because the money used for investments and employee pay is considered expense (and thus is not taxed) as opposed to profit (which is distributed to the owners and taxed).
So while raising tax rates might reduce the owner's own disposable income, it should not reduce their incentive to invest in the business and hire workers. One could even argue that higher tax rates on their profits might make the owner more likely to invest and hire (since doing so is not costing them as much personally as it would with lower tax rates).
Where's the flaw?
The reason "the rich get richer and the poor get poorer" is because the rich control their means of income the poor rely on someone else to pay them. As long as the poor are relying on someone else for their livelihood they will have a difficult time becoming rich.
Last edited by 1depd; Apr 15, 2011 at 06:06 AM.
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The reason a business owner invests in their business (assuming sole proprietorship) and hires more people is to make more money. The investment is a risk the business owner is taking. If the expansion does not generate enough income the business owner either loses that money or suffers with a very low return on investment to not pay for the risk. If the "new" money is taxed at a high enough rate, then the rate of return on that investment has to be much higher to repay the risk, otherwise it would be safer and more lucrative to put the money in a high yield investment and have interest coming in. The other side of that is if the business owner doesn't want to take a pay cut they can easily increase the price of their goods to at least offset some of the increased costs, for almost all businesses.
The reason "the rich get richer and the poor get poorer" is because the rich control their means of income the poor rely on someone else to pay them. As long as the poor are relying on someone else for their livelihood they will have a difficult time becoming rich.
The reason "the rich get richer and the poor get poorer" is because the rich control their means of income the poor rely on someone else to pay them. As long as the poor are relying on someone else for their livelihood they will have a difficult time becoming rich.
best thing the republicans can do and ide definetly vote for him
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From: Rochester, MN
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From: Gulf Coast
Democrat or Republican. The two crappy choices that are thrust upon the American citizens. Lets see you can vote for this crappy candidate or that crappy candidate. Which will you choose? This two party system is akin to a dictatorship it seems. Here's the new boss same as the old boss.
Last edited by 1depd; Apr 16, 2011 at 06:36 AM.