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Obama: No Deal Without Tax Hikes

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Goldenboy219 said:
This has nothing to do with my statement. Economic uncertainty alone is enough to cut high income consumption; tax increases along with said uncertainty only makes it worse....
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There is no economic uncertainty when it comes to the wealthy. Year after year, the wealth of the rich has increased.

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Goldenboy219 said:
Which is true when considering consumption as a % of total disposable. The flip side of the coin is because they are not big spenders, increasing taxes on high income earners during (near) full employment is not a negative because their consumption pattern(s) will not change drastically.
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except that most of the wealthy also invest in their own businesses, which means that when you increase their taxes they will reduce those ongoing investments.


my uncle is a prime example - small business owner, worked his way up from a trailer to a multi-million dollar business, etc. His "Big Expenses" is that he likes to go fishing, and he bought a pool in the back yard for his daughters. He used to have 100 employees, but with the multi year recession (he works in contracting) he's down to about 60. The savings have been burnt through keeping as many with him as long as possible. You raise his taxes, and the next day he has to walk into work and fire people to make sure he stays in the black.

his lifestyle will probably - you are correct - remain the same. he wont' stop buying gasoline for his truck to take his boat to various lakes. He won't have to sell his house with the pool and move back into a trailer. My Aunt may start cooking more like she used to and picking up less. His former employees consumption will be dramatically curtailed. the consumption of the currently] unemployed who he might otherwise have hired will remain curtailed. Less worth will be added to society from all involved. But you are correct, he won't drastically change his consumption habits.
 
cpwill said:
except that most of the wealthy also invest in their own businesses, which means that when you increase their taxes they will reduce those ongoing investments.
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Nonsense. Business owners don't invest in their own business simply because they have money laying around. They invest in their own business because they believe they will get a better return (ie more profit) than investing it elsewhere. A businessman who invests in his own business when he can get a better return elsewhere should be run out of business and probably will.



my uncle is a prime example - small business owner, worked his way up from a trailer to a multi-million dollar business, etc. His "Big Expenses" is that he likes to go fishing, and he bought a pool in the back yard for his daughters. He used to have 100 employees, but with the multi year recession (he works in contracting) he's down to about 60. The savings have been burnt through keeping as many with him as long as possible. You raise his taxes, and the next day he has to walk into work and fire people to make sure he stays in the black.
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Each of those employees is contributing to the profit of his business. Firing them will only reduce his profits, an awfully stupid way to reduce ones' income taxes.

his lifestyle will probably - you are correct - remain the same. he wont' stop buying gasoline for his truck to take his boat to various lakes. He won't have to sell his house with the pool and move back into a trailer. My Aunt may start cooking more like she used to and picking up less. His former employees consumption will be dramatically curtailed. the consumption of the currently] unemployed who he might otherwise have hired will remain curtailed. Less worth will be added to society from all involved. But you are correct, he won't drastically change his consumption habits.
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Thanks for proving our point for us. Your uncles business is more dependent on demand, not tax rates, and his personal consumption is dependent on neither
 
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FilmFestGuy said:
So you're saying that if you owned a business, you would NEVER raise prices if you weren't profiting?

Is that a good way to run a business?
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-chuckles- the word never in your statement is a great bait and trap ... but it's a safe bet to say that if a company isn't profiting in most intances ... they would not raise prices but would look to cut spending ........but.... I'll assume .... then ... that you would agree with a company adding to their profits by raising prices when you find the CEO got a 10 million dollar bonus ... use of company owned jet, yacht, and other misc. perks ....

See I see the comparison between government and business kind of awkward to say the least ... lets look at government since 1989.... we have increased taxes 25%, and we've increased deficit spending by 1000%..... now forgive me..... but in the opion of rational folks .. we have a much bigger spending problem then we do taxing problem ..

Now you have to determine what it is you want ... do you want big business to act as our government acts ... or do you want them to make a profit .. perhaps if our government adopted some of the same principles of successful businesses ... we would be much better off ..
 
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sangha said:
Nonsense. Business owners don't invest in their own business simply because they have money laying around. They invest in their own business because they believe they will get a better return (ie more profit) than investing it elsewhere. A businessman who invests in his own business when he can get a better return elsewhere should be run out of business and probably will.

Each of those employees is contributing to the profit of his business. Firing them will only reduce his profits, an awfully stupid way to reduce ones' income taxes.



Thanks for proving our point for us. Your uncles business is more dependent on demand, not tax rates, and his personal consumption is dependent on neither
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Just a wild guess ..... but you have never owned a business yourself have you ??
 
cpwill said:
...Boehner reiterated his position that the debt ceiling “must be raised,” and praised President Obama for “making that case” at a press conference earlier in the day. Tax increases, however, could not realistically be part of the solution. “The American people will not accept, and the House cannot pass, a bill that raises taxes on job creators,” he said. “The House can only pass a debt limit bill that includes spending cuts larger than the hike in the debt limit, as well as real restraints on future spending.”...
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Code for: "We'll raise the debt limit, large spending cuts will be part of the deal. I think I can get my party to accept getting rid of some tax loopholes that are no longer necessary as opposed to increasing taxes on "job creators" (...code for "investors and business owners"...). But under no circumstances will the Republican party accept tax increases on anyone else, weathy or otherwise."

At this point, I can live with that as long as the revenue generated by eliminating those tax loopholes are huge! Fact is, the country could use the revenue to start paying down the debt faster.
 
cpwill said:
except that most of the wealthy also invest in their own businesses, which means that when you increase their taxes they will reduce those ongoing investments.


My uncle is a prime example - small business owner, worked his way up from a trailer to a multi-million dollar business,...
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We can stop right there. Point to remember here, folks, is this: the tax increase the President has proposed would not impact the profits of the small business. So, if cpwill's uncle's business made a profit of $2 million, the small business would not be taxed, atleast not in the way the tax debate has been phrased. Now, if cpwill's uncle earned $1 million in income from his business, his income would likely be taxed, but NOT the profits from his business - not unless the uncle declared the business proceeds as his total income.
 
Objective Voice said:
We can stop right there. Point to remember here, folks, is this: the tax increase the President has proposed would not impact the profits of the small business. So, if cpwill's uncle's business made a profit of $2 million, the small business would not be taxed, atleast not in the way the tax debate has been phrased. Now, if cpwill's uncle earned $1 million in income from his business, his income would likely be taxed, but NOT the profits from his business - not unless the uncle declared the business proceeds as his total income.
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Furthermore, if an employees work produces a profit, the only way a tax increase can eliminate that profit is if the tax is greater than 100%. If the employee brings in $1 of profit, and the tax rate is 35%, then the after tax profit is $0.65. If the tax is increased to 40%, there is still a profit. If an employer fires that employee because of a tax increase, they are reducing their profits, which is a foolish way to decrease a businesses' tax bill.
 
Objective Voice said:
Code for: "We'll raise the debt limit, large spending cuts will be part of the deal. I think I can get my party to accept getting rid of some tax loopholes that are no longer necessary as opposed to increasing taxes on "job creators" (...code for "investors and business owners"...). But under no circumstances will the Republican party accept tax increases on anyone else, weathy or otherwise."

At this point, I can live with that as long as the revenue generated by eliminating those tax loopholes are huge! Fact is, the country could use the revenue to start paying down the debt faster.
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I agree completely.... I've said all along that this was nothing more then getting every cut that could be gotten .. it's the best that can be hoped for .. as for the revenue to begin paying down the debt .... that is just a joke right ??? because we are still more then a trillion dollars a year away from even balancing the budget ... let alone having an
surplus to begin paying down the debt ...... to get to that point .. we "have" to get the people back to work .... and from what I'm seeing ... that is still a ways out....
 
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sangha said:
Furthermore, if an employees work produces a profit, the only way a tax increase can eliminate that profit is if the tax is greater than 100%. If the employee brings in $1 of profit, and the tax rate is 35%, then the after tax profit is $0.65. If the tax is increased to 40%, there is still a profit. If an employer fires that employee because of a tax increase, they are reducing their profits, which is a foolish way to decrease a businesses' tax bill.
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rolls around laughing ...... yeah .. if you had anything to do with business .. it would be broke by now ..
 
Red Crow said:
?????????????????????????? Wtf????????????????????????????
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-laughing- don't try to make sense of anything said ..... cause there isn't any sense behind it .. just the insane ramblings of someone that doesn't know better
 
sangha said:
Nonsense. Business owners don't invest in their own business simply because they have money laying around. They invest in their own business because they believe they will get a better return (ie more profit) than investing it elsewhere. A businessman who invests in his own business when he can get a better return elsewhere should be run out of business and probably will.
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yes and no - small business owners also consider their own businesses "safer" investments because they are investing in things that they control, and often in capital they could sell if necessary.

Each of those employees is contributing to the profit of his business
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wrong. each of those employees has the potential to contribute to the profit of his business. when he hires and continues to pay them, he is accepting upon himself the risk that they may not - he is risking assets for a return. reduce the return, and you will reduce the amount of risk he will take.

In general. Here you will reduce the amount of risk he can take. Like I said; he's been burning through income and savings to keep as many of his people with him as possible.
 
sangha said:
Furthermore, if an employees work produces a profit, the only way a tax increase can eliminate that profit is if the tax is greater than 100%. If the employee brings in $1 of profit, and the tax rate is 35%, then the after tax profit is $0.65. If the tax is increased to 40%, there is still a profit. If an employer fires that employee because of a tax increase, they are reducing their profits, which is a foolish way to decrease a businesses' tax bill.
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Wrong. You keep the people earning you the most profit and cut those that are in the least productive area. Sure, you are cutting your potential profits, but the key word in potential. If the market isnt doing what it used to, cutting your staff and production to meet slower demand is a strong option. Besides all that, taking a 5% profit margin hit in a small business is a pretty big hit all things considered. Some profit margins may be anywhere from 8% all the way to 25% depending on the business. Companies taking that hit must then either cut costs or raise prices. Raising prices is trickle down in reverse, customers always pay eventually when it comes to tax hikes.
 
cpwill said:
yes and no - small business owners also consider their own businesses "safer" investments because they are investing in things that they control, and often in capital they could sell if necessary.
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Correction...FOOLISH business owners believe that.



wrong. each of those employees has the potential to contribute to the profit of his business. when he hires and continues to pay them, he is accepting upon himself the risk that they may not - he is risking assets for a return. reduce the return, and you will reduce the amount of risk he will take.
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Any business owner that has employees that do not contribute to the profitability of the business is a fool.

In general. Here you will reduce the amount of risk he can take. Like I said; he's been burning through income and savings to keep as many of his people with him as possible.
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Then he's not running a business, he's running a charity.
 
OpportunityCost said:
Wrong. You keep the people earning you the most profit and cut those that are in the least productive area.
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Wrong.

Sure, you are cutting your potential profits, but the key word in potential.
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No, you are cutting actual profits.

If the market isnt doing what it used to, cutting your staff and production to meet slower demand is a strong option. Besides all that, taking a 5% profit margin hit in a small business is a pretty big hit all things considered. Some profit margins may be anywhere from 8% all the way to 25% depending on the business. Companies taking that hit must then either cut costs or raise prices. Raising prices is trickle down in reverse, customers always pay eventually when it comes to tax hikes.
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1) Wrong again. Income taxes only apply to the profit. If a business has a 1% pre-tax return, then a 35% tax rate leaves the business with an after tax return of 0..65%, still a profit.

2) Some businesses have returns that are lower than 8% and some have returns that are more than 25%. You even got the #'s wrong

3) Some markets can not bear an increase in price. Therefore, they can't pass the cost onto its' customers. Instead, they have to cut costs, which is good for both consumers and producers
 
Cutting payroll is a way to cut costs; especially when it comes to sales of large ticket items. Some sales personnel are more efficient than others. Those that are not efficient or whose sales go down when the economy slows are primary targets for layoffs.

As for point 1, when the economy slows at the same time as taxes go up, profit may not even exist.
As for point 2. Notice that may part? MAY be. I think you will find most are in the ranges Im using.
As for point 3, thats also why businesses sometimes fail. They learn to manage costs or they dont.
 
OpportunityCost said:
Cutting payroll is a way to cut costs; especially when it comes to sales of large ticket items. Some sales personnel are more efficient than others. Those that are not efficient or whose sales go down when the economy slows are primary targets for layoffs.

As for point 1, when the economy slows at the same time as taxes go up, profit may not even exist.
As for point 2. Notice that may part? MAY be. I think you will find most are in the ranges Im using.
As for point 3, thats also why businesses sometimes fail. They learn to manage costs or they dont.
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And cutting payroll can also be a way to cut profits, especially when it comes to employees who earn your business a profit. When the economy goes down, employers are stupid to fire any employee that contributes to the bottom line at a time when profits are slim.

1) Taxes can not turn a profit into a loss unless the taxes are >100%. It's called "math"
2) Margins depend on many factors. I think "I think you will find" is a very poor argument
3) Exactly!! It has nothing to do with tax rates (see #1)
 
Because in a large ticket item business, someone's sales could never, ever slump to the point where they no longer generate profit. Nope. Never.
Raising taxes in this environment means you will be looking harder to see who is making you how much money. One guy may be making you 20% profit, one guy may be making you 3% profit. If your tax burden goes up...does it make sense to look harder at the 3% profit person? Of course it does.

Taxes are part of costs. I cannot believe you think they are not.
 
Catawba said:
Where taxes were increased again and revenues increased again with job growth and a lower deficit. Tragic indeed! :sun
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Taxes were increased, and incomes dropped to the lowest level in the past 25 years or more. Revenues didn't increase until years later with the dot com boom and the 1997 tax cuts (capital gains, estate, new tax credits/deductions). Wages remained stagnant and consumer debt and income disparity soared at an unprecedented rate.
 
Thunder said:
yeah, cause the GOPers couldn't stand the fact that the tax-increases helped stabilize the economy.
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Taxes were increased in 93 and there was no significant change in income tax revenue for three or four years. It wasn't until the economy started to boom that revenue took off. The boom was largely propelled by Greespan's drop in interest rates which promoted borrowing and investment.

Interest rates are currently rock bottom. Anyone that thinks an income tax increase now is going to bring about a 90's-like economy is clueless. The situation today is totally different.
 
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