Why higher taxes may help the economy, a personal and logical explanation (unemployment, government)
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1. Our current business is in the hospitality industry. Some of our business comes from public schools and hospitals, but as a percentage of revenue, it's a small amount. However, there is a infrastructure project being considered and if it were completed, our business would see a rise or at the very least would become more valuable for resale.
2. The current debt deal, our business shouldn't feel any pain. If medicare was drastically cut or social security, it could possibly hurt because these customers would have less discretionary spending. Although, I'm not sure if any of our customers have to depend solely on either program.
3. We have been involved in businesses for awhile. One of the key reasons for our successes is we constantly invest our profits back into our business. However, we also save a lot. If the tax rate were increased, we would most likely upgrade our heating system. Upgrading our heating system will have no direct relationship with sales, so it's not high on our list. There has to be a good reason to install a new system as it wouldn't increase revenue, only add value and save us some money each year since it would be more efficient.
Expanding and hiring depends 100% on customer demand. That's why the tech boom still happened even during a tax hike. If the demand is there, no business owner will let a tax hike stop them from expanding or hiring. If you can make $1 million instead of $500k, it's worth it even if taxes increase by 15%. Anyone who says otherwise I don't believe is a business owner.
Thanks for the explanation. Great to get your perspective!
I dont think higher taxes will help the economy---and I dont think that is, or was the goal in this latest round of comedy and hijinx.
I think the intent was to plug up massive loopholes and escape hatches that trilloionaires and corporations have discovered.
If some of these grabags were eliminated, new sources of revenues would develop----of course, the zealots have labeled these as new taxes. I am vehemently oppossed to new taxes on lower and middle class Americans----that being said, eliminating some of the folly and humorous tax breaks of the rich and famous will allow for new revenue streams and aid somewhat in debt reduction.
Remember now------according to the zealotists eliminating tax heavens and escape hatches is actually a tax increase----which is very bad for the country-----and allowing the supernovas to avoid their true reponsilites is very good for the country----get it now?
And this is why we will all be rushing to reelect the Tea Party, because they fought to balance the budget with NO NEW TAXES.
As a family business owner in the top income bracket during Clinton, Bush, and Obama.
The decision to hire employees is based on demand, not taxes. In 2010, we made around $550k net profit. So, if the tax rate goes back to the Clinton years, we will have to pay 5% more on $300k profit, which is $15,000.
Do we want to pay an extra $15,000? No we don't, but it does not make us want to cut payroll because it would hurt sales. If demand continued to grow, we would not change our mind about hiring employees because it wouldn't make sense. Think about it. Would I really want to turn away customers because I don't have enough staff? No. Taxes don't influence the decision at all. DEMAND is the only thing that matters.
Personal example: Now to take the argument even further... if taxes are raised 5% on everything above $250k, it would give us an incentive to complete any needed projects. For example, we have an ancient heating system. It will cost around $30,000 to install a new system. We aren't sure how much longer we plan on owning this business, so we are putting that project on hold for now. If taxes were raised, we would want to invest in our business instead of paying more in taxes. It makes sense right? If we install the new heating system it not only adds value and saves on us money on utilities, we can write it off! This boosts our economy because businesses instead of sitting on cash are encouraged to spend their profits in order to pay less taxes, which add no value to the business.
If you want to give 15000 more to the government rather than yourself you are free to write the check. You say IF demand stays high.
Three things here. If money fell from the sky we would not need to tax anyone. Most business who are taxed 15000 dollars more will make that up in the price of their goods and services. I am happy to here your business will just write it off and not pass it on to customers. I assure you most will raise the price of products or services to make the difference up and who pays for that, the poor, whom you say taxing the rich helps the most.
So let me get this straight you will invest more in your business and hang on to that business longer if you pay more taxes to the government? Why not give all your money to Taxes you might be able to be motivtated to make no money and hold on to that busienss forever
But you would try to use the tax system to avoid some of that 15,000 dollars in extra taxes.
I have one thing to say with your business sense.
So why aren't Republicans talking about doing something to increase consumer demand? To them, it's all about cutting taxes for the wealthy and somehow that will inspire them to create new jobs. But then if they really do, how many of them are going to make new jobs for China or Mexico? GE, for instance, is creating 65 new jobs for the Chinese when it moves it X-Ray business from Wisconsin to China.
If more people have jobs there will be more demand and less tax payer support for the unemployed. The Dem's are killing employment.
i seriously doubt that you could sell your business for a profit in this environment. BOTH parties are in complete denial, and it looks like BOTH parties have ZERO courage and ZERO concern for the future of our country if this deal is reached.
from denninger:
•Lie once again about "cutting spending." It does no such thing. It increases spending - every year. Bogus and outright-fraudulent "baseline budgeting" means that if they intended to boost spending $300 billion but only increase it $200, that's a $100 billion "cut." If you ran your household like this you'd be broke in a week. For the US, it will take a bit longer.
•No tax increases. That's nice, but let's not forget that while the Democrats scream about the "Bush Tax Cuts" the FICA tax cut was theirs. Obama signed it. You cannot keep reducing income and increasing spending forever.
•The cuts, fraudulent though they are, aren't even real anyway - and not binding either. There's nothing before 2013, which means a downgrade is almost certain. Further, raising the debt ceiling now for the whole among but allegedly finding the "cuts" over 10 years is an outright fraud by a ratio of 10:1.
•A 2013 timeline for actual changes means nothing, since the next Congress is not bound by what this one does. Period.
•Sequesterization didn't work in 1997. It won't work in 2011 either.
•We failed to get to $4 trillion. That's what S&P said they needed, and they said they needed to see that within the next three years. Now we find out if S&P has any balls.
let me add i don't think that S& P will cut anything, because the ratings agencies are bought and paid for, but it doesn't mean that we aren't in real trouble now.
the battle may be won, but the war is going to be lost. count on both parties to claim "victory".........
it looks like both parties want to destroy the economy- an agreement with more spending and no increased revenue. REALLY??????
If you want to give 15000 more to the government rather than yourself you are free to write the check. You say IF demand stays high.
Three things here. If money fell from the sky we would not need to tax anyone. Most business who are taxed 15000 dollars more will make that up in the price of their goods and services. I am happy to here your business will just write it off and not pass it on to customers. I assure you most will raise the price of products or services to make the difference up and who pays for that, the poor, whom you say taxing the rich helps the most.
So let me get this straight you will invest more in your business and hang on to that business longer if you pay more taxes to the government? Why not give all your money to Taxes you might be able to be motivtated to make no money and hold on to that busienss forever
But you would try to use the tax system to avoid some of that 15,000 dollars in extra taxes.
I have one thing to say with your business sense.
WOW
You are completely wrong! I know for sure now you've never owned your own business with employees. The tax rate is not a part of your operating margin. The wonderful thing about Capitalism is competition. You increase your prices to make up the difference in a tax increase and your competitors will be more than happy to take your disgruntled customers. Give me a break please, theory does not always work in reality. If the tax rate is historically low, you should know at some point it's going to increase again. It's a good idea during this time to keep your expenses low and rain check costly projects that won't hurt or prevent revenue growth. You want your net profit to be as high as possible because you can keep more. Once the tax rate increases, you are better off spending money on needed projects that add long-term value. This is smart because it will potentially increase revenue, make your business more efficient, and make it more valuable when you plan to sell it. Theory is good and all, but sometimes you have to experience it yourself to truly know what works. And about business sense...our current business when we purchased it had a negative net profit for the year 2007 between $150k-$200k and in 2010 we had a taxable net profit of $550k. That's enough said...I'm not going into any more details about personal information and figures. Keep believing what you believe and I'll do the same .
So why aren't Republicans talking about doing something to increase consumer demand? To them, it's all about cutting taxes for the wealthy and somehow that will inspire them to create new jobs. But then if they really do, how many of them are going to make new jobs for China or Mexico? GE, for instance, is creating 65 new jobs for the Chinese when it moves it X-Ray business from Wisconsin to China.
All of those reach republicans or democrats whose crying for high taxes and talk about patriotism have (move) companies in Mexico or in China. What do you have?
People forget, the main employer in the United States is SMALL BUSINESSES! A small business owner cannot and will not pack up and move to China. Huge corporations are an entirely different creature, but contrary to popular belief...most jobs come from small businesses not major corporations.
People forget, the main employer in the United States is SMALL BUSINESSES! A small business owner cannot and will not pack up and move to China. Huge corporations are an entirely different creature, but contrary to popular belief...most jobs come from small businesses not major corporations.
i don't know about you, but i am seeing small businesses fail all around me.
lots of businesses for sale or rent.
that might have something to do with the rising unemployment rate and astronomical food stamp and social service usage.
the government regulatory environment is not conducive to small business growth.
the big government-connected seem to be doing fine, however.
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