I don’t see why this should be the case. Can you explain how this would work? It don’t see the mechanism that promotes building sure businesses over taking irresponsible risks when there are higher gains rates. Can you work some numbers for me on this?
Oregon. During a specific one-year interval. You can probably find an archived article to that effect in the archives of the Oregonian, Portland’s main newspaper.
Correlation does not equal causation.
Sigh. What I said was, the 5% overall revenue drop could be attributed to the recession but that the recession alone could not account for the 60% revenue drop in income taxes collected from the highest earners. Therefore, and since the inflation-adjusted amount collected from those highest earners had stayed very steady for the last dozen+ years, it is logical to attribute the 60% revenue drop to the unintended effects of the new tax; it was the only thing that had really changed in terms of how the highest marginal earners were taxed.
Brilliantly said. May I borrow this?
Though fanaticism does equal blindness.
Since you referred to it in the first place, I presume you could link to it even faster. Cite, please?
Correlation does not equal causation.
I think I read that somewhere.
Uh, no. This is another basic misunderstanding. The business entity–the corporation–gets taxed on its earnings, THEN dividends paid out are taxable to the recipient, in this case, the owner. (There is no distinction, tax-wise, between a “dividend” paid to the shareholders in the manner of a quarterly check to stockholders, and a one-time “dividend” paid to the company’s owner/primary or sole stockholder.) This is an example of the double taxation that is supposed to be illegal in this country.
It is only in the case of a sole proprietorship and all the variations thereof that income and losses flow directly to the owner(s) in terms of tax liability.
I totally agree with you that profits reinvested in capital are taxed at a lower rate than those disbursed as dividends, or kept as retained earnings. In fact, I’ve already said that. The fact that so many large corporations are retaining cash rather than investing it should make you happy, then, as the Treasury obtains more revenue that way.
Business is not a sure thing, it involves risk as well and takes up a lot of personal time. Making investments in the stock market or in real estate ect is often very low risk and low labor and with a large investment often produces better personal gains than a business will, as long as it’s responsibly managed. Again the wealthy person participating in this area doesn’t care if its a US investment of a foreign one, so again US originating money flies all around the globe in greater amounts when it’s concentrated in the upper classes, and even after they’ve made the money there is a drastically lower likelyhood they’ll keep the money here as a wealthy person. Most people know a bit about Romney’s family history at this point, they aren’t exactly married to the US, not to mention his personal banking.
I don’t have the time to run specific numbers but if you have the interest and time I’m sue you can investigate the mathematics involved, though I think some basic reasoning makes a strong enough case.
I’ve come up with a way to help all of you to understand what is obviously a very difficult concept for you to grasp.
The economy affects a company’s willingness to invest in capital and create jobs.
The tax rate affects a company’s ability to invest in capital and create jobs.
If the economy is stagnant, neither increasing nor decreasing taxes will affect companies’ present willingness to invest. What changing the tax rate will do is affect companies’ ability to invest when the economy does improve and their willingness to invest becomes greater as a consequence.
So it would seem, superficially (and “superficial” pretty much defines most laymen’s economic thinking), that the tax on profits kept as retained earnings–NOT profits per se–should be increased in order to discourage the “hoarding” of cash. That incentive is already in place, though. To increase that incentive–to widen the gap between taxation of profits used for capital investments and the taxation of retained or paid-out profits–would serve to encourage capital expenditure and job creation even if such investments were unwise in the long run. Thus, the job market would improve in the short term, but overall economic health would be adversely affected in the long term. One has to assume that corporations are retaining cash and withholding investment because they have decided that that is the best course of action for their economic health. The officers of a corporation are tasked first and foremost with the well-being of that company–not the economic health of society as a whole. Before you react angrily and say, “Well, that’s the whole dadgum PROBULEM!!!”, stop and ask yourself whether you put your own economic health before that of the country as a whole, and whether that makes you “selfish.”
The way that both sides of this argument might agree is if you view the current economic situation as an emergency. If you’re starving, you eat the seed corn and slaughter the farm animals, i.e., long-term consequences don’t matter. Much of the New Deal, especially the WPA make-work projects, was constructed on this very premise.
I don’t think our current situation is quite as dire as then, though.
Wait, what? This one time, in Portland? And that would prove what again, if someone could even cite it?
Because I want the government to have money at the expense of a good economy. OK. Sure thing. Besides which the labyrinth of loopholes make the basic description of corporate taxes pretty meaningless.
The basic premise is correct. You want to incentivize reinvestment and deincentivize managerial looting. Everyone who works hard for what they make feels like they earned it, to no limit. Turns out that promoting more broadly distributed rewards for the various kinds of labor helps economies while concentrations of earnings at astonomical levels threaten both the health of the economy and democracy.
90% of the population of the United States are not scum that aught only be dealt with as needed and the .01% are not saints of genius and personal sacrifice. Our current economic balance of rewards and barriers is maladapted to promote good accomplishment and production of value by people that live here.
There’s A LOT more to go on than your theoretical economics. Considering over the course of a century tax cuts for the wealthy have never been followed by job creation, any working brain would stop insisting on the “job creators” myth. You don’t even have a correlation to fall back on… except tax cuts for the wealthy correlating to economic collapse.
But the absence of correlation confirms the absence of causation. Tax cuts don’t create jobs, because they have never been correlated.
Q.E.D.
Never let reality get in the way of a good theory.
First, please tell us where you got your education in economics. You don’t seem to know much of it.
How will changing the personal tax rate affect a companies willingness to invest again? If there was no money around, sure, but as even you admit there is plenty of it.
You are confusing corporate taxes with personal taxes yet again. Increasing personal tax rates might siphon some of the money corporations pay to CEOs to more productive uses. (Did you know that the CEO of PG&E in California, who got fired after the company incompetently lost track of its gas pipeline and used ratepayer money targeted for upgrading pipelines to pay investors, leading the an explosion that destroyed a neighborhood and killed some people got paid over $30 million as a going away gift).
Using money from the rich stimulus could jumpstart the economy more than the inadequate (but still important) stimulus we had. It could at least be used to send to the states to get them to stop laying off cops. People who become employed start spending, which increases demand, which leads to more hiring for good reasons, which further increases demand. A virtuous circle I think it is called.
The very rich having such a high percentage of money is clearly hurting the economy, but we can hardly expect them to give it up out of the goodness of their hearts. That’s why we have taxes. The greedy ones are the ones who want to spend hundreds of millions of dollars to keep those below them down, and that is not all the rich, just a small subset.
It could of been if your type of people were in charge. However we’re not in danger of eating our seed corn - we got silos stuffed full of corn. And using it to create jobs through stimulus and infrastructure work is just like planting corn, not eating corn.
It isn’t even a good theory. It is more like voodoo economics.
My dad was a job creator for about 15 years before he had to close the door on his business. He was never even close to rich.
As already pointed out, there are plenty of rich people who are not creating any jobs.
There is absolutely no correlation between rich people and job creators. In fact, I’m sure that there are more job creators than not who would see no tax increase if marginal rates went up on those making 250,000+ per year.
97% of businesses would see no increase in taxes.