Tax breaks for the rich create new jobs? How?

why would you want to raise there taxes anyways? so the goverment has more money to throw in there never ending pit. how has the goverment helped you lately? why would you want them to have more money

I wrote this a few months ago.

Why trickledown economics works!

I’m trying to be the lest political I can but the most ignorance I find on this board comes from liberals or democrat supporters. Their arguments come as “if you give tax breaks to the rich they are just going to send their money to off shore bank accounts.” Or “they are so rich what’s another million extra dollars when they have 10 million already” another favorite is “the rich get richer and the poor get poorer” I find all these statements as talking points from the MSM. They provide no evidence and no substance and come from people who I believe have no concept of the market and how business is ran.

Why do the “RICH” need tax breaks? Simple, they need more money to start businesses and open up branches in new markets. Let’s create a business model. Let’s say the federal corporate tax is 35 %( I believe this number is correct) and state corporate tax is another 10%. (California) So right off the bat you are going to pay 45% in any gross profit.

Let’s say your net sales is $5,200,000 (revenue) for the year and you’re a small construction company

A good guess of goods sold would be (cost to supply jobs and finish)
Materials $2,200,000
Labor and Burden $1,213,000
Subcontract $87,000
Total Cost are $3,500,000

This leaves us with $1,700,000 Gross Profit and 32.69% margin (margin is the percentage of return on our sale, our $5,200,000 number)

But wait we must now pay for overhead! (the cost to keep the doors open and pay admin)

General and Admin expenses
Insurance $237,000
Facilities Expenses $84,000
Vehicle expenses $241,000
Other $656,000
Total overhead expense $1,218,000

We are now left with $1,700,000- $1,218,000 = $482,000 profit at 9.27% margin (margin is the percentage of return on our sale, our $5,200,000 number)

Now its April 15th, Time to pay taxes!!! Our profit of 482,000 must now be taxed at 45% so $216,418 gets taken for taxes. We are now left with $265,582 our company made for the year at 5.10% Margin (margin is the percentage of return on our sale, our $5,200,000 number) and this is a very conservative number. Company usually make about 3% return on investment!

So we invested 5.2 million dollars to make $265,582! These are true life real numbers. It takes a lot of money to invest and make money. And to be able to finance this work for the year the company need to have 5.2 million in the bank! So when you libs talk about company hording money in banks that’s not the case. The companies need this money in the bank to finance the jobs and as insurance if anything goes wrong.

So the next year we have 265,582 to invest with. We need at least $350,000 to open another branch and start work but since 45% went to taxes we have to wait and save till next year to open up another branch and hire more people to bring in more money. If we were taxed only 25% this number would have been achieved and we would have hired more people and started up more jobs!

These are the number and numbers don’t lie. You need a large bank roll now a day to make a little money. If only our taxes were cut for company it would take less money to start up more companies in more markets to gain more jobs. simple as that.

Remember the owner of the company is forking out 5.2 million of his own money for this company. if it falls he loses it all ( unless you know obama and he bails you out) other wise he is intiteled to the win falls and the money the company makes. would you be willing to lay your life on the line like that to make a buck. lucky your have bosses who are. other wise you would not have a job.

reply to post by camaro68ss


did you know that 5.2 million dollars is tax deductible in the first place?

reply to post by thewholepicture


how is it tax deductible? what tax code says that? this is a model of one of our jobs and we had no deduction. please no talking points!

Some interesting replies here,mostly wrong to a point.

You don't get rich by spending money,unless there is a profit generated from the expenditure.

The problem is risk,the problem is lack of confidence in the economy.

There is less funding toward risky investments being made by those who could generate jobs,because all of us little people who are some 70% of what runs the economy don't have faith in the system.

It will only get worse,that "trickle down economics",the actor in chief Ronnie Reagan was harping about is bull#.

The bottom is falling out,until people are confident enough to blow that wad,it'll stay in the mattress.

The bottom can no longer support the massive weight of the top.

Originally posted by aching_knuckles
The Bush tax cuts on the wealthy have been in effect for nearly 10 years. How many net jobs do we have over that period?

One of the fairest non partisan explanations I've seen - incorporates population growth and manufacturing jobs to China in aggregate numbers.
How Many Jobs?

Answer = 5,000,000+

Originally posted by camaro68ss
reply to post by thewholepicture

 

how is it tax deductible? what tax code says that? this is a model of one of our jobs and we had no deduction. please no talking points!

The startup costs would be considered business expenses.

I own a company and know that the expenses a company must pay out, whether it's to start the company or just regular business expenses are tax deductible.

So in essence with or without the tax breaks the expenses are the same.

reply to post by chiponbothshoulders


By your own conviction you just said you don’t get rich unless you turn a profit. And in turn re invest that profit to gain a even larger profit. So how am I going to do that when im taxed up the but and have no money left?

Please read my example up above

FYI: this post is not about whether I believe the rich should get taxed more (that is a matter of perception) but as to argue against the point that the tax breaks will help employment.

Originally posted by thewholepicture

Originally posted by camaro68ss
reply to post by thewholepicture

 

how is it tax deductible? what tax code says that? this is a model of one of our jobs and we had no deduction. please no talking points!

The startup costs would be considered business expenses.

I own a company and know that the expenses a company must pay out, whether it's to start the company or just regular business expenses are tax deductible.

So in essence with or without the tax breaks the expenses are the same.

i highly dobut you own a company because you dont know what your talking about. and if you do you better fix it or else your going to get the IRS on your butt.

yes there is a start up deduction but thats only if you lose money on the deal

yes some expenses are taxed deductible but not materials, man hours and any other large expense there are exception but none are used in my model because none apply. please state the tax code that explains this to me that you use. I cant find it?

Originally posted by thewholepicture
FYI: this post is not about whether I believe the rich should get taxed more (that is a matter of perception) but as to argue the point that the tax breaks will help employment.

well i just proved it in my model that it creates more employment. by having more money at the end the owner is able to open up new locations and higher. but with large taxes he has to wait longer to do that.

It's really all moot, because the tax changes made by the government amount to peanuts in the effect they have on the economy. Really the whole issue just gives left and right partisans something to fight about.

Plus, what matters is not taxing but spending. There's only so much resources to go around at any given time. If the government is consuming, it means private individuals aren't. If they cut taxes but don't cut spending, it means they do it via debt. And then they call it the "public" debt using the fiction that the people control the government so we will all agree to be slaves to the banking hierarchy who are our real masters.

You know what would create real economic growth? Massive, earth-shaking slashing of government spending, repudiation of the fraudulent "public debt" (basically sticking a middle finger to the banking establishment), massive tax cuts, and most importantly, the elimination of legal tender laws which would allow free people to trade in whatever manner they damn well please.

That would cause some major effing economic growth in the long term (in the short term it would probably trigger SHTF, lol... but that just shows what a Catch-22 we've already gotten ourselves into).

Originally posted by thewholepicture
reply to post by camaro68ss

 

did you know that 5.2 million dollars is tax deductible in the first place?

Do you even know what a deduction is? its a statement saying I own you $100 in taxes but i lost $90 on this job over here so i really only can pay you $10 because thats what i made. And there is only a limited amount of items that can be deductible like that.

you know how i know you don’t own a company. because you clam a statement like this.

I know, facts are alot harder to disprove then talking points from MSNBC

Can anyone please tell me why my Model on top of page 2 doesent work? im still waiting

reply to post by camaro68ss


Seriously?

Do you not know what is tax deductible and what isn't?

WOW, you just totally killed any argument you had. I do own a business, and yes I do taxes and know what I can write off and what I can't.

Look up what can be deducted and you may be surprised.

Sorry dude your wrong (but I appreciate the challenge)

And if the investment in materials equals a quarterly loss, then yes it is deductible, otherwise it's profit, which matches exceeds the initial investment in the first place, negating the need to deduct this.

Your arguments are way off.

So where does giving the wealthy an income tax break help them in anyway shape or form to create jobs?

P.S.

Can anyone prove to me, since the tax cuts were put into place, where we have had substantial or any job growth in the United States?

Oh they are using these tax breaks to invest in companies and jobs alright, but not in the United States (see china industrial expansion and job growth over the last 10 years, like wise in the United States)

reply to post by thewholepicture

how about you educate yourself friend. no hard feelings. now why is my model flawed?
en.wikipedia.org...

Originally posted by camaro68ss
reply to post by thewholepicture

 

how about you educate yourself friend. no hard feelings. now why is my model flawed?
en.wikipedia.org...

I ask again, prove to me where the tax deductions have created American Jobs. (after 10 years, there should be some statistics)

Originally posted by camaro68ss
reply to post by thewholepicture

 

how about you educate yourself friend. no hard feelings. now why is my model flawed?
en.wikipedia.org...

I own a company, yet I haven't educated myself on taxes? huh, the IRS seems to disagree.

How do tax breaks for "the rich" create new jobs, you ask??

The following is from an internal communication received at work recently, names and locations have been removed to preserve privacy:


Under U.S. tax law the owners of certain businesses are taxed directly on the income generated by their business, rather than the business itself paying corporate income tax. Businesses taxed in this manner employ over 47 million people (about 39% of total employment), pay annual wages and salaries of $1.7 trillion and comprise about 94% of all business tax returns filed each year.

While there is a certain appeal to the notion of taxing the "rich", it can also have unintended consequences. The individual tax returns of the private family members which own the (non-public) company I work for include their share of the company's income. Based on that data, they fall into the "high-income" category.

But in truth, little of that income goes into their pocket. Almost 90% of the company income that would otherwise be available to the owners is in fact re-invested into the business, e.g., $XX million to build and equip a plant in one location and the $XX million expansion we recently launched in another location. Increased taxes on my company’s shareholders will reduce earnings available to re-invest into the company’s business, which in turn will impact the company's ability to create new jobs. Most businesses like this would experience the same impact, which could well slow our already fragile economic recovery in the U.S.

To bring this a little closer to home, had the government raised taxes (as they would like to in 2011) in 2010, we estimate that we would have sent another $3.1 million to Washington to bail out the likes of AIG, Chrysler and probably this year Fannie Mae and Freddie Mac. Instead we would like to invest that money – One of our plants is asking for another $2.1MM this year – they need it to help us be more competitive in a world market. Another different expansion could lead to another 200 jobs when at full capacity.

Isn’t this what the politicians have been telling us? – “we need more jobs for U.S. workers.” Then let us keep the money and invest it right here and not give it away to bail out companies that cannot compete.



That's how.
Be careful what you wish for.

Originally posted by thewholepicture
P.S.

Can anyone prove to me, since the tax cuts were put into place, where we have had substantial or any job growth in the United States?

Oh they are using these tax breaks to invest in companies and jobs alright, but not in the United States (see china industrial expansion and job growth over the last 10 years, like wise in the United States)

yes, before the crash bushes unemployment was at 4.2%. with Obama we are at 9.8% even after his spending spree you liberals love so much