reply to post by SaturnFX
large corporations and the rich are generally useless for the american economy now due to outsourcing.
You couldn't afford domestically produced goods. The pair of jeans you buy was made for about $2.00 or so in Taiwan or some place. Textile
distributors (like Penny's) only make about a 3-5% profit margin. That means the extra $30 tacked on is the price of labor and operation in the U.S.
You would easily be paying 120+% for most of your products made here in America.
I'm sure those working minimum wage would appreciate this.
The only meat and potatos America has is small businesses.
And America makes it as difficult as possible to start up a new business.
The biggest growth in the economy since...hell, the 50s was with Bill Clinton..and that was from a ton of .com small businesses blowing up and
the services that rippled from them.
What has changed since then?
You have to think on large time scales - beyond the context of your own life-span. I'm young - this is very normal for me to do, it's a context I
am used to thinking in. It is not, however, very common outside of those under 25. Everything is either going to happen when I am older, or happened
before I was born.
This perspective is a general advantage when thinking in terms of the economy. For starters - the dollar is no longer backed by anything other than
central bank notes. It used to be that we had silver and other precious metals backing our currency. It also used to be that our central bank
mandated all banks have, for all loaned assets, a certain amount reserved in their vaults. This was a hard control on Fractional Reserve Banking.
Now, there is none. The ways to solve this go with removing the central bank, or instating a control again. Either will be better than what is going
on, now. The entire lending crisis would simply never have happened.
We also pay over 50% of all tax revenue into welfare programs. This value needs to shrink. Yesterday. Preferably - it would be left to the state
level, and the federal government forever banned from setting foot in the realm of welfare without an explicit constitutional amendment.
Today's economy is a product of very poor long-term economic decisions being made to resolve short-term economic problems. Resorting to more
knee-jerk reactions (such as tax and spend) will not do us any favors in the long run.
It wouldn't hurt the American people to start thinking as far ahead as next year. My short-term starts at five years. Long-term extends well past
my projected natural life.
now its back to the norm.
I have no clue why the republicans demand the richest 2% get another tax break extension...its retarded
What is retarded is spending close to 500 billion dollars into the red each year. The bureaucrats are going to spend whatever they want to, whether
they collect it in taxes, or not. This is the primary problem with navigating away from backed currency. We've lost all concepts of metrics.
Minimum wage can be expanded arbitrarily, money can be printed arbitrarily, and taxes can be raised arbitrarily.
That, my friend, is retarded. And, yes - it's been done under every administration.
You know why? Because it's what the people demand. The people demand that which is impractical and the bureaucrats provide even though it is
assured an eventual economic suicide. It gets them re-elected in a few years' time, and that's as far as they need to worry about it.
the more incentive they have to cash out, the more they will..a business that has a higher tax rate will simply not cash out, but rather
reinvest and grow the business so they don't pay the extra cost in profits.
This makes no sense whatsoever.
First - the tax is on individuals - which is only a business issue if you're dealing with sole proprietorships. Second, it's completely separate of
corporate gains tax.
As for the whole "a higher tax rate will promote reinvestment" is simply not supported by any market research. Markets that have gotten rid of
their progressive tax systems that excessively tax wealthy earners and businesses have seen a lot of market growth and activity - beyond that of
progressive systems in virtually every year since.
The reason for this is that an expansion may cost $500,000 (talking in the case of a sole-proprietor, so personal and business earnings are
identical). Let's say I make furniture and want to expand the workshop and bring on a couple apprentices (or additional employees). I may even wish
to make the jump to incorporate. In either case - I need to come up with $500,000. Average profit margins are between 2-5%. To come out $300K
ahead, I need to be pulling about $6M in volume. In all reality - I've probably already got a few employees to pull that off, and probably getting
closer to 10-20% profit, because business is not steady and you don't want a bad month to clear your savings. Anyway - I'm paying 35% of that into
taxes. Wages are also not factored into profit - so wages come out of profit, as well.
Presuming I'm just over that $250K mark - I'm paying 35% into federal taxes. About 5% to state income tax. An average of 10% sales tax on anything
and everything - so we're up to a nice 50% of that goes straight into taxes. That leaves me with $150K effective purchasing power. Subtract bills,
and I'm easily down to $50K. If I'm smarter and a little more meager, I am banking that up - and probably only spending about $50K on bills, rather
than $100K. I'm fairly frugal and would live out of a trailer for a few years so that I could put a massive down-payment on a construction loan for
my dream-home (and after my kids are grown and gone so they don't become a reason we can't have nice things).
In either case - expanding my business as a form of tax-write-off is not, at all, an option. Most deductions available are only partial deductions
(not total deduction of price). While repairs and replacements of machinery are deductible - purchasing new and expanding are considerably different
matters. I have to save up, considerably, to hit the costs of expanding. I may want to get into laser-engraving and some better controlled
environment shops, as well as some newer saws that expand the options I can offer to customers. I may even need to send a few of my employees off to
a college, trade school, or industrial seminar to learn how to properly use this equipment and maintain it.
The prospect of investing in your business for tax-write-offs is pretty naive. While a lot of private practices rank in the 10+% profit-margins, they
are also known for having years of not even making their overhead costs. It is also very rare to see those businesses pulling that kind of volume (by
that time, they are usually incorporated, even if all of the stock is privately held). However, the principle remains - a business wishing to expand
must invest well over 100% of their annual profit into expanding. This means that raising taxes and claiming it will promote investing through
tax-write-offs is just silly, as no business is making the kinds of profits to expand without the need of saving for at least one fiscal cycle.
The only companies that could even dream of it are beverage (namely, soda) manufacturers, that have something like 30% profit margins. Compare that
to health insurance companies at about 3% average profit margin. Hmm.
My sentiments, exactly.