posted on Sep, 24 2011 @ 09:58 AM
reply to post by mikejohnson2006
It depends on the type of tax structure in place for the higher taxes and what can and cannot be written off.
It seems that the example you gave in your own post indicates that for at least that year in the 80's the tax code was written in a way that allowed
him to not pay taxes on a chunk of money if it went back into the business.
It also depends on the type of return the business is looking at and if it can be kept in the business without being considered taxable income, than
having to give it up for no reason does create a reason to keep it. One way to keep it is to increase the size of the business and hire more
But there are times when it does not work to just higher taxes. If there is no place to safely stash the money in the company according to the tax
code (which changes so often that I don't even try to keep up, there are professionals who focus on that and if you are in this kind of situation
they are worth the money, but anyway) if there is no way to keep the money tax free or tax reduced in the business then it all comes down to the math.
Do you keep more of it by cutting yourself (and/or investors) a check and waving goodbye to the rest, or do you stand to keep more by investing in
the business and hoping for an even bigger cut later on. When the tax code is written in a way that discourages cutting yourself a take home check
and encourages reinvesting, that stands to create jobs.
I think in our current global situation that it is important to write it even more specifically to reward job growth in this country. While that
sounds like the credit our President suggested, I still want to see the paperwork because he did not say jobs "in this country" he said jobs "in
America" which includes our free trade NAFTA partners Canada and Mexico.
While that would still be an improvement over all the jobs we have lost to Asia...it isn't a sure fire fix for the job situation in this country and
I do NOT think tax dollars should go to support job creation in Canada or Mexico. If that is the way the plan is written then it is an epic fail.
So the short answer for my long rambling one is it all comes down the specifics of a particular year's tax code as it impacts a particular type of
business. So, too many variables to give a straight answer and the politicians can make it sound whichever way they want without "technically"