Debt deal

[Fallakin Kuvari]

Not sure what you mean, Fall.

Dd

People making more than 30k a year get tax returns too, is what I'm saying.

[Jarochai Alabaster]

Are we talking individuals making more than 30k, or couples/families of a particular size making more than 30k? Because as an individual, I've never made more than 30k, and I've never not paid taxes on my income. My refund tends to be ~40-50% of what I pay in during the year.

[Fallakin Kuvari]

In that case you're doing something wrong.

[Embar Angylwrath]

Free up business by reducing regulation and taxation (because all that tax is just a cost and gets passed to the consumer) and he'll get an increase in revenue without having to up anyone's tax rate, or impose new taxes/

You're high. That doesn't work. It's never worked. Corporations are showing record profits and the money doesn't go into more jobs or lower costs, it goes into their pocket. They have never magically hired just because they have less regulation and more money. They hire what they need and if people can't consume more shit, they aren't going to expand to need more people to create more shit.

Reducing regulation is also asinine. Companies do not self-regulate.

Good lord....

You have to have a source of income in order to consume, don't you Harlowe? And where do most Americans get that source of income.

Jobs.

People have money, they consume. When they consume, business hires to address new demand. You're pretty smart, don't know why you can't see the link here. Stimulate hiring, reduce the unemployment level, and tax revenues will rise.

[Harlowe]

The only way you are going to "stimulate" hiring is increased demand for goods and services. Even record profits do not stimulate job growth.

Bottom line - companies do not use more money from less taxes and less regulation to hire more people. They only hire people if they need them, which has zero to do with letting them regulate themselves and pay less taxes.

I think you are just too locked into an agenda you don't even recognize when it's bad for the country.

[Ddrak]

The effect on GDP of reducing corporate tax has been measured - for every $1 the government drops taxes, you get about 30c in GDP. Compare this with $1 spent on capital works that gives $1.59 in GDP, or $1 spent on unemployment benefits gives $1.64.

Tax Cuts
Nonrefundable Lump-Sum Tax Rebate 1.02
Refundable Lump-Sum Tax Rebate 1.26

Temporary Tax Cuts
Payroll Tax Holiday 1.29
Across the Board Tax Cut 1.03
Accelerated Depreciation 0.27

Permanent Tax Cuts
Extend Alternative Minimum Tax Patch 0.48
Make Bush Income Tax Cuts Permanent 0.29
Make Dividend and Capital Gains Tax Cuts Permanent 0.37
Cut Corporate Tax Rate 0.30

Spending Increases
Extend Unemployment Insurance Benefits 1.64
Temporarily Increase Food Stamps 1.73
Issue General Aid to State Governments 1.36
Increase Infrastructure Spending 1.59

Edit: source = http://www.economy.com/mark-zandi/docum ... _24_08.pdf

So, think carefully before you spout ideas about what would help the economy because a lot of people talk ideology without looking into what really does make a difference.

Dd

[Kulaf]

I would think any cut in corporate tax rates would need to be coupled with an increase in capital gains taxes. That way you gain the economic stimulus of cutting the corporate rate, and still recoup the tax money on the backend from people receiving any boost in dividend payments to shareholders.

win-win

[Embar Angylwrath]

By that logic Dd... the governement should make everyone unemployed, give them unemployment checks and POOOF! Instant recovery.

It amazes me that so many of you fall into the unemployment benefit trap.

[Embar Angylwrath]

The only way you are going to "stimulate" hiring is increased demand for goods and services. Even record profits do not stimulate job growth.

Bottom line - companies do not use more money from less taxes and less regulation to hire more people. They only hire people if they need them, which has zero to do with letting them regulate themselves and pay less taxes.

I think you are just too locked into an agenda you don't even recognize when it's bad for the country.

Profits that are re-invested into the comany DEFINATELY stimulate job growth. At least on a small business perspective. Small businesses want to grow their business. I will tell you now that the lack of access to working capital (i.e. loans from bans, credit lines and equipment purchase loans) are hamstrining the economy, and I can personally attest to that.

I can tell you that "record profits" that my company has produced over the last few years have gone in to growing the business, just like every other business would do. We've added headcount, i.e. JOBS. We've added about 30% headcount over the last year alone. We did that by funding through our "record profits". But its been tough. We have a proven working business model and it was still like negotiating with Iran to get a modest credit line. I can only imagine what companies are dealing with that are just hovering at the profitiability line.

So lets move to big business.. and lets say that your statement that RECORD PROFITS don't translate to jobs. Let's accept for the moment that's a true statement (it isn't, but lets run with it). Those record profits are either retained, or they are distributed to shareholders. A shareholder like say, you... with your retirement plan holdings. So you benefit from those record profits Harlowe.

What about the retained earnings? Well.. it goes back to access to capital. Banks just don't lend like they used to, so companies have to hoard cash in order to finance operations and acquisitions whenin the past they would borrow some money to do that.

Companies want to grow Harlowe. They need to in order to generate profits for shareholders. That means finding new ideas, new products, new services. And that mneas jobs.

Take the financial shackle off companies, and the jobs will grow.

Then we might be able to afford Dd's model of stimulating the economy through unemployent /boggle.

[Ddrak]

"/boggle" all you like. When Moody's says that their research indicates extending unemployment insurance benefits has better returns for the GDP than dropping corporate tax, I'll believe them over your gut feel. Of course, your complete misinterpretation of what the report said doesn't help either - of course they aren't talking about "making people unemployed". That's a blatant strawman and you know it.

Dd

[Harlowe]

Shackles? Oh boy.

I love this quote from Dan Savage..

"In 50 years taxes have never been lower. If Republican theories about the economy worked, we'd be having a boom right now. We're told over and over if you lower taxes people will create jobs, it will trickle down and they'll pee all over us and it never happens."

[Fallakin Kuvari]

And if we believed every pundit that was on TV we'd be living in a land where farts didn't stink and everyone pooped lollipops.

[Embar Angylwrath]

Shackles? Oh boy.

I love this quote from Dan Savage..

"In 50 years taxes have never been lower. If Republican theories about the economy worked, we'd be having a boom right now. We're told over and over if you lower taxes people will create jobs, it will trickle down and they'll pee all over us and it never happens."

As always, the devil is in the details.

Some things to keep in mind...

Almost half the wage eaners in this country pay no federal income tax. And its not $30K. That cut-off point is $50K for a family of four. A family of four eaning $50K year pays no federal income tax. In fact they get about 80 bucks back in a "tax refund" they neveer paid. How about we stop the practice of issuning "refunds" to people that never paid a dime in income tax? Anyone have a problem with that?

Also, the US corporate tax rate is one of the highest in the world. Many larger companies have spohisticated strategies to reduce their effective tax rate to lower than the actual listed rate, but most smaller companies do not. Those of us small businesses electing to be treated as a flow-through organization, have to pay taxes on money that never "flowed-through". We pay taxes on cash that we never received. But that's just the breaks I guess.

Another thing most Americans don't fully understand is that "profit" does not equal "cash". For tax purposes, "profit" is income minus expenses, and there are varrying definitions of both. "Profit" is just an accounting number, and has no bearing on actual cash received. So when you have someone like Harlowe spouting off about "record profits", its clear she means "tons of cash". But those two concepts are just not synonomous. But its an easy thing to mistake, since most American think that money in the bank left over after the bills are paid is "profit" to them. Its extra money. But that ain't the case for businesses.

[Ddrak]

Almost half the wage eaners in this country pay no federal income tax. And its not $30K. That cut-off point is $50K for a family of four. A family of four eaning $50K year pays no federal income tax. In fact they get about 80 bucks back in a "tax refund" they neveer paid. How about we stop the practice of issuning "refunds" to people that never paid a dime in income tax? Anyone have a problem with that?

You're seriously bitching about $80 (and I'd love to see the source for this)? And you're seriously saying "it's not $30k, but $50k" when I was quoting the individual rate and you're quoting the married rate for a family of 4? Good grief, Embar, you're just being petty. Why do you even CARE about $80 one way or another when it doesn't make a damn of difference to the deficit (0.4% of the personal income tax receipts according to the IRS numbers) even if it actually was given to a full half of the people filing returns?

Also, the US corporate tax rate is one of the highest in the world. Many larger companies have spohisticated strategies to reduce their effective tax rate to lower than the actual listed rate, but most smaller companies do not. Those of us small businesses electing to be treated as a flow-through organization, have to pay taxes on money that never "flowed-through". We pay taxes on cash that we never received. But that's just the breaks I guess.

US corporate tax is not the highest in the world. The CBO has done extensive studies on this and while it is among the highest, it is comparable to effective corporate tax rates among the G7 nations. In the US there is a progressive tax system for companies that counters some of the difference between small and large, but certainly doesn't make up for companies like GE paying no tax at all. If you're advocating that loopholes should be closed and rates adjusted to make it revenue neutral then I don't think anyone will disagree, but it doesn't fix the deficits.

As to the flow-through argument, you'll have to explain it to me. I thought S-corps just applied their income to the shareholders and the shareholders got taxed as normal with the effective extra income?

Another thing most Americans don't fully understand is that "profit" does not equal "cash". For tax purposes, "profit" is income minus expenses, and there are varrying definitions of both. "Profit" is just an accounting number, and has no bearing on actual cash received. So when you have someone like Harlowe spouting off about "record profits", its clear she means "tons of cash". But those two concepts are just not synonomous. But its an easy thing to mistake, since most American think that money in the bank left over after the bills are paid is "profit" to them. Its extra money. But that ain't the case for businesses.

I'm pretty sure Harlowe and others have the idea that "record profit" means "record taking money for services compared to what it costs to provide those services". What happens to that excess of money once it goes into the company is just accounting, just like what you do with cash in the bank after you get it is just accounting. Of course it gets spent on stuff eventually (ie invested) because having money in the bank is about the worst thing you can do with it.

Dd

[Embar Angylwrath]

I was using the $50K for family of four because that's how it was explained to me. The issue still stands. I'm not bitching about 80 bucks, I'm bitching about the principle of giving cash refunds to people that never paid a dime to even get a refund. What's sp wrong with abolshing that, no matter how small it is? It just isn't right.

As to corps.. I acknolwedged that larger corps have tax strategies that help bring their effective tax lower. Smaller companies don't typically have those tax strategies because they simpler models that do not avail themselves to accounting gymnastics.

Finally... for S-corps and other flow through entities. Income does not equal cash. Net income is an accounting exercise, and it has little bearing on actual cash distributed. That's why S-corp owners can pay income tax on income never received or distributed. To the average paycheck earner, income is what they get on a paycheck. Its not the same for businesses. Income has no direct relation to cash, as it does for most paycheck takers.

[Ddrak]

There's a lot of things a lot more important to fix that are just "not right" before worrying about something you don't even seem to be able to explain the cause for. If I were you, I'd just let it go. It's entirely possibly that it happens now and then for a very good reason but until you can demonstrate the calculation that actually results in that scenario, I don't really know how to respond to it. I can't very well agree to abolish something that hasn't been properly explained now, can I?

The solution to fixing large corps being able to use accounting gymnastics to avoid tax isn't to give small corps the same effective rate. It's to fix the issues that permit the accounting gymnastics in the first place. What you're asking for is equivalent to a welfare program for small businesses.

I'm not sure why you're beating the "income is not cash" strawman over and over because no one is claiming that it is. That's called "revenue". Seeing as you are having difficulty yourself actually explaining income, I'll give it to you in black and white from accountancy 101:

Income is increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants. (F.70, IFRS Framework)

In short, it's the money you get paid plus the increases in value of what you own plus the decrease in value of what you owe. Of course, when people complain about "record profits" they're not talking about S-Corps in any case so random anecdotes about an S-Corp mentality trying to generalize into real corporate finances is rather silly.

Dd

[Embar Angylwrath]

http://waysandmeans.house.gov/UploadedFiles/Carroll.pdf

Flow through entities (S-corps) employ over half the workforce and are over 90% of all business entities. I don't see how you can be so dismissive of that.

The link is a good read, and explains the issues better than I ever could. You can see why raising corporate taxes will kill jobs, because it will increase costs to 90% of businesses employing almost half the population. These are mostly small businesses, although I've noticed a swing by larger companies to have LLC structures for individual operating units, branches, etc, with the parent company acting as a holding company. That practice has been growing over the last few years.

Some quotes of note:

In 2007, $695 billion in flow-through income was reported on the roughly 30 million individual tax returns of individual flow-through owners who paid $176 billion in individual income taxes on this income (see Chart 4).13 In comparison, C corporations reported $1,061 billion in net income and paid $229 billion in corporate income taxes in 2007

So you can see that flow through companies (mostly small businesses) pay a larger portion of their income (which isn't cash) as a cash expense in the form of taxes.

Tax rates have also been found to deter these businesses from hiring worker and investing and affect the rate at which flow-through businesses grow

As to your statement addressing the half of the population that pays no income tax. Do you, or anyone else on this board, REALLY beleive that half the working population in this country is the working poor?

[Kulaf]

The only way I can see to get more in return that you paid in is from the EITC. It was designed to be relief from the massive increases in SS withholdings and to provide low income workers an incentive to actually work, and not be on public assistance. I see no need to do away with it unless it is not meeting those stated goals.

[Raelesyn]

Trouble with being a "Centrist" or as I like to call them..a fence sitter..is sooner or later you have to come down on one side or the other... as much as I am for a strong defense and I am probably wrong..but you don't hear about any cuts to the military budget...I know those aircraft carrier's they're building don't come cheap!

Volkrass

[Embar Angylwrath]

The only way I can see to get more in return that you paid in is from the EITC. It was designed to be relief from the massive increases in SS withholdings and to provide low income workers an incentive to actually work, and not be on public assistance. I see no need to do away with it unless it is not meeting those stated goals.

If you have dependent children, you get tax credits too, on top of EITC. Then there's the Making Work Pay Act.. or something like that. Another tax credit I think.

And my question still stands that no one on this board has addressed.... does anyone REALLY think that the roughly 50% of the population that pay no federal income taxes are the working poor?