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MHJ

Raising Corp Tax

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Is it accurate that raising corporate taxes in the current economic climate will eventually yield a wider and deeper recession.

 

You cannot predict with accuracy what will happen in the future if you do X.

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You cannot predict with accuracy what will happen in the future if you do X.

 

And another way to put it, is that the TV pundits don't understand, you cannot project with any accuracy what would have happen today if x had been done in the past.

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If history does repeat,then yes. Didn't Herbert Hoover do the same in 1932? Raising taxes in that recession lead to a depression.

First it is my stand that raising taxes on anyone or anything effects each and everyone of us in one way or another. So a tax increase on a select few or on corporations or on capital gains will have an effect on us all, not just the rich, but right down to the homeless windshield cleaners receiving smaller handouts and these "I'll work for food" guys actually having to work for food.

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In my opinion, it's not so easy to draw a direct correlation between taxes and economic growth. In general, I would agree that higher taxes act as a disincentive for entrepreneurs to get a business off the ground and growing.

 

The part of the equation that also needs to be looked at is how those tax receipts are being used. Is the government investing in growth strategies with the funds they receive? Are they using those dollars to employ people? If you think of the government as just another very large business that collect money for providing services to its clients, I think you'll agree that it's important to look at the revenue and the expense side of things before coming to a hasty conclusion.

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.............

The part of the equation that also needs to be looked at is how those tax receipts are being used....

 

Yes exactly. If they use the money efficiently or as efficient as we can expect a governmental oranization to be.

 

It can create needed jobs - the dreaded service variety since they don't manufacture anything but the phoney money the Treasury prints. I say dreaded service jobs tongue-in-cheek, after all what are teachers/doctors/lawyers/architects/lobbyists - well forget the last group. ;)

 

But if they are creating jobs for the sake of creating jobs that is just shifting around tax money from one person to another, adding layers of bureauracy and not very efficient at all. Prime example these days is the Homeland Security Dept.

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The hot topic on the news stations is "We ne to fix Wall Street". Well what about the Government, there is sooooooooooooo much waste it is silly. We need to put someone in charge that can take the country and run it like a business. Raising taxes isnt the answer, locating and fixing the problem is.

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How can you tax businesses without increasing the price of the goods they produce at every level? Taxes are a part of cost of production. I offer a hypothetical example.

 

Company A produces widgets at the cost of $1.00 and sells at 15% over cost or for $1.15. Government (to the delight of poor customers) taxes the the "rich" businesses 10% so the cost is now $1.10 + 15% so company A now charges the wholesaler $1.27.

 

The wholesaler figures his profits at 25% over cost which is now .12 higher and he is hit with the 10% tax too. So now instead of wholesaling widgets at $1.44 he sells them for $1.59

 

The retailer also must pass on the increase to keep his 50% profits so he retails the goods to the customer at $2.39 for what he sold pre-tax for $2.16.

 

The customer walks out of the store grumbling about inflation and big business sticking it to the little man and goes to vote for the who will make the rich pay their fair share.

 

Meanwhile the government collected 48 cents on every widget to redistribute on their pet projects mostly aimed at enslaving the masses.

 

Hayek got it right in 1947: socialism is the Road to Serfdom.[/I]

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How can you tax businesses without increasing the price of the goods they produce at every level? Taxes are a part of cost of production. I offer a hypothetical example.

 

Company A produces widgets at the cost of $1.00 and sells at 15% over cost or for $1.15. Government (to the delight of poor customers) taxes the the "rich" businesses 10% so the cost is now $1.10 + 15% so company A now charges the wholesaler $1.27.

 

The wholesaler figures his profits at 25% over cost which is now .12 higher and he is hit with the 10% tax too. So now instead of wholesaling widgets at $1.44 he sells them for $1.59

 

The retailer also must pass on the increase to keep his 50% profits so he retails the goods to the customer at $2.39 for what he sold pre-tax for $2.16.

 

The customer walks out of the store grumbling about inflation and big business sticking it to the little man and goes to vote for the who will make the rich pay their fair share.

 

Meanwhile the government collected 48 cents on every widget to redistribute on their pet projects mostly aimed at enslaving the masses.

 

Hayek got it right in 1947: socialism is the Road to Serfdom.[/I]

 

 

This is a great point. Companies don't pay taxes. Customers pay the taxes in the form of high costs.

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