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View Diary: Cut My Taxes To Zero and I Still Won't Create a Single Job (Updated with Appreciation) (120 comments)

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  •  I'll have to disagree (2+ / 0-)
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    ozsea1, OhioNatureMom

    "Many other expenditures are not, including: purchasing new equipment, renovating buildings, purchasing new store fronts, and research & development."

    I can choose whether or not to claim these as deductions right away (a 1 time thing) OR I can choose to claim them as depreciating terms.  

    Most businesses will chose to claim it over a multiple of years so they can maximize their deduction over a period of time, rather than right away, but you can do either.

    "All else equal, a business is more likely to create jobs under a lower tax rate regime.  This, of course, does not mean that lower tax rates will create jobs, or, more importantly, whether lower tax rates will create more jobs and/or more social value than the government could create with the additional tax revenue. "

    Again I will have to disagree.  The lower the tax rate, the less the incentive to expand, because the more profit is gained earlier on.  Over all businesses will expand through necessity, not through want.

    Why expand to make that first million if you make it sooner?

    95% of all life forms that once existed on earth are now extinct. It is only a matter of time until the Republicans follow suit.

    by PRRedlin on Thu Sep 27, 2012 at 06:53:57 AM PDT

    [ Parent ]

    •  ?? (0+ / 0-)

      1.  You can't generally deduct capital expenditures "right away."  There are exceptions (see IRC 179, which contains both restrictions and caps), but the general rule is that capital expenditures are depreciable and not deductible.  

      2.  I disagree with your claim that business "expand through necessity, not through want."  Is it a "necessity" to live in a nice home?  Is it a "necessity" to have an iPhone or a television?  Is it a "necessity" to take a vacation once a year?  Is it a necessity to eat more than rice and beans for dinner?  Not in any strict sense.  These are things that you want (and, quite frankly, things that you should want).  I certainly agree that, for all business owners, the hassle of creating an additional $1 in profit is simply not worth it: after all, while our tax forms might not reflect it, the stress associated with a larger business has a "cost" associated with.  In such circumstances, the business owners will not "want" to expand.  Where the lines intersect will, of course, depend on the business and the ownership.  It sounds like your lines intersect very early.

      Note the sheer perversity of your argument, by the way.  If your position is that we should keep tax rates high in order to give businesses a "need" to expand, that same logic would suggest that we should keep wages down in order to incentivize workers to work harder and longer.  Moreover, your argument would suggest that marginal rates should decrease as one's income goes up.  After all, if you want to create both a "need" and "incentive" to work harder, you should, for example, tax the shit out of the first $100,000 in income and then tax income above those levels at progressively lower and lower rates.

      •  necessity has a different meaning for us (0+ / 0-)

        apparently.

        the necessity of expansion means that either you decide you want to make more profit, by which you would need to hire more people in order to make that happen, OR you decide as we have, to let a few sales go in order to keep it a private family affair.

        You're confusing the results (what I do with my profit) to the running of the actual business.

        I am perfectly fine with the level of profit I am making, however if I WANTED to make more, it would be a NECESSITY to hire more people.

        as for your deductions statement, if it is feasible to within a start up write off capital investments, then you can, otherwise, you can depreciate them.  

        Your entire argument of a regressive tax structure has been proven wrong on countless measures.  I believe you are on the wrong site myfriend.  Perhaps you'd feel more at home over at drudge.

        95% of all life forms that once existed on earth are now extinct. It is only a matter of time until the Republicans follow suit.

        by PRRedlin on Thu Sep 27, 2012 at 11:05:16 AM PDT

        [ Parent ]

        •  I'm not in favor of a regressive tax structure (0+ / 0-)

          I'm not in favor of a regressive tax structure.  My point was that your argument re: high business tax rates -- namely, that high tax rates give businesses a greater incentive to expand because, without expansion, the business would not bring in enough post-tax earnings to satisfy the owners -- is a very close cousin of the argument that individual tax rates should be regressive.  Or, put another way, be careful what you argue, lest you give conservatives ammunition.

          As a general matter, it is simply not plausible that raising taxes stimulates business growth because it takes more money out of the business owners' pockets (thus forcing them to expand to make up the difference).  That does not mean that raising taxes won't stimulate business growth, of course: if the tax revenues are put to good use, it can stimulate business growth by stabilizing and growing the middle class, and thus growing demand.

          As a thought experiment, assume that we raise tax rates but that the government uses all the extra revenue to buy incredibly expensive European wines for the enjoyment of ambassadors living abroad.  Do you think that the tax hikes under this scenario would encourage business growth?  Of course it wouldn't!!  Does this not prove that tax rate hikes are alone stimulators of business growth?  Do you not agree that what matters is how the extra tax revenues are put to work?

          See, this is the difference between liberals (like you and like me) and conservatives like Mitt Romney.  I, like you, believe that government can, if run properly, sometimes make more efficient use of money than private businesses and/or taxpayers.  So, I have no problem with raising taxes.  But to say that raising taxes is what stimulates business growth is ridiculous.  Raising taxes allows the government to improve the demand-side equation, which then allows businesses to grow profitably.

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