Skip to main content

View Diary: Ways & Means chief David Camp wants to return to 1931 tax rate (110 comments)

Comment Preferences

  •  A higher tax rate makes it cheaper to hire (3+ / 0-)

    on the margin.

    I have $100,000. I can hire someone at 60k or not.

    At a 30% tax rate

    hire: I'm left with the after tax gain on $60k, = ($40k x (1-0.30) = $28,000, plus the output of my new employee.

    nohire: I'm left with $70,000.

    Net employee cost = $70k - $28k =$42k

    At a 20% tax rate:
    hire: I'm left with $40k x (1-.20) = $32,000
    nohire: I'm left with $80,000.

    Net employee cost = $80k - $32k =$48k

    I give up more income to hire someone at a lower tax rate than the higher tax rate.

    And, of course, the whole point of hiring someone is to generate more income.

    The real obstacle that keeps people from hiring is poor cash flow - fear that business will dry up, or fear that existing business won't pay their bills on time. You can also make a case that payroll tax rates, which are paid each month, makes workers more expensive... though perhaps not as bad as health insurance rates.

    Income tax rates are not the problem.

    Fry, don't be a hero! It's not covered by our health plan!

    by elfling on Thu Mar 17, 2011 at 12:18:55 PM PDT

    •  You miss the ability (0+ / 0-)

      of the company to just expanding their operations into other industrialized counties instead.  The rest of the world has corporate tax rates of 25% or lower - while the US Federal rate is 35% and when combined with state taxes like California are 43%.

      Higher tax rates just drive business operations and jobs out of the US faster.

      Our bigger problem is that imports don't have the tax burden of our economy while what American workers produce to bear this burden - while the rest of the world largely removes their tax burden from their exports.  

      The net is American made products sold in the US have the US tax burden while the imports they compete against don't have the US burden and don't have the exporting country's tax burden.

      The most important way to protect the environment is not to have more than one child.

      by nextstep on Thu Mar 17, 2011 at 12:55:58 PM PDT

      [ Parent ]

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site