ObamaRama 8

[MinnFan]

Re: ObamaRama 8

All of which is decided before you get to your tax rate. What you continue to struggle with is once you do the risk/reward factor, you get to a potential profit. Either there is a profit potential or there isn't. If there is, you go forward because again some profit is better than none at all. Unless the tax rate is 100% IF you think there's a profit to be made you go forward. You may not like the tax rate (I doubt anybody does) but its still worth your while to move forward. Unless you're stupid, you don't turn down a chance to make more money, even if the govt might take 5% more of it down the road. Because if you do put off making extra money, chances are your competitor down the street won't and will end up cleaning your clock.

An increase in taxes has nothing to do with people who are borderline on expanding unless they don't know what they're doing. The question to answer is: what kind of profit (pre-tax) is to be made if any. If the answer is none - taxes are irrelavent. If the answer is some, you do it because taxes won't take up 100% of the pre tax profit.

So, I'll ask again, how close have you ever been to a small business operation?

Let me ask you this then. Would you double the number of hours you work each week for 5% more pay?

I have a number of close friends who run their own business. They are forced to take taxes into consideration when they do any sort of projection.

 

[Handyman]

Re: ObamaRama 8

You do realize that taxes are going to have to go up across the board in the not-so-distant future, right? Whether they harm the economy or not will be irrelevant, we're still spending like drunken sailors and the economic hangover is coming 'round the bend.

What kind of nonsense is this! You can't expect to actually PAY for anything, that is just crazy!

Spend more and tax less THAT is the American Way!

 

[joecct]

Re: ObamaRama 8

What kind of nonsense is this! You can't expect to actually PAY for anything, that is just crazy!

Spend more and tax less THAT is the American Way!

I would actually prefer to tax less and spend less, but show a loose $ to a legislator and he'll spend it.

Nothing short of a revolution is going to stop the fiscal idiocy that is occurring in most every legislative body in the country.

And today, in a surprising and shocking move, the Obama administation today proposed nationalizing the States of California and New York. "We cannot have our largest and most important states on the verge of fiscal collapse," Treasury Secretary Timothy Geithner was quoted as saying. "As soon as Congress passes the Federal Nationalization Act of 2009, we will convert all state functions to federal. All employees will be converted to Federal and the retirement systems will be absorbed by the Federal government." When asked if additional states could be nationalized, Secretary Geithner was non-committal.

 

[Rover]

Re: ObamaRama 8

Let me ask you this then. Would you double the number of hours you work each week for 5% more pay?

I have a number of close friends who run their own business. They are forced to take taxes into consideration when they do any sort of projection.

Apples and oranges. Business expansion vs an employee's pay are two different things. Stick to your original point and lay off the tangents.

 

[Rover]

Re: ObamaRama 8

I would actually prefer to tax less and spend less, but show a loose $ to a legislator and he'll spend it.

Nothing short of a revolution is going to stop the fiscal idiocy that is occurring in most every legislative body in the country.

You know, blame must be laid to rest where it belongs, which is the voters. When voters stop demanding as many services, you might get better fiscal management. In the meantime, forget about it. Want proof? What happened when those rock ribbed, Reaganite, hard core fiscal conservative Republicans took control of the government? Answer: they spent like drunken sailors, because nobody wants to hear their rep is giving up govt funding while other districts and states are raking it in.

 

[unofan]

Re: ObamaRama 8

I would actually prefer to tax less and spend less.

If the budget were alreayd balanced, sure. But we're running a deficit; that means we need to make up for lost time. The quickest way to do that is to tax more AND spend less. Which means we pay more for less.

Thank the selfish generation for causing that. Seriously, I love my parents, but their generation can go to hell for all I care.

 

[joecct]

Re: ObamaRama 8

You know, blame must be laid to rest where it belongs, which is the voters. When voters stop demanding as many services, you might get better fiscal management. In the meantime, forget about it. Want proof? What happened when those rock ribbed, Reaganite, hard core fiscal conservative Republicans took control of the government? Answer: they spent like drunken sailors, because nobody wants to hear their rep is giving up govt funding while other districts and states are raking it in.

And they were rightly turned out of office. Would that would happen to the more fiscally loose Democrats.

 

[huskyfan]

Re: ObamaRama 8

Business expansion vs an employee's pay are two different things.

different but highly interrelated.

 

[LynahFan]

Re: ObamaRama 8

All of which is decided before you get to your tax rate. What you continue to struggle with is once you do the risk/reward factor, you get to a potential profit. Either there is a profit potential or there isn't. If there is, you go forward because again some profit is better than none at all. Unless the tax rate is 100% IF you think there's a profit to be made you go forward. You may not like the tax rate (I doubt anybody does) but its still worth your while to move forward. Unless you're stupid, you don't turn down a chance to make more money, even if the govt might take 5% more of it down the road. Because if you do put off making extra money, chances are your competitor down the street won't and will end up cleaning your clock.

An increase in taxes has nothing to do with people who are borderline on expanding unless they don't know what they're doing. The question to answer is: what kind of profit (pre-tax) is to be made if any. If the answer is none - taxes are irrelavent. If the answer is some, you do it because taxes won't take up 100% of the pre tax profit.

So, I'll ask again, how close have you ever been to a small business operation?

You're treating this in far too black-and-white of a manner. "Either there is profit or there isn't." The level of profit matters. If I have to spend 600k to put 1M in my pocket, I'd probably do it, but if I'm only going to get back 750, I might not. And the probabilities DO matter - you have to look at expected value, which takes the probability into account. When taxes go up, the net Return-On-Investment (money in my pocket divided by the money I spent) DOES go down. Obviously, it will never go negative, since if there's no profit, there's no tax. But there's still a difference between a projected +5% ROI and +10% ROI. Sure, they're both still better than breaking even, but businesses will do the latter and not the former.

 

[Rover]

Re: ObamaRama 8

You're treating this in far too black-and-white of a manner. "Either there is profit or there isn't." The level of profit matters. If I have to spend 600k to put 1M in my pocket, I'd probably do it, but if I'm only going to get back 750, I might not. And the probabilities DO matter - you have to look at expected value, which takes the probability into account. When taxes go up, the net Return-On-Investment (money in my pocket divided by the money I spent) DOES go down. Obviously, it will never go negative, since if there's no profit, there's no tax. But there's still a difference between a projected +5% ROI and +10% ROI. Sure, they're both still better than breaking even, but businesses will do the latter and not the former.

Because I'm answering a black and white question, which is why would businesses expand if they think their tax rate is going up? The answer to that is what I've been saying, which is they'd expand if the profits were there regardless of the tax rate unless it was 100% (or close to that to be fair).

If you're only going to get back 750, that's not because of a 5% increase in the tax rate, its because your margins pre tax were really low. If your tax rate was zero you still might not launch an expansion for a practically break even amount. Nothing to do with the tax rate.

Not sure what the probability argument is for. Of course probabilities matter. Never said they don't. However, its the probabilities BEFORE the taxes kick in that really matter. That's where the do/don't expand decision gets made.

 

[MinnFan]

Re: ObamaRama 8

Apples and oranges. Business expansion vs an employee's pay are two different things. Stick to your original point and lay off the tangents.

Business profits are the owners pay. Extra effort/risk has to be taken to increase them.

You say that they should go more profit even if its only 1%. So I'm asking you if you're willing to double your effort to make 5% more as you expect small business to do.

 

[LynahFan]

Re: ObamaRama 8

Because I'm answering a black and white question, which is why would businesses expand if they think their tax rate is going up?

That's not a black and white question. Businesses will expand more when/where taxes are low than they would where/when taxes are high, and it's most definitely a sliding scale.

 

[unofan]

Re: ObamaRama 8

Business profits are the owners pay. Extra effort/risk has to be taken to increase them.

You say that they should go more profit even if its only 1%. So I'm asking you if you're willing to double your effort to make 5% more as you expect small business to do.

If the profit's only 1% after taking taxes into account, it was only going to be about 1.2% without considering taxation.

The fact remains that you're only taxed on profits (income) to begin with, so taxes don't come into play at all if you aren't expecting to make some sort of a profit to begin with (taxes won't suddenly make a profitable expansion unprofitable, since by definition taxes are taken as a percentage of profit). What you're arguing is that taxes might make a worth-while profit less worthwhile, and that's inherently subjective to the situations of each individual corporation. It's also one with an impact that I think you are grossly overestimating; my educated guess says that whether an expansion is worthwhile or not is decided well before tax considerations ever come into play.

You're also convoluting the numbers in your hypothetical example. Working twice as hard for 5% more money is a net loss prior to any tax considerations - you're expending an extra 100% of output and only getting an extra 5% back, essentially losing 95% in the process. Now, if you're working twice as hard for an extra 5% profit (which would mean you're actually getting back as revenue an extra 105%, covering all of the additional output as well as the profit), then taxes might come into play and we get back to my original point that it's all subjective.

If i had to double my hours to increase my current salary by 105%, I probably wouldn't take it because the value I place on my free time that would be lost is higher than the wage I'd be getting in lieu of those hours. If I could increase my hours by 20% and take a corresponding 21% increase in salary, I'd probably accept that.

 

[MinnFan]

Re: ObamaRama 8

The fact remains that you're only taxed on profits (income) to begin with, so taxes don't come into play at all if you aren't expecting to make some sort of a profit to begin with (taxes won't suddenly make a profitable expansion unprofitable, since by definition taxes are taken as a percentage of profit). What you're arguing is that taxes might make a worth-while profit less worthwhile, and that's inherently subjective to the situations of each individual corporation. It's also one with an impact that I think you are grossly overestimating; my educated guess says that whether an expansion is worthwhile or not is decided well before tax considerations ever come into play.

Its very subjective, but that is because you're weighing the potential profit against the risk. When you decrease the potential net profit it may no longer be worth the risk

You're also convoluting the numbers in your hypothetical example. Working twice as hard for 5% more money is a net loss prior to any tax considerations - you're expending an extra 100% of output and only getting an extra 5% back, essentially losing 95% in the process. Now, if you're working twice as hard for an extra 5% profit (which would mean you're actually getting back as revenue an extra 105%, covering all of the additional output as well as the profit), then it's worth it regardless of the tax consequences.

Its not a net loss. Its 5% more money than you previously had. The remaining output is inconsequential according to Rover. Your time and effort don't cost anything. It doesn't matter if 95% of it is taxed away. You have 5% more.

 

[unofan]

Re: ObamaRama 8

Its not a net loss. Its 5% more money than you previously had. Your time and effort don't cost anything.

My time and effort cost me plenty. I don't know about you, but I place a pretty high value on my spare time. If you value your spare time at 0$, you're an idiot.

 

[Rover]

Re: ObamaRama 8

Business profits are the owners pay. Extra effort/risk has to be taken to increase them.

You say that they should go more profit even if its only 1%. So I'm asking you if you're willing to double your effort to make 5% more as you expect small business to do.

But where your analogy makes no sense is that business owners might not be doubling their hours worked to expand. They can simply hire more people to cover the expansion at no huge extra effort of their time. A better analogy would be would I accept a doubling of the size of my group that I manage along with the extra business/work that would fill up those people's time for a promotion with a 5% raise attached. The answer to that question is yes, even if I knew state taxes were going to raised a couple of % points next year.

That's not a black and white question. Businesses will expand more when/where taxes are low than they would where/when taxes are high, and it's most definitely a sliding scale.

Cart before the horse. If there's no profit opportunity, zero taxes will not make business expand. If there's big profit opportunity, a higher tax rate won't stop them. Pre-tax profits first. Tax rate afterwards.

 

[MattS]

Re: ObamaRama 8

Because I'm answering a black and white question, which is why would businesses expand if they think their tax rate is going up? The answer to that is what I've been saying, which is they'd expand if the profits were there regardless of the tax rate unless it was 100% (or close to that to be fair).

Totally bogus. I work in R&D and we are always conscience of the ROI. And as much as you would like to deny it taxes (along with a whole host of other factors) do play into those decisions. A business might still expand if there taxes were going to go up, but to think that a tax increase plays no part in the decision of whether or not to expand or to what extent to expand is just plain foolish.

 

[MinnFan]

Re: ObamaRama 8

Yes it is, so long as you don't consider "labor" to be free.

I agree it would have to be 105% after any actual costs. However, business owners receive no set compensation for their personal labor. The simply get the business profits (or losses) after taxes. So they may expend $100 worth of effort, but only receive $5 for it.

 

[MinnFan]

Re: ObamaRama 8

My time and effort cost me plenty. I don't know about you, but I place a pretty high value on my spare time. If you value your spare time at 0$, you're an idiot.

Thats the point

If you cut into your time you're going to want it to be worth your while. The more you are compensated for your additional work the more likely you are going to be to spend your time working.

 

[Rover]

Re: ObamaRama 8

Thats the point

If you cut into your time you're going to want it to be worth your while. The more you are compensated for your additional work the more likely you are going to be to spend your time working.

But to expand a business does not correlate to whether or not an individual is working double time at his existing job. There's no connection there, making this tangent of yours an exercise in CYA since you can't admit that a possible 5% increase in a future tax rate will not discourage business from expanding if there's profits to be made, which was your original assertion.