Ah tax cuts! is there nothing they cannot fix?

FTFA - Repeal means higher stock prices and improved cash flow. Corporations would respond to this change by investing in plant and equipment, and by hiring additional workers.

What is sad is this clown actually believes this. Guess what moran- Corporations don't invest in plants, equipment or workers unless there is an increase in demand for their product.
And if there is sufficient demand, they don't need a tax cut to give them an incentive to expand.

/some people are incredibly stupid.

Let corporation keep more of their money and all that's going to happen is their executives get even bigger bonuses and the corporations have even more money to offshore their business.

Large corporations are evil pieces of shiat through and through. Giving them more money is not going to make them do good things. It will simply let them increase their evil shiat plans.

How about we keep the corporate tax and eliminate the income tax. The former is prescribed in the constitution, the latter is not.

why bother, corporations are better at avoiding taxes than anyone else.

The people who are going to overwhelmingly support this plan are the ones right in the meaty part of the tax base... they will screw themselves beyond belief then go looking for someone else to blame.

again.

torch: How about we keep the corporate tax and eliminate the income tax. The former is prescribed in the constitution, the latter is not.

agreed, now all we need to do it figure out a way to make them actually pay them.

Dinki: Corporations don't invest in plants, equipment or workers unless there is an increase in demand for their product. And if there is sufficient demand, they don't need a tax cut to give them an incentive to expand.

Precisely. Corporate taxes don't affect demand for the product. Given a fixed demand, more money going to the corporation goes to the profit pot, not to investing in workers and equipment.

hillbillypharmacist: Precisely. Corporate taxes don't affect demand for the product. Given a fixed demand, more money going to the corporation goes to the profit pot, not to investing in workers and equipment.

The theory goes that if their costs (taxes are a cost of doing business) are lowered, the price of goods is lowered, and demand rises. There are two problems. First, general supply and demand it bullshiat. Sure, it works in some circumstances, but often in extremes, not in day to day life. Second, the companies, as you say, are not likely to lower prices, they are likely to keep the money they used to pay in taxes. You can almost hear the guys in the meeting. "Our bottom line will be increased 10% due to the lower taxes!" Hell, I've been at many a meeting where management was getting ANGRY at use that we were MISSING $X of revenue because we had not jacked peoples' services fees up in the software yet. They actually believed (and forecasted) that after jacking someone's service fees ridiculously, EVERY customer would magically stick around and take it. When, our experience showed, we would lose AT LEAST 10% of our customers. Most business management is not anywhere near as talented as people like to think. MOST businesses that succeed do so through luck and not business acumen.

Corporations have never paid taxes. They just figure them as part of the cost of doing business and adjust their pricing accordingly.

teto85: Corporations have never paid taxes. They just figure them as part of the cost of doing business and adjust their pricing accordingly.

Right, and when the cost goes down, they can afford to lower prices, which drives competition. Competition is the key here.

Dinki: Ah tax cuts! is there nothing they cannot fix?

FTFA - Repeal means higher stock prices and improved cash flow. Corporations would respond to this change by investing in plant and equipment, and by hiring additional workers.

What is sad is this clown actually believes this. Guess what moran- Corporations don't invest in plants, equipment or workers unless there is an increase in demand for their product.
And if there is sufficient demand, they don't need a tax cut to give them an incentive to expand.

/some people are incredibly stupid.

The idea that corporations pay tax now is stupid. They just pass the tax onto the consumer. So in essence the government double taxes us, and it triple taxes me, because I have to pay taxes on my dividends.

This article is a prime example of why I cannot take the Libertarian Party seriously. The skepticism about the government is nice, and I can get with that, but they seem to have a really embarrassingly naive view of corporations, like they're full of good fairies who just want to buy us all a pony and candy but can't because of the Evil, Evil Government.

The free market is wonderful, and I'd love to have one. But we don't have one, and would not have one if the already toothless government regulation we have now went away.

Whamdangler: hillbillypharmacist: Precisely. Corporate taxes don't affect demand for the product. Given a fixed demand, more money going to the corporation goes to the profit pot, not to investing in workers and equipment.

The theory goes that if their costs (taxes are a cost of doing business) are lowered, the price of goods is lowered, and demand rises. There are two problems. First, general supply and demand it bullshiat. Sure, it works in some circumstances, but often in extremes, not in day to day life.

CITATION NEEDED

The supply curve of labor doesn't count, unless you can make a good argument for it. :)

And here is the standard model of taxes (since it is not marked, supply curve goes from lower left to upper right, demand curve goes from upper left to lower right):


Without a tax, the equilibrium price will be at Pe and the equilibrium quantity will be at Qe.

After a tax is imposed, the price consumers pay will shift to Pc and the price producers receive will shift to Pp. The consumers' price will be equal to the producers' price plus the cost of the tax. Since consumers will buy less at the higher consumer price (Pc) and producers will sell less at a lower producer price (Pp), the quantity sold will fall from Qe to Qt.


Copied from here.

jake_lex: This article is a prime example of why I cannot take the Libertarian Party seriously. The skepticism about the government is nice, and I can get with that, but they seem to have a really embarrassingly naive view of corporations, like they're full of good fairies who just want to buy us all a pony and candy but can't because of the Evil, Evil Government.

It would be more fun if you said this was a prime example of why you couldn't take the Harvard Economics Department seriously. :)

It is estimated that our budget would be a bit more towards the black if the IRS had not been tasked to going after middle income tax problems, as opposed to corporate tax cheats and upper income brackets.

Yes. Let us continue with the myth of trickle down economics, now that we are full well soaking in it.

I understand that no one likes being taxed. That is the nature of the beast, but giving corporates carte blanche is a large part of the current economic crisis. Not mortgage holders, not middle class tax cheats, not single mothers, not rap music, not violent video games, not atheists in the classrooms, not gays in the military, not any of the many boogey men bandied around to divert attention to the sad fact that greed got the best of folks and a shiat ton of people ran right off the cliff, and articles like this only cheer for the rest of us to charge right over after them.

Oh great prognosticators of economic wellness: where were you a year ago, and if you see so clearly into the future, why did you not scream bloody blue murder about the impending doom? If you tout the same crap that GOT us into this mess, why the hell should anyone put any credence into your claims?

Right now the corporatist Rah Rah culture is trying like hell, but to be honest, it's falling on deaf ears, because it's farked us all, and probably our great grandkids are going to still be paying for this mess.

torch: teto85: Corporations have never paid taxes. They just figure them as part of the cost of doing business and adjust their pricing accordingly.

Right, and when the cost goes down, they can afford to lower prices, which drives competition. Competition is the key here.

And competition has been the bane of so many in these last eight years. Not real competition. We have skewed our markets badly, and we are reaping what we have sown. You want a free market? Then we have to accept that some folks are going to go under. That some folks will fail. That some folks make poor decisions, and they go away. The move to prop up businesses or skew the markets towards them doesn't do our system any favors.

That is the reason for regulation--to insure a fair and balanced market so that trade can occur. It's not some system where anyone can do anything, but rather, it is a balanced playing field, where everyone follows the same rules, and the best shake out, and the worst, go the way of the dodo.

Too much regulation can choke off business, but too little, and you see what we have today: chaos in the markets. The trick is to balance things so that competition can flourish. Reducing corporate tax doesn't do anything to encourage competition--not right now especially, considering the free ride that corporates have had with taxes. It is just trying to spin a little more goodies onto a banquet that we are feeding them already.

Man up, pay your taxes, and actually do something useful, or get the fark out of the way, go bankrupt, and let someone else buy your shiat and get it done. The whining at this point is what annoys me the most.

"We've had our way for so long that we can't survive without it!" is not the way to win the hearts and minds, and it's not a solid business plan.

Pray to God, but row to shore. And right now, a great deal of American corporates are suddenly realizing that the Fed is maybe NOT going to carte blanche anymore. Ooops.

My company calls any thing that doesn't meet a budget, a loss.

For example one quarter in 06 we posted our best quarter EVER with multi-millions in pure profit but it was under what they budgeted to make so... "because we lost $$ to budget we are unable to pay your quarterly bonus, sorry ..."

This is the corporate mentality, and of course if we ever do meet the budget of what they want to make, they raise the earnings expectation so that doesn't happen anymore.

Eliminating the corporate income tax (assuming the government cuts spending and doesn't just keep spending the money they would have gotten from it) would certainly improve the economy. But I have trouble believing that it would improve it any more than eliminating the personal income tax would. Or a billion different taxes or excessive regulations.

Snarfangel: And here is the standard model of taxes (since it is not marked, supply curve goes from lower left to upper right, demand curve goes from upper left to lower right):

Sometimes, standard models don't work particularly well. This explanation probably works fine for an increase in taxes. However, it probably doesn't for a decrease.

If the producers have already reached a steady-state level of demand (meaning they have an established market share), and are currently profitable, then an influx of cash in the form of reduced taxes is best placed directly into the profit column. Profitability attracts investors, it is its own reward.

Of course, new products or unprofitable products probably would get a price reduction/supply increase in order to gain more market share. But for the most part, tax reduction is a subsidy for existing businesses.

The best option is to provide exceptions for new businesses in order to supply them with the capital to gain market share. But who is willing to do that?

I'll just incorporate myself and never pay taxes again. Yippee!

you know, between Whamdangler and hubiestubert, i have nothing to add to this thread.

Snarfangel: -It would be more fun if you said this was a prime example of why you couldn't take the Harvard Economics Department seriously. :)

Except he's a lying sack of shiat who knowingly took her economic research out of context to present this shiatty political point rather than a legitimate economic argument. Probably why he works at Harvard instead of one of the better elite economic universities. Link (new window)

We already had a link describing why the Republican tax cut idea based on her analysis won't work in the current economy.

torch: How about we keep the corporate tax and eliminate the income tax. The former is prescribed in the constitution, the latter is not.

May I introduce you to the Sixteenth Amendment ^{(^)}?

hillbillypharmacist: Snarfangel: And here is the standard model of taxes (since it is not marked, supply curve goes from lower left to upper right, demand curve goes from upper left to lower right):

Sometimes, standard models don't work particularly well. This explanation probably works fine for an increase in taxes. However, it probably doesn't for a decrease.

If the producers have already reached a steady-state level of demand (meaning they have an established market share), and are currently profitable, then an influx of cash in the form of reduced taxes is best placed directly into the profit column. Profitability attracts investors, it is its own reward.

IMO (and the rest of this is pretty much all in my opinion, no fun graphs or anything), suddenly changing tax rates -- either higher or lower -- does more harm than good. Suddenly dropping rates doesn't suddenly cause capital to be invested, people to be hired, raw materials to be purchased, or products to be manufactured, but it does suddenly cause a jump in deficit spending. Suddenly increasing taxes *does* cause a fairly sudden disruption, and not for better.

Assuming a 35% corporate income tax rate (which is current maximum), if someone wanted to cut corporate income taxes entirely, they should propose something like 5% cut per year for 7 years (instead of 35% all at once), starting in the next fiscal year. The same if they wished to raise taxes by a similar amount. That gives business and individuals time to adjust their spending accordingly without disrupting the economy any more than necessary, and there is the anticipatory benefit -- companies still can plan for the full future cut, while the deficit only sees the current cut.

Of course, new products or unprofitable products probably would get a price reduction/supply increase in order to gain more market share. But for the most part, tax reduction is a subsidy for existing businesses.

Well, a partial subsidy for businesses positioned to take immediate advantage of it, but those who have actually planned ahead and geared their business to a 35% maximum rate in a recessionary economy (and did things like order less and shed jobs) could be at a competitive disadvantage to firms that had less foresight.

The best option is to provide exceptions for new businesses in order to supply them with the capital to gain market share. But who is willing to do that?

Well, my long-range goal (if I had any political power) would be to shift taxes from factors of production that are elastically supplied to a certain factor that is inelastically supplied, plus Pigovian taxes and the like. Considering the extreme malinvestment at present, though, it would probably take twenty years to completely switch over.

I'd be just fine with completely eliminating the corporate income tax. However, the deal is that all corporate donations to any and all political organizations and/or elected officals AND regulatory officials completely stops. No more lobbying. For anyone. Anywhere or on any issue or at any time. NO. EXCEPTIONS.

So you get to keep your money and not get taxed on it. But you cede the ability to influence governement in any direct manner. And if you try it, then someone goes to jail.

supply-side economics will work eventually

it just HAS to

Weaver95: I'd be just fine with completely eliminating the corporate income tax. However, the deal is that all corporate donations to any and all political organizations and/or elected officals AND regulatory officials completely stops. No more lobbying. For anyone. Anywhere or on any issue or at any time. NO. EXCEPTIONS.

So you get to keep your money and not get taxed on it. But you cede the ability to influence governement in any direct manner. And if you try it, then someone goes to jail.

You know, I'm totally fine with this. In fact, I like it.

Weaver95: I'd be just fine with completely eliminating the corporate income tax. However, the deal is that all corporate donations to any and all political organizations and/or elected officals AND regulatory officials completely stops. No more lobbying. For anyone. Anywhere or on any issue or at any time. NO. EXCEPTIONS.

So you get to keep your money and not get taxed on it. But you cede the ability to influence governement in any direct manner. And if you try it, then someone goes to jail.

That should happen anyways. All discussions with public officials should be recorded and placed on youtube. They should only be allowed to have discussions with friends and family, along with other government service members in private. We should own our public servants. They work for us.

Dinki: Ah tax cuts! is there nothing they cannot fix?

FTFA - Repeal means higher stock prices and improved cash flow. Corporations would respond to this change by investing in plant and equipment, and by hiring additional workers.

What is sad is this clown actually believes this. Guess what moran- Corporations don't invest in plants, equipment or workers unless there is an increase in demand for their product.
And if there is sufficient demand, they don't need a tax cut to give them an incentive to expand.

/some people are incredibly stupid.

not to mention that a reduction in taxes is also a reduction in incentive to invest in these things. they expenses that come with the investments are tax deductable, which means that putting money back into your business is a way to keep it out of the government's hands.

these people would fail first year accounting.

Dinki: What is sad is this clown actually believes this. Guess what moran- Corporations don't invest in plants, equipment or workers unless there is an increase in demand for their product.
And if there is sufficient demand, they don't need a tax cut to give them an incentive to expand.

I sort of agree with you here, its foolish to think a company is merely going to spend all the money they get their hands on.

HOWEVER... R&D is often a more flexible expense, and when a company has more money, they will spend more on R&D, as it has more to do with future markets/competition.

randomizetimer: Dinki: Ah tax cuts! is there nothing they cannot fix?

FTFA - Repeal means higher stock prices and improved cash flow. Corporations would respond to this change by investing in plant and equipment, and by hiring additional workers.

What is sad is this clown actually believes this. Guess what moran- Corporations don't invest in plants, equipment or workers unless there is an increase in demand for their product.
And if there is sufficient demand, they don't need a tax cut to give them an incentive to expand.

/some people are incredibly stupid.

The idea that corporations pay tax now is stupid. They just pass the tax onto the consumer. So in essence the government double taxes us, and it triple taxes me, because I have to pay taxes on my dividends.

Actually the government technically (for lack of a better term) "infinite taxes" everyone.

I get paid, its taxed. The money I keep I spend on groceries and the like- sales tax. That money is income for the stores I frequent- corporate tax. They pay their employees with what remains, income tax. And so on and so forth.

At the end of the day its the *complication* of taxes that matters. Government needs so much money. Doesn't matter where it comes from, it needs it. We can argue what amount government needs, but we agree it needs SOME amount.

I say choose one tax- corporate, income, sales, whatever- and stick with it. Yes, it needs to be somewhat progressive (rich paying a little more) because not everything in live is percentage-based.

My choice would be for something like the flat tax, but weighted. No deductions, no complications. You make between $X and $Y you pay this percent. You make between $Y and $Z you pay that percent. End of story.

As it is now, deductions are an attempt to control the way people live. The government forces its hand on all sorts of things: buying property vs. renting, where businessess spend its money, political concerns like the environment. Taxes are not the place for this.

Corporations would respond to this change by investing in plant and equipment, and by hiring additional workers.

hsahahahahaah
no they wont
they will give theirselves bigger bonuses
they will give bigger dividends

DURRRRR

Dinki: Corporations would respond to this change by investing in plant and equipment, and by hiring additional workers.

What is sad is this clown actually believes this.

Precisely. Corporations look at the bottom line. In fact, often, they are REQUIRED BY LAW to focus on the bottom line in order to maximize stock price/dividends for their shareholders. Companies RARELY view increased revenues (including decreased costs) as money that they can use for reinvestment in infrastructure. They almost always see it as added profit to report to shareholders and to inflate bonuses.

Yes, this is pretty much what namatad just said. :)

I've been in hundreds and hundreds of strategy meetings over the years. This is how they view it, seen time and time again. More money = more profit (or less loss). Less money = less profit (or higher loss).

Why do companies, even companies doing well, shift jobs and manufacturing overseas? To save money, which equals more money for them. If anyone ever thinks more revenue (or lower taxes) equals more jobs, they are delusional.

Dinki: What is sad is this clown actually believes this. Guess what moran- Corporations don't invest in plants, equipment or workers unless there is an increase in demand for their product.

This is what drives me nuts about the "All Tax Cuts All the Time" philosophy. The auto companies have new cars coming out of their ears, but no one is buying them because the banks aren't lending. Why would Ford use a tax cut to hire more workers to build more cars that no one is buying?

There is a time and a place for tax cuts, even corporate tax cuts. This ain't it. Once demand starts to pick up, maybe then, but not now.

torch: How about we keep the corporate tax and eliminate the income tax. The former is prescribed in the constitution, the latter is not.

So the Sixteenth Amendment isn't part of the Constitution.

I've finally got my ammo for the gun nuts. "But the right to bear arms isn't in the important part of the Constitution!"

torch: How about we keep the corporate tax and eliminate the income tax. The former is prescribed in the constitution, the latter is not.

Do you care to guess what corporate taxes are? If you said income taxes, then you can leave your tinfoil hat at the door.


Dinki: Ah tax cuts! is there nothing they cannot fix?

FTFA - Repeal means higher stock prices and improved cash flow. Corporations would respond to this change by investing in plant and equipment, and by hiring additional workers.

What is sad is this clown actually believes this. Guess what moran- Corporations don't invest in plants, equipment or workers unless there is an increase in demand for their product.
And if there is sufficient demand, they don't need a tax cut to give them an incentive to expand.

/some people are incredibly stupid.

I like to call it the "if you build it, they will come" stimulus model. These people really think that companies are eager to just start hiring and building crap because people will magically want to run out and buy that stuff.

teto85: Corporations have never paid taxes. They just figure them as part of the cost of doing business and adjust their pricing accordingly.

Consumers never pay taxes. They just figure them in and adjust their buying practices accordingly. Taxes on income are passed on to corporations.

So, apparently, no one pays taxes at all!

See how stupid your argument is?

Troy McClure:
I like to call it the "if you build it, they will come" stimulus model. These people really think that companies are eager to just start hiring and building crap because people will magically want to run out and buy that stuff.

This, and the fact that if we give them the tax breaks, they will build it... In Dubai, maybe, or perhaps China, India, Mexico.... But not here. It just hands them more supertanker-loads of cash to ship out of the country.

I'm no Internet Economist, but that article seems pretty naive in predicting the behavior of businesses. Plus, "Taaaaax Cuuuuuts" is getting to be a zombie-like chant in some quarters.

I think they should keep corporate income tax and regular income tax. Income tax at least taxes people on money they actually have. Property taxes I take issue with.

/Also, if they want to stimulate the economy- get rid of the gas taxes

yea, so those Corporate Owners can further the divide between the rich and everyone else. more money for the top 5%! kewl!!

let me guess. the middle/working class gets to pay more taxes to make up for the Corporate tax dodgers, right?

Private capital tends to become concentrated in few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of the smaller ones. The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education). It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights. (Albert Einstein, 1949)

snuffy: torch: How about we keep the corporate tax and eliminate the income tax. The former is prescribed in the constitution, the latter is not.

agreed, now all we need to do it figure out a way to make them actually pay them.

Take the troops out of Iraq, and then threaten to invade any of those tiny countries with no military forces at all with invasion if their banking system isn't made completely transparent.

randomizetimer: My choice would be for something like the flat tax, but weighted. No deductions, no complications. You make between $X and $Y you pay this percent. You make between $Y and $Z you pay that percent. End of story.


This looks just like the tax code we already have, you know where you pay 10% up $8950, 15% on $8951 to $33950, and so on...


source

Batman in the Operating Room: I'm no Internet Economist, but that article seems pretty naive in predicting the behavior of businesses. Plus, "Taaaaax Cuuuuuts" is getting to be a zombie-like chant in some quarters.

those quarters reside in the top 5% of the richest americans because they are the ones who benefit. when is the last time you got a tax cut???

bulldg4life: supply-side economics will work eventually

it just HAS to

We just need to take it up to 11.

From the efficiency perspective, the corporate income tax has never been sensible policy. Economic theory holds that an efficient tax system should not tax capital income, since this distorts the incentives to save and invest.

So if a foreign power invades the corporation is not affected?
Does the corporation not use the national highway system?

How does exempting corporations from paying for their share of the benefits they receive from government, "distort" incentives?

I would think exempting them from paying anything for the expenses they help to incur would be more of a distortion.

Even if the tax base includes capital income, corporate income taxation is overkill. All income earned by corporations accrues to households as dividends or capital gains, and this income is then taxed by the personal income tax system.

Using this same logic we could argue that all personal income tax is overkill, since all income earned by individuals accrues to corporations.

yes. it's so obvious that the solution is more tax cuts. faith-based economics.

hillbillypharmacist: Precisely. Corporate taxes don't affect demand for the product. Given a fixed demand, more money going to the corporation goes to the profit pot, not to investing in workers and equipment.

Yes, they do - it's called lower consumer prices.

A healthy profit margin is a good thing, but sometimes corporations can earn more profit dollars by lowering prices to stimulate sales. It also helps them remain solvent when demand drops due to a recession; having liquid assets when the margin (and dollars) are low in a slow sales period gives them the opportunity to develop products that meet new market demands and rebuild short-term profit making.

TFA's sentiment is a nice one, but it's never going to happen. There's a culture in government that sees every transaction as taxable; they'd charge you a dollar for every breath of "their" air you breathe if they could. (Come to think of it, they sort-of already do, indirectly through "clean air" initiatives.)

I have one better. Eliminate the corporate tax on profits derived from activies in this country. You build the car here, you pay no income tax on the sale. You build it in china, you pay the income tax.

Conservatives and Liberals alike should want the country to have the most attractive business environment in the world. More jobs, more income taxes and spending as well as less government spending on entitlement programs.

But instead we want to raise taxes and cap executive pay, because surely that will help things.

/Need term limits in congress.
// Congressional compensation should be based on a formula that includes GDP growth and unemployment rate.

General Motors to Invest $1 Billion in Brazil Operations -- Money to Come from U.S. Rescue Program (new window)
SAO PAULO -- General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.

According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012."

You mean giving more money to corporations will make new jobs like this?

Raise their taxes, cap price increases for five years, stiff penalties for layoffs. Now that would improve the economy.

Or they could repeal Taft-Hartley. That would certainly improve things for the people that actually need them improved.