Can someone explain to me how tax cuts "create jobs"? - GoFuckYourself.com - Adult Webmaster Forum

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Snake Doctor

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#1

Can someone explain to me how tax cuts "create jobs"?

02-04-2009, 08:58 PM

I'm a business owner, and I know lots of business owners, and whether or not we hire new people is a function of how well the business is doing.

If business is growing and we need more workers to meet the needs of our business, we hire people. If business is contracting and we need less workers, we lay people off. The tax rate we pay on the profit our business makes has no bearing on how many employees we need to run our business. An astute business person is going to run an efficient operation and keep their labor costs as low as possible.

If the government cuts my taxes, that increases my take home pay, but it doesn't mean I'm going to create a make work job because of that. That wouldn't make any sense. Also, employees are paid with pre-tax dollars anyways, so it's not like lower taxes makes it cheaper for me to hire people.

As for the capital gains tax argument.....the one that says lower capital gains taxes encourages investment, encourages businesses to expand, etc......capital gains taxes are paid when you sell an investment, not when you make one. So lowering the capital gains tax rate encourages people to sell their investments, not to make new ones.

Taxes may be low today when I make an investment, but I have no idea what the rate will be when my investment has run it's course and it's time for me to sell, so a low rate today doesn't encourage people to make investments.

If anything lower capital gains tax rates depress asset values because it floods the marketplace with more sellers than would otherwise be there.
Besides, if you invest your money in stocks, bonds, your own business, someone else's business, real estate, or a savings account at a credit union.....you're going to pay capital gains tax on the return......so at the end of the day, capital is going to go where it will earn the highest return, regardless of the tax rate.

So I'll end this post where I started it, can someone explain to me how cutting capital gains taxes or cutting the top marginal tax rate "creates jobs"?

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mikesinner

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#2

02-04-2009, 09:00 PM

Most of the money in the Obama plan is going to create new jobs not cutting taxes. It's actual job creation like in the new deal.

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the Shemp

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02-04-2009, 09:09 PM

lower taxes means people have more cash in their pocket, so they can buy more crap at walmart...which means they will have to hire an additional person on the check out...

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KillerK

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#4

02-04-2009, 09:10 PM

If he cuts taxes and you make an extra $20k a month, you might decide to higher another worker or 2 that really you could use but couldn't afford before.

Atleast that is what I understand it to be. Owner of business makes more profit, means they can try to expand or ship/sell more things by having an extra worker or 3.
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Snake Doctor

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02-04-2009, 09:13 PM

Originally posted by the Shemp

lower taxes means people have more cash in their pocket, so they can buy more crap at walmart...which means they will have to hire an additional person on the check out...

That I understand, but doesn't really have much to do with capital gains taxes or taxes on the highest earners who don't spend anywhere close to 100% of their income anyways.

I just keep hearing the republican robots on TV talking about how we have to do more to help (i.e. cut taxes for) small businesses because they're the ones who create all the jobs.

I fail to see how the taxes paid on profit correlates to how many employees they need to run their operation.

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tony286

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#6

02-04-2009, 09:16 PM

it doesnt do shit basically to help the economy but it helps republicans get reelected.
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KillerK

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02-04-2009, 09:23 PM

Originally posted by Snake Doctor

That I understand, but doesn't really have much to do with capital gains taxes or taxes on the highest earners who don't spend anywhere close to 100% of their income anyways.

I just keep hearing the republican robots on TV talking about how we have to do more to help (i.e. cut taxes for) small businesses because they're the ones who create all the jobs.

I fail to see how the taxes paid on profit correlates to how many employees they need to run their operation.

You mention SMALL BUSINESSES! Those are the ones that if they make an extra $20k a month can hire people.
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Barefootsies

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#8

02-04-2009, 09:26 PM

Originally posted by tony404

it doesnt do shit basically to help the economy but it helps republicans get reelected.

Exactly right.

That bullshit is just economic theory that does not work, especially in an economy like ours currently. Much less for SMALL business. I think BIG business would actually care more about such things.

You want to actually do something? Change the fucking tax laws. Eliminate capital gains, death tax all together. Tax the rich. Base taxes more on the 'sales' then income. If the economy is rocking, lots of money. People are not buying? Neither is the government.

That is how it works for the average Joe. If you do not have money, you can not spend it.

Then hammer companies who took their operations over seas, and import. Eliminate ALL tax shelters for corporations so they actually HAVE to pay their taxes. Give breaks to companies in the U.S. and on U.S. soil.

You will see a mass influx of jobs coming back to the states.

Last edited by Barefootsies; 02-04-2009, 09:28 PM.

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96ukssob

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#9

02-04-2009, 09:50 PM

Originally posted by KillerK

If he cuts taxes and you make an extra $20k a month, you might decide to higher another worker or 2 that really you could use but couldn't afford before.

Atleast that is what I understand it to be. Owner of business makes more profit, means they can try to expand or ship/sell more things by having an extra worker or 3.

thats what i gathered too, its not to the employee but the employer

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#10

02-04-2009, 09:57 PM

Originally posted by the Shemp

lower taxes means people have more cash in their pocket, so they can buy more crap at walmart...which means they will have to hire an additional person on the check out...
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DaddyHalbucks

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#11

02-04-2009, 10:12 PM

Taxes generally have a "punishing" effect. When you lower taxes, you reward business and investment, thus increasing the size of the pie.

For an example, look at the Regan tax cuts. They actually INCREASED government revenue (tax) receipts because they boosted the economy.

In practice, if you encourage a businessman to make a million dollars by lowering his taxes, he will do that... and more. In the process, he will hire people. If you punish him by raising his taxes, he will shut his business and move to a friendlier jurisdiction.

Last edited by DaddyHalbucks; 02-04-2009, 10:13 PM.

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Lester Burnham

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#12

02-04-2009, 10:50 PM

"trickle down economics", i.e., give the rich and businesses big tax breaks because the money they spend will "trickle down" to the lowly commoners doesn't work...period.

The GOP is so fucked up. They should just disband or just deal in state politics (and continue to govern the states they run..you know...successful states like West Virginia, Mississippi, Arkansas, South Carolina).
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Snake Doctor

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#13

02-05-2009, 06:12 AM

Originally posted by DaddyHalbucks

For an example, look at the Regan tax cuts. They actually INCREASED government revenue (tax) receipts because they boosted the economy.
.

That is actually false and I challenge you to provide data to back that up.

Revenue did eventually go up but that was because the population (tax base) and the economy grew. There is no empirical evidence that the economy grew because of the tax cuts, and it's likely that revenue would have increased more had tax rates remained higher.

--------------------

As for what Shemp said, I agree 100%. If people have more money in their pockets, they'll spend more, and that has a stimulative and a multiplier effect throughout the economy.
So therefore, the tax cuts need to go to the people most likely to spend all of it, and that would be the working poor, and seniors on a fixed income.

So why are the republicans against the payroll tax rebate for lower income workers and pushing for capital gains tax cuts and cuts to the top brackets? (and/or making the Bush tax cuts permanent)

Seems like, based on the spending more money argument, that the solution would be to do things like raise the minimum wage, expand the EITC, exempt low income seniors on social security from payroll taxes and things like that.

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kowalsky

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#14

02-05-2009, 06:44 AM

Extra taxes are used for states to collect money to make public infrastructure work. That work need people, usually those people who are the first to lose their job. So after new people get back to the job chain, the consume start working again (people with low salary usually don´t save money, the consume everything). That consume active the economy, it´s a cycle very well explained by Keynes.

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Snake Doctor

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#15

02-05-2009, 06:53 AM

Originally posted by KillerK

You mention SMALL BUSINESSES! Those are the ones that if they make an extra $20k a month can hire people.

Businesses hire people with pre-tax dollars. They are going to hire people based on the needs of the business and they get to deduct the wages and benefits given to that employee.

If business had to pay taxes first and THEN pay their workers with what was leftover, then what you're saying would make sense....but they only pay taxes on what's left over after all expenses, so your example would just increase the business owner's take home pay by 20K/month. It doesn't "encourage" him to hire someone else.

I also love the phrase "encourage someone to be successful". As if there are really people out there going "I could be a millionare, but not with tax rates at 39%....if they drop the top rate to 35%, then I'll go make a million bucks"

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