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

hahaha, that's too funny.

Of course what you said is true in terms of lower income people....but that's not what I wanted this discussion to be about.

sorry to point out the flaws in your arguement.


unfortunately it happens to be true

sales taxes are recessive, they punish people with lower incomes more because they spend a greater portion of their income.

Actually I think the word you're looking for is "regressive"

Besides, they're not punishing people with lower incomes, they're just "time-shifting" their future, higher incomes to the present day.

Shemp and his famous quotes... ehehehe

1. time shifting monies or deferring taxes is a decent way of stimulating the economy, it creates more available income. Available income (also for high income self employed people) is more likely to be used for like consumer goods, cars, televisions, boats and hookers.
2. Now can anyone explain to me how cutting capital gains taxes or cutting income taxes for wealthy small business owners "creates jobs"?
It creates more incentive for the small business owner to grow his business since he feels he could get a better return than putting the money in the mattress
cap gains: it creates more opportunity to invest in real estate (which is really where we need stimuli)(again a possibility to avoid paying taxes on investment is a big plus)

In my view.. "it depends" like pretty much everything else in this world.

While you are correct - businesses hire with pre-tax dollars, you don't actually delve into the tax code to see how this "really" works.

For example, our business is extremely capital intensive - we have to buy servers weekly, or we will slowly go out of business. In this manner, much of our "capital" expenditures really *should* be classified as an operating expense. Unfortunately, the tax code does not agree

Thus, we are taxed on "phantom" income - income that is simply not there, since we had to spend it on new equipment to upgrade customers on older stuff/etc.

So.. in our case where we are putting almost every dollar in profit right back into growing the company - a lower tax rate on capital expenses would directly equate to more jobs. Not many, of course - but having an extra few hundred thousand a year or whatnot either means we can hire more staff, or more likely buy more equipment to get more customers, which then requires more staff to support.

So.. I agree with both sides. Cutting business taxes may not directly equate to job growth in many businesses, but it can in others. It also very much depends on what *kind* of tax cuts you are proposing as well.

-Phil

I'll repeat myself again....you pay capital gains tax when you sell an investment, not when you make the investment...so a low rate today encourages me to sell my assets, it doesn't encourage me to invest in new ones....because nobody knows what the rate will be when I decide to sell what I buy today.

I agree in your situation, that when you buy equipment for your business it should be an expense, just like paying a salary or buying advertising.
I never cared for the whole depreciation game, I always thought it was silly.

True dat

a. Define 'wealthy'. A small business owner making 120,000.00 a year is not 'wealthy'. Well off.. maybe. But take geography into the equation as well. New York, L.A., Seattle, San Diego. Not remotely close. Middle American, $120k is a nice living.

b. Capital gains influences where I invest. Short or long term, and the money. Do I invest in my business, or do I invest in the stock market while I could maybe make some coin while stocks are down. Same as people cashing out their 401K's at this time have to consider the capital gains, and do they spend that money paying down debt, or buying new shit.

I know a handful of people in my personal life pondering this very decision right no on their 401k, and other shit. Having to pay capital gains, and penalties.

As a small business owner, where I take my profits, and where I invest it will be effected by the other mitigating factors. Stockings, bond, real estate, etc. Especially if I am going to tie up a chunk of money for any period of time.

Agreed.

I buy new computers every 12-18 months. My accountant refuses to just write them off for a full year taxes, so I have 8 computers in various levels of depreciation.

lol...

There is no such thing as capital gains taxes on a 401(k)
401(k) is tax deferred money. No taxes are paid on capital gains or dividends. The money is taxed as ordinary income as it is withdrawn.

I don't see how capital gains tax rates will influence where you invest unless you're talking very short term investments (in which case it's more like gambling than "investing") because cap gains tax might be 15% today, but it could be 25% next year when you sell. You don't get a 15% future capital gains rate because you invested today. That's not how it works.

so if it is encouraging investors to sell, it will also encourage other investors to buy those assets, this is if i am not mistaken investment101 or alphaomega type stuff.
same if all of a sudden there was no tax on stock gains, it would entice investors to invest in stocks so that they would capitalize on those opportunities..

congrats

wal-mart will NOT hire another check out person. they'll just pocket the money and expect people to wait longer in line. Also most poorer people getting tax cut would just pay off debt not spend it. Give a tax cut to a rich guy and he'll either buy foreign shit or spend it overseas. Either way it ain't helping America.

So Snake, since you think the government would be better with your money how much EXTRA are you going to give them? 20, 30, 40% more? I mean your man Obama knows how to spend your money better than you do! Why not give 60% more to the government to show that you really believe what you say.

I was reading what's considered wealthy by banks is someone with $750k in liquid. A 20 grand tax break isnt going to change anything they do,its another 20 grand in the account.