Are higher taxes bad for the businesses?
I keep reading these comments here that claim that Obama will raise taxes on corporations, which will cause companies to shut down, and people to get ...
I keep reading these comments here that claim that Obama will raise taxes on corporations, which will cause companies to shut down, and people to get laid off etc..
So here is a little information from someone who is quasi-literate in such affairs. First of all Obama is not talking about raising corporate taxes, which are very different from income tax. Obama wants to raise income tax (not corporate tax or capital gains tax) on families that make more than 250 thousand dollars a year. So your boss, who probably makes more than that, would want to get paid a little more so he can offset the higher tax that he would have to pay. The increase will come from the PRE-TAX profit of the company that you are working for. More a company pays in salaries the less it pays in tax as the salary, being an expense, is tax deductable. So in other words that tax that would otherwise be paid by the company is now paid by the individual (your boss). So why the whole drama? The answer is actually simple. Corporations have found a lot of loop holes in tax laws and they never pay the taxes that they are supposed to pay. The individuals on the other hand have to pay straight forward taxes based on W2s which some deductions.
So raising your boss’s tax rate is not going to effect your job or the health of the company you work for. Just the tax system will become better and more stream-lined.
I have tried to explain this as simply as possible. I know some of you are going to ask for sources, but you are no websites that will tell it to you in one paragraph. It is common sense if you want to understand it.
Why were the Clinton years more profitable than these horrible last 8 years of Bush?
Any sane person will realize that higher taxes are bad for businesses!
Actually it can be a bad thing for large corporations. Think about this. If higher taxes are enforced on large companies, do you know how many lay offs could be the result? The higher the taxes are for large corporations, the more they have to shell out of their pockets and the less room for new employees the companies will have. So that means the growth of a large company will be stunted due to the decrease in revenue and the increase in taxes. Also, it would cause a decrease in productivity amongst workers. If workers are not being paid enough they will either quit, or they may go on strike. Either way, whether higher taxes on large corporations are enforced, or higher taxes on citizens are enforced, there is no winner. One way or another someone has to pay. If it happens to be those who own large businesses then you will see a decline in revenue, and gross profit along with loss of jobs which is never good for the economy, and its not good for our current economic market right now..
Obama wants to raise income tax (not corporate tax or capital gains tax)- He has stated that he wants to raise corporate income tax and capital gains taxes in speeches and in interviews.
i do agree with some of what you stated.
but this i strongly dont think is true
"Obama wants to raise income tax (not corporate tax or capital gains tax) on families that make more than 250 thousand dollars a year."
if obama is saying that, which i don’t think he is, it’s not gonna stay like that when he is president. that has never happened in history. 250,000 dollars? i don’t think so. the salary number is much lower than that.
Any tax raise is bad for business. It reduces earnings which lowers the price of the stock which reduces the value of pension funds which in turn reduces the amount retirees can expect.
Taxes are not reduced by the amount of dividends the company pays to mutual funds, retirement funds, widows and orphans, etc., which results in double taxation: once to the corporation and again to the dividend recipient.
It also reduces the amount the company can spend on capital equipment and other expenditures that improve productivity which lowers the cost to consumer while increasing profits at the same time.
It can also result in cost-cutting layoffs of workers and forcing others into early retirement.
It just ain’t no good nohow.
Well, your argument appears to have some facts- which is more than my retort will have, since I couldn’t be bothered to look it up. But, perhaps you will get my point.
Over 60% of businesses in America are small businesses. In the case of sole proprietorships or partnerships, the owners report their earnings as part of their personal income. Therefore, by "taxing the rich" you are also taxing businesses that haven’t filed paperwork to be incorporated.
You could argue "maybe they should" and I could agree. The only concern I have is that, if you "tax the rich" you need to insure it is not translating to "taxing business." American businesses are the second-highest taxed on the planet. If you tax them, they will go overseas (which we have seen all ready).
Technically, the rich could also go overseas. So, like anything, you need to be careful where you apply pressure. Taxes, in any form, are a disincentive to some one.
What’s more important is cutting spending- something that either party is loath to do.
increased taxes under ANY label is bad for business = bad for Americans
WRONG WRONG WRONG. You are leaving OUT small business owners who file SubS or LLC or LPC. These filings go under the owners PERSONAL TAXES as INCOME TO THAT OWNER. This is how many companies will be run out of business, plain and simple. I know, we are such small business owners. BTW we make about $60,000 in a GOOD YEAR…….but our returns might show higher income (that money the company makes usually goes back into the business).
Obama also plans on increasing what you are talking about……….Corporations who file under Corporate Taxes. By increasing the payroll taxes, that Corporation has a decision to make, either pay up, lay off employees, etc., etc.
Furthermore, Obama IS GOING TO INCREASE CAPITOL GAINS which will in essence affect more people than y ou realize. It IS a proven fact, when Capitol Gains percentage is increased, the Government actually takes in less taxes, as these people tend to hold onto their stocks/bonds/retirement accts./houses because in essence they are being taxed to death!!!!
I suggest you go back to business economics, as much of your thinking is just plain wrong.
What the democrats don’t understand is that if they higher business taxes, they will just lay off workers to gain the profit they previously had. Unemployment will increase even more. I think America is coming to realization because McCain is ruling polls and electoral college right now.
There is only one problem here. The numbers do not add up. Obama is proposing an estimated 800 billion in new spending. This tax on the rich will not cover the spending increases. It is estimated that the taxes required will amount to 39.6 percent personal income tax, a 52.2 percent combined income and payroll tax, a 28 percent capital-gains tax, a 39.6 percent dividends tax, and a 55 percent estate tax.
Additionally he is proposing wind fall profits taxes on oil companies which will increase not only the price of gas, but the costs of shipping goods across the board. This will definitely effect every American consumer negatively and economy as a whole.
Sorry you cannot make a skunk smell like a rose. Just taking a few numbers regarding what you might view as favorable taxation without examining the broader context of spending which will require additional increases to fund is not sufficient.
Have you as an expert ever heard of the capital gains tax. Capital gains are those profits made through investments. The tax is paid by investors who buy into corporations that need money to expand or improve. When it becomes unfavorable to invest in corporations or undesirable investors move their money. Sell offs happen and corporations layoff employees. employees pay income tax. The less they make the less they pay. When taxes are low investors enter the stock market which is more profitable than the safer bond market. There are plenty of small business owners who are not incorporated and earn less than $100,000/year. Carpenters, plumbers, engineers,electricians. When things are going good they have more business and hire people. They pay more income tax and their employees pay income tax. When business owners and corporations hire, more employees pay income tax. I don’t need a source to show more people paying taxes generates more revenue that is an axiom.