Things are Looking Better

[dmarc117]

this logic is golden.

 

100% of people who are seventy years old are seventy years old. Does that make 69 years old young?

 

 

umm, that was perch's point.

 

 

[driveby]

umm, that was perch's point.

 

BAZINGA!!

[Azazello1313]

alan greenspan on scaaaaaaaaary "uncertainty"

[Perchoutofwater]

Agreed. The economy is sluggish. Employers have more money on hand than every before. Theoretically - hiring more people would give the people more spending power - you know - trickle down. But companies are just sitting on the money.

 

Companies are sitting on the money because they are trying to figure out how legislation, taxation, and regulation are going to affect them. They are trying to figure out how much Obamacare is going to cost them, and if it cost effective to hire that new employee. They are worried Cap and Trade could be passed, and not knowing what form it will take, it is making them hesitant on expanding their plants because they ,know it will increase their energy cost, but not by how much. They know it will affect emissions, but not by how much, so they don't know what they should build. Our government has interjected so much uncertainty into the economy businesses are taking a very conservative approach afraid to do much of anything, because they are afraid of what the government is going to do to them.

[detlef]

The tax cut helps businesses two fold. One, it gives me the ability, more capital, to hire more workers. Number two it gives me the ability to purchase equipment/services which employ other people. If you take that money out of my pocket and send it to the federal government I'm not going to purchase things or employ people with it. Not only that, but it could actually trigger me to layoff some people in order to keep my profit margin where I feel it needs to be to justify me to continue to invest my money in said business.

 

The tax increase will hurt ll sectors as fewer people get hired, more people get laid off, there will be less demand for durable goods and machinery thereby creating fewer jobs in those sectors, etc... It's vicious what a tax increase can do to one's spending habits by taking money out of an individuals pocket, it impacts ALL sectors.

 

 

Here is an article that spells out the affects pretty well. One thing to keep in mind though, you have to remember the government's idea of a small business and the real world idea of a small business are two different things. There are many businesses that most rational people would consider a small business that the government does not. So if you take that into consideration the impact on "small" businesses is even greater than what this article portrays.

Sorry, but I don't think this answers the question. It seems simple enough but it doesn't address the fundamental reason why people create jobs. They create them to meet demand. That's it. If there is no increased demand, there are no new jobs created. If there is increased demand, businesses find a way to pay for the help needed to address that demand.

 

At the core of your guy's arguments is that businesses are hell bent on spending all the money they make. So, if there's extra money laying around, it is safe to assume that they'll just hire some more people. I mean, what other logical thing is there to do with extra money? Well, besides keep it, of course.

 

And it cuts the other way as well. If your business is profitable enough that you are generating profits that are taxable at the highest rate, that means you are doing something right and you have enough business to support the labor you have employed. Why would you start laying people off, and thus hampering your ability to generate income (once again, I'm going on the bold assumption that you actually employ people based on the fact that you need them not just because you're looking to give money away), just because your marginal profit was cut into by a higher tax rate? Seems a lot like cutting off your nose to spite your face.

 

There is one reason why keeping the tax break for the lower tiers but not the higher tiers is a bad idea. Because it's not fair. I get it. Stick to that one. But you guys need to stop pretending that having extra money laying around is going to inspire the wealthiest among us to just go and create jobs for the hell of it because that line of reasoning lacks logic.

[SEC=UGA]

Sorry, but I don't think this answers the question. It seems simple enough but it doesn't address the fundamental reason why people create jobs. They create them to meet demand. That's it. If there is no increased demand, there are no new jobs created. If there is increased demand, businesses find a way to pay for the help needed to address that demand.

 

At the core of your guy's arguments is that businesses are hell bent on spending all the money they make. So, if there's extra money laying around, it is safe to assume that they'll just hire some more people. I mean, what other logical thing is there to do with extra money? Well, besides keep it, of course.

 

And it cuts the other way as well. If your business is profitable enough that you are generating profits that are taxable at the highest rate, that means you are doing something right and you have enough business to support the labor you have employed. Why would you start laying people off, and thus hampering your ability to generate income (once again, I'm going on the bold assumption that you actually employ people based on the fact that you need them not just because you're looking to give money away), just because your marginal profit was cut into by a higher tax rate? Seems a lot like cutting off your nose to spite your face.

 

There is one reason why keeping the tax break for the lower tiers but not the higher tiers is a bad idea. Because it's not fair. I get it. Stick to that one. But you guys need to stop pretending that having extra money laying around is going to inspire the wealthiest among us to just go and create jobs for the hell of it because that line of reasoning lacks logic.

 

Det, I've said as much in other threads, hiring is not occurring because of low demand and people can stay at their current labor levels and meet said demand, in this we are strictly dealing with the impact of taxes... I think I covered the demand side a little bit in here with this.

 

If I'm in a position where my potential revenue growth will outpace the growth of the taxes, then I am going to invest to grow said revenue. What is hurting is that there is not going to be the growth over the next 12 to 24 months, IMO, to offset the increased tax burden, thus I don't have the excess capital to hire or invest in equipment right now when that money is going to go out disproportionately in the form of taxes.

[Perchoutofwater]

Sorry, but I don't think this answers the question. It seems simple enough but it doesn't address the fundamental reason why people create jobs. They create them to meet demand. That's it. If there is no increased demand, there are no new jobs created. If there is increased demand, businesses find a way to pay for the help needed to address that demand.

 

At the core of your guy's arguments is that businesses are hell bent on spending all the money they make. So, if there's extra money laying around, it is safe to assume that they'll just hire some more people. I mean, what other logical thing is there to do with extra money? Well, besides keep it, of course.

 

And it cuts the other way as well. If your business is profitable enough that you are generating profits that are taxable at the highest rate, that means you are doing something right and you have enough business to support the labor you have employed. Why would you start laying people off, and thus hampering your ability to generate income (once again, I'm going on the bold assumption that you actually employ people based on the fact that you need them not just because you're looking to give money away), just because your marginal profit was cut into by a higher tax rate? Seems a lot like cutting off your nose to spite your face.

 

There is one reason why keeping the tax break for the lower tiers but not the higher tiers is a bad idea. Because it's not fair. I get it. Stick to that one. But you guys need to stop pretending that having extra money laying around is going to inspire the wealthiest among us to just go and create jobs for the hell of it because that line of reasoning lacks logic.

 

Here's the thing. If you see there is going to be additional demand in the future, you might want to increase your capacity now to meet that future demand. In order to increase capacity you need to hire more people and purchase more equipment, both of which have a trickle down affect to other businesses. Now if you increase what you admit is an unfair tax, there is less cash available to increase capacity, thus making the future less profitable, and denying the trickle down stimulus to the equipment manufacturers and the businesses the guy you hired would be a patron of. With demand being very low, capital equipment could be bought cheaper than a few years ago (in some instances), if you feel that the economy is going to turn around in the 3rd or 4th quarter of 2011 now would be an idea time to purchase new equipment and hire and train new employees, but because the government is increasing unfair (your words) taxes you do not have the cash flow to do that. I need to purchase about 5 new trucks, and a new frontend loader. Obviously I'm not going to purchase these until I feel certain I can pay for them. Due to low economic activity, additional cost associated with health care, as well as what I presume to be additional tax burden coming my way I'm going to postpone this as long as possible so that I have more certainty in what I'm doing and my ability to pay for them without hampering my cash flow. Now if several projects get green lighted next month like I expect they will I will need these additional assets. The question is when will I buy them. Tax policy will in large part determine that. Basically you are delaying a private funded stimulus.

[SEC=UGA]

Here's the thing. If you see there is going to be additional demand in the future, you might want to increase your capacity now to meet that future demand. In order to increase capacity you need to hire more people and purchase more equipment, both of which have a trickle down affect to other businesses. Now if you increase what you admit is an unfair tax, there is less cash available to increase capacity, thus making the future less profitable, and denying the trickle down stimulus to the equipment manufacturers and the businesses the guy you hired would be a patron of. With demand being very low, capital equipment could be bought cheaper than a few years ago (in some instances), if you feel that the economy is going to turn around in the 3rd or 4th quarter of 2011 now would be an idea time to purchase new equipment and hire and train new employees, but because the government is increasing unfair (your words) taxes you do not have the cash flow to do that. I need to purchase about 5 new trucks, and a new frontend loader. Obviously I'm not going to purchase these until I feel certain I can pay for them. Due to low economic activity, additional cost associated with health care, as well as what I presume to be additional tax burden coming my way I'm going to postpone this as long as possible so that I have more certainty in what I'm doing and my ability to pay for them without hampering my cash flow. Now if several projects get green lighted next month like I expect they will I will need these additional assets. The question is when will I buy them. Tax policy will in large part determine that. Basically you are delaying a private funded stimulus.

 

I can get you a truck, trailer and front end loader out there cheap... This place up the street, well let's just say there are a few pieces of equipment that have been sitting around for a while and I have some keys...

[Perchoutofwater]

Det, I've said as much in other threads, hiring is not occurring because of low demand and people can stay at their current labor levels and meet said demand, in this we are strictly dealing with the impact of taxes... I think I covered the demand side a little bit in here with this.

 

I agree with the hiring, but there are some capital improvements that could be made that people are less likely to make right now due to policy decisions in Washington. Who wants to build a new plant if they don't know that the emissions that plant produce will not meet standards of proposed legislation or not? Who wants to build a new manufacturing facility that relies heavily on electricity if currently proposed legislation is sure to increase energy costs, but the amount of that cost is currently unidentifiable? Taxes raise similar issues. How much my profits are taxed directly relates to how fast I can pay of debt I may incur in purchasing capital goods. I may wish to pay it off faster but due to increased taxation may not be able to. Additionally increased taxation will effectively lower my bonding capacity from what it would otherwise have been as my bonding capacity is directly associated with the assets I hold, many of which are in low risk stocks and bonds that would be subject to higher capital gains taxation.

 

The point is, there are some things that we need to address, but I question the timing of addressing them, just like I questioned the timing of the health care fiasco. The government is currently manufacturing uncertainty via it's legislative agenda which is having an adverse affect on the economic recovery.

Edited October 12, 2010 by Perchoutofwater

[Azazello1313]

Sorry, but I don't think this answers the question. It seems simple enough but it doesn't address the fundamental reason why people create jobs. They create them to meet demand. That's it. If there is no increased demand, there are no new jobs created. If there is increased demand, businesses find a way to pay for the help needed to address that demand.

 

well in economics there is also the supply curve. increased costs of supply (in the form of labor costs, taxes, etc.) change the point at which supply and demand intersect just as surely as increased or decreased demand.