The false premise of "job killing taxes" exposed

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From Prairie2...enjoy:

:patriot:

The Republicans talk about jobs

~snip~

Most small businessmen simply don’t take that much money out of their businesses, but re-invest to minimize their taxes or they are being hammered by big business (you know, the real Republicans) and don’t make anything like 250,000 a year anyway. This is of course the false premise the Republicans are using to paint this a job killer. A business only pays income taxes on profit, taxing profit has nothing to do with how many jobs are created. In fact just the opposite is true as a higher top marginal tax rate encourages re-investment to avoid paying the higher tax.

Not a single owner operated business will cut jobs to spite Obama for raising taxes and they are by no means compelled to do so since wages are paid from gross income and not from net taxable income. The number of jobs “created” depends entirely on demand for the product or service the business provides and nothing else. The austerity the Republicans are pushing would of course cut demand for products and services that’s why the Republicans don’t want any stimulus money spent as it would have a positive effect.

http://www.prairie2.com/2010/09/republicans-talk-about-jobs.html

[xchrom]

1. Recommend

[NoSheep]

2. And there you have it.

[dkf]

3. The flip side of taxes is what is left for consumption. Consumption makes our economy function

The fear is that in a recession caused by lack of demand decreasing the amount of disposable income may cause a decrease in spending. Decreases in spending lead to job losses.

[starroute]

7. And that has nothing to do with taxcuts for the wealthy

If you give the wealthy a tax cut, they're very unlikely to spend it. They either save it or invest it -- generally overseas. There was something posted the other day saying that the money lost to Bush's tax cuts to the wealthy since 2001 is very close to the increase in overseas investment during the same period.

If you're worried about lack of demand, almost any form of government spending gets a better return than handing more cash to the wealthy.

The OP, however, wasn't even about that but about the false argument that if you cut a wealthy business owner's taxes, he'll reduce his own take-home pay in order to hire another employee and expand production -- even if there's no sign of increased demand for his product.

[Schema Thing]

4. yep. I know how you can get a 100% tax break on your money.

Hire someone.

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5. There's very little in business that is as simple as either side tries to portray.

The number of jobs “created” depends entirely on demand for the product or service the business provides and nothing else.
Demand is usually increased with sales, marketing, and R&D/product diversification (less functional but cheaper version, different color, subscription vs one-time sale, new customers, niche/vertical customers etc). Small companies who do these successfully are the ones who become medium then big companies.

Small but growing businesses probably aren't making a profit so taxes are not an issue like the article says. But medium sized businesses often have a profit from erratic income. They need to reserve much of the profit to make sure they can meet payroll during the low income periods (i.e. don't want to invest all profit into growth activities)

We need tax rates tied to job creation, rather than one side arguing "low taxes create jobs" and the other saying "tax rates don't affect jobs" then coming up with a number that applies to everyone (there are different rates, incentives, etc now, but they aren't based on job creation)

[L0oniX]

6. It's surprising how many people don't realize, that $250,000 is "net" profit.

Why is that not explained in short to the public? Do people not understand that expenses get deducted? A restaurant owner would have to take in $5,000,000 in gross sales to have a net profit of $250,000. I have been informed that the net profit margin for a successful restaurant is %5.

DEDUCTIONS!