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  #71  
Old October 15th, 2011, 05:14 PM
blackriver blackriver is offline
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Originally Posted by Gamblor View Post
It's not part of pricing and hiring decision because the government already took a big chunk of your profits from last year and there's nothing you can do about it. There is nothing to DECIDE. But if you have $2,000,000 in profits from last year, instead of $1,000,000 in profits, of course it makes a difference. Why you can even decide to hire more employees with this extra money!
Maybe if credit want so readily available. if you didn't hear but companies are making record profits and not hiring. They are just holding cash! If you lose money in a year but see that you are just understaffed you can get loans. Starbucks compensated its employees in shares in its early days. they say cash its king, but if that true then credit is the prime minister. most businesses operate on loans.

ceos aren't complaining about corporate taxes and never really do. They say the number one thing is infrastructure.

Last edited by blackriver; October 15th, 2011 at 05:19 PM.
  #72  
Old October 15th, 2011, 05:19 PM
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What qfit is saying is that a corporation seeks to maize profits. If we subsidizes corporations in such a way that the government matched their profits (-100%), companies would try to maximiz profit. If we take 90% of their profits then they would sill seek to maximize profit.
What if we tax a company 100%. It doesn't matter, it won't change their strategy. Of course it would, and this how, any sane person would choose not to start or continue a business as the only likely outcome is 0 profit or losing money. That's a pretty big strategy change! You just slashed the number of employees in your company by 100%.

What if we tax a company at 99%, 98%, 97%... etc. Again, a sane person would choose not to do business.

Last edited by Gamblor; October 15th, 2011 at 05:27 PM.
  #73  
Old October 15th, 2011, 05:32 PM
tthree tthree is offline
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Good thing you're not a corporation, as these are surefire ways to destroy one. You do not react to increased taxes by decreasing future profits. You try to increase future profits. And of course I comprehend shooting one's own foot. I just can't see why you would insist on doing it.

Prices are set according to the market. Decreasing R&D would increase taxable income, thereby further increasing taxes. Why would you do this? None of the actions you gave make any sense to a corporation.

Corporate taxes bounce all over, due to charges, like layoffs or suits, and one-time gains. If you have a corner with four gas stations, one is sued and loses a year's profit, one finds a stash of gold in its basement, a third just opened and has huge startup costs, one just had a large depreciation expire, substantially increasing taxes, they are NOT going to change prices. The ones with higher taxes can't increase the price, since no one would buy. The ones with lower taxes would not lower prices, because they don't have to. Pricing is a market concern, it is not related to taxes.
Obviously you don't have too many corners with 4 gas stations on it. Most of the time there is a degree of cooperation between stations in this situation so they all can have profits without a downward price war. This doesn't always happen around here. You get some that charge 10 to 20 cents more per gallon, The others have lines waiting to get gas (I only pay attention to the great price areas. But the other still has busy pumps without the lines. This always amazed me as I don't understand why you would pay 20 cents more per gallon if you didn't have to.

I don't like the 999 tax proposal. But I know it will never get through congress without being greatly changed. Like losing deductions for mortgage which would put about ten more nails in the coffin of the housing industry. Most of the things Shad talked about will never make it through congress. It is good that the dialog has been reopened about tax reform. The taxes collected by government are to great a burden for a failing economy to bear.

That is the big problem with the way our government does business. They act like they can grow government indefinitely and can add huge new programs and huge new spending bills when revenues are plummeting due to a bad economy. It would hardly be noticed during an economic boom but is a killer during hard times. This only puts more stress and uncertainty into the equation that will not normalize until their is a stable investment environment. If one is not found here it will be found elsewhere. The world is a big place. The winner in the competitive world environment will be the country that offers the best bargains to businesses. The US is not a source of cheap labor so we better be outshining the others in business friendly environment or we are in big trouble as the corporate structure of the world adjusts to the new environment in the post world recession economy. We have already screwed up pretty bad on this front we better make the necessary adjustments.
  #74  
Old October 15th, 2011, 05:42 PM
tthree tthree is offline
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lol, this guy drunk right?



I can't believe how many times you have to explain this, and each time you get berated like you don't get it. You have amazing patience.

Hey guys, if we increase the tax on land will all our land disappear?
Hint: how much we tax land doesn't have much to do with how much land exists
The land won't disappear. They number of people willing to own the land will go down. Banks don't look at land as an asset. It is a source of negative cash flow. This makes it a financial liability. Were I live this actually happened recently.

Last edited by tthree; October 15th, 2011 at 06:40 PM.
  #75  
Old October 15th, 2011, 06:00 PM
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Corporations will always try to maximize profit and the strategy that does that best doesn't change based on the tax rate. The same way a baseball team wouldn't change its strategy if next week all home runs counted as half a point. They won't suddenly think home runs are less useful
That's an over-generalization. Corporations do not always try to maximize profit, as has been shown repeatedly when corporations act to the benefit of the officers of the corporation and not the shareholders, as in unjustifiably large salaries, stock options and golden parachutes. But be that as it may, corporations in seeking to maximize profitability may decide to shrink operations, shutting down less profitable segments and laying off employees, in the face of a slow economy. If you do not believe that raising taxes adds to that overall disincentive to grow the business, I doubt I will ever convince you, or Qfit.
  #76  
Old October 15th, 2011, 06:04 PM
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Originally Posted by Gamblor View Post
It's not part of pricing and hiring decision because the government already took a big chunk of your profits from last year and there's nothing you can do about it. There is nothing to DECIDE. But if you have $2,000,000 in profits from last year, instead of $1,000,000 in profits, of course it makes a difference. Why you can even decide to hire more employees with this extra money!
Arrgh, throw away the high-school economics text you got this from. Everything you learned in high-school is wrong. They teach it because it is easy to teach. That's what universities are for.

Spending decisions made by corporations are 100x the size of profits, and can be just as high in bad years (as measured by profit) as good years. Infinitely larger in the first years of companies like Google, Facebook, AMD -- huge drivers of the economy. Intel, after huge losses, increased R&D enormously, spending billions. They also spent billions in R&D during the recession. And their spending pulled them out of losses by beating the hell out of their competitor in innovation.

Things were so simple in high-school.
  #77  
Old October 15th, 2011, 06:10 PM
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That's an over-generalization. Corporations do not always try to maximize profit, as has been shown repeatedly when corporations act to the benefit of the officers of the corporation and not the shareholders, as in unjustifiably large salaries, stock options and golden parachutes. But be that as it may, corporations in seeking to maximize profitability may decide to shrink operations, shutting down less profitable segments and laying off employees, in the face of a slow economy. If you do not believe that raising taxes adds to that overall disincentive to grow the business, I doubt I will ever convince you, or Qfit.
Another strawman. I was talking about honest corporations. Of course what you said is true and it is a shame that you say you could never convince me of something that is obvious. In fact, what you are saying is exactly what the Occupy Wall Strret people are saying, and why I went to visit them.

But, the disgusting acts of crooks has NOTHING to do with the discussion. You are now trying to divert the discussion. Oddly, before this, you seemed to suggest we should trust corps and not gov't. Now you are saying we can't trust Corps.

I am talking about companies that act in the interest of their owners. I thought you were.

It is now clear that the people on one side of this discussion have given up on honest discussion. I have given examples and logic for my position, and received mantras and strawmen in return. You guys can have the last words.

I will add, I think the TP has lowered the IQ of the country by 5% with their idiotic mantras. Who needs PHDs when you can listen to simplistic logic from high-school texts and phony degrees from Bachmann. (Look up her actual jobs and "degrees" if you didn't know.)

Last edited by QFIT; October 15th, 2011 at 06:21 PM.
  #78  
Old October 15th, 2011, 06:13 PM
tthree tthree is offline
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1. You keep missing the point. Businesses are ALWAYS trying to make more money. And, pricing is a part of this. If their taxes go up, that makes no change to their gross. It does affect net earnings. In no way does that mean anything about hiring or profit. No matter what the taxes, they will always try to maximize earnings. Corporate income taxes do not affect pricing decisions or hiring, and, in a large business, the people that handle pricing are completely unaware of what the accountants in the back room are doing to deal with taxes. If net earnings drop, they will do the same thing that they would do if net earnings increased. They will try to make more money. That's what they do.
They stuck it out with their employees waiting for the government to be done changing the business environment. After a long enough time of uncertainty the layoffs came and jobs were bled for quite some time. That was how they dealt with your point of making more profit cut the workforce to met a market that was not recovering in the normal historic time frame. This was about a couple years tops. The economy tanked in 2006-7. They tried to grow and do normal operations but by 2007-8 it was clear that the environment changed. By 2008-9 the cutting began. That is when it became an official recession. The mistake people make is they assume things went bad when the businesses finally react to a long period of strife. Of course the time frame differs some depending upon what industry you talk about.

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2. NO, businesses are NOT forestalling hiring for fear of taxes. No matter how many times the TP and FOX repeat this nonsense, it ain't so. There is absolutely no reason for it to be true. I have explained this in many ways with several examples, and you keep repeating it like it is a law of nature. Frankly, I have no idea why you believe it. Businesses certainly don't.
The businesses I work with tell me specifically that is why they are doing it. I never heard it on FOX or from the TP.

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3. A major purpose behind health care reform is to ease the burden on businesses. Currently, we are competing with businesses that exist in countries that have universal health care. Those businesses do not have to think about health insurance at all. US businesses are at a severe disadvantage competing with foreign businesses. We need health care reform to help make our business competitive. And we need infrastructure spending for the same reason.
Other countries fund their healthcare through huge taxes on things loike gas etc. We don't pay a small fraction of what they do because our oil companies care about us. The companies must pay their employees enough to pay all these extra taxes. In that manner they actually do pay for their healthcare.

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4. Good luck moving to another country for lower taxes. The US has very low ACTUAL corporate taxes, since other countries don’t have a ridiculously long list of exemptions, deductions, carve-outs, credits, etc.
We do those things to pay off favored corporations by our government but those that don't play the game the politicians want $$$. It is a dispicable arrangement that most are ashamed of.

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5. Businesses will ALWAYS try to lower costs. This has nothing to do with taxes. If taxes go down, they aren’t going to say “Hey, let’s spend money on stupid things.” If a company is seriously losing money, THEN they might make severe cuts. But, if they are losing money, they pay ZERO corporate taxes.
No argument here. I agree.

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Aslan, I don’t think you understand how little effect corporate taxes have on a business in comparison to revenue. Take a gas station or grocery chain. They make a couple pennies per gallon or item. They operate remarkably efficiently. Corporate taxes are only applied to those pennies of profit. The fees they get charged for credit cards are vastly higher. This is unlike a sales tax which is applied to the full price of the purchase of a taxable product. VATs are always passed on.
The relationship of these fees to a tax on profits are obvious to everyone I would hope.
  #79  
Old October 15th, 2011, 06:16 PM
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Gamblor Gamblor is offline
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Originally Posted by QFIT View Post
Arrgh, throw away the high-school economics text you got this from. Everything you learned in high-school is wrong. They teach it because it is easy to teach. That's what universities are for.

Spending decisions made by corporations are 100x the size of profits, and can be just as high in bad years (as measured by profit) as good years. Infinitely larger in the first years of companies like Google, Facebook, AMD -- huge drivers of the economy. Intel, after huge losses, increased R&D enormously, spending billions. They also spent billions in R&D during the recession. And their spending pulled them out of losses by beating the hell out of their competitor in innovation.

Things were so simple in high-school.
Great single data point, a highly volatile technology business like Intel, where signifcant yearly rises and drops in profit are the norm rather than the exception.

Well if your prospects for profit is higher, of course some will risk more even in bad years. The higher the tax rate, the less higher your potential for profit, and vice versa. Its really not that hard.
  #80  
Old October 15th, 2011, 06:28 PM
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Originally Posted by QFIT View Post
1. You keep missing the point. Businesses are ALWAYS trying to make more money. And, pricing is a part of this. If their taxes go up, that makes no change to their gross. It does affect net earnings. In no way does that mean anything about hiring or profit. No matter what the taxes, they will always try to maximize earnings. Corporate income taxes do not affect pricing decisions or hiring, and, in a large business, the people that handle pricing are completely unaware of what the accountants in the back room are doing to deal with taxes. If net earnings drop, they will do the same thing that they would do if net earnings increased. They will try to make more money. That's what they do.

2. NO, businesses are NOT forestalling hiring for fear of taxes. No matter how many times the TP and FOX repeat this nonsense, it ain't so. There is absolutely no reason for it to be true. I have explained this in many ways with several examples, and you keep repeating it like it is a law of nature. Frankly, I have no idea why you believe it. Businesses certainly don't.

3. A major purpose behind health care reform is to ease the burden on businesses. Currently, we are competing with businesses that exist in countries that have universal health care. Those businesses do not have to think about health insurance at all. US businesses are at a severe disadvantage competing with foreign businesses. We need health care reform to help make our business competitive. And we need infrastructure spending for the same reason.

4. Good luck moving to another country for lower taxes. The US has very low ACTUAL corporate taxes, since other countries donít have a ridiculously long list of exemptions, deductions, carve-outs, credits, etc.

5. Businesses will ALWAYS try to lower costs. This has nothing to do with taxes. If taxes go down, they arenít going to say ďHey, letís spend money on stupid things.Ē If a company is seriously losing money, THEN they might make severe cuts. But, if they are losing money, they pay ZERO corporate taxes.

Aslan, I donít think you understand how little effect corporate taxes have on a business in comparison to revenue. Take a gas station or grocery chain. They make a couple pennies per gallon or item. They operate remarkably efficiently. Corporate taxes are only applied to those pennies of profit. The fees they get charged for credit cards are vastly higher. This is unlike a sales tax which is applied to the full price of the purchase of a taxable product. VATs are always passed on.

Now I expect you will again claim that raising taxes will cause cutbacks, with no examples or rational.
In all you business experience, do corporations ever say they want to make at least X number of dollars? Do they ever take measures to make at least X number of dollars? Don't shareholders expect annual sales increases?

Maybe they won't raise prices if they think they think they are already priced out. Maybe they will do what GM did for so many years, just cut corners and produce lower quality automobiles with built in obsolescence. That drove me from a love of GM cars to buying Japanese cars many years ago. It's not pricing, but it is one way to deal with assaults on profitability. I don't know what drove GM-- maybe it was greed-- spend less on quality, reap more profits.. or maybe it was rising union costs-- or maybe it was just inadvertent and mindless stupidity.

I don't know, but there is more than one way for corporations to improve profitability even though some ways spell long-term disaster. To this day I do not trust GM, even though reports show their cars are improving. Once you lose trust in a person or a company, it is hard to regain it, if ever.

I just find it hard to believe that corporations do not plan strategies to increase profitability, especially when profitability is under attack by poor economic times or lower demand for products or even .... I won't say it, 'cause I don't want you to have a FIT.
 

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