The "People's Budget" from Progressive Caucus

#226
#226
utvolpj said:
I get it now, gibbs is assuming every company lives in a bubble and does not factor taxes in while deciding how to price their products. With that they will never be affected by taxes because that comes way later after the products are already out the door.



how can they do 100% tax on profits and still have money left over after expenses?
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Is that sort of like title, tags, registrations, destination charges etc don't, you know, really factor into the cost of buying a new car/boat? Just because it might not directly be a cost of the item itself it's damn sure money I'm not getting to keep.
 
#227
#227
hndog609 said:
Is that sort of like title, tags, registrations, destination charges etc don't, you know, really factor into the cost of buying a new car/boat? Just because it might not directly be a cost of the item itself it's damn sure money I'm not getting to keep.
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exactly. No way a company could factor in that cost so they just don't try and write a check at the end of the year. They have whole depts dedicated to figuring out raw material costs months in advance but taxes are a mystery
 
#228
#228
utgibbs said:
The small business owners you are hanging with must have pee-poor accountants! Goodness, even good businesses don't profit in certain quarters! What ever will they do??????!!!!?????? :facepalm:

Regardless, two things:

1. No one is suggesting a 100% rate (although we did fine with 90% for a good long time).

2. Did you just miss my last paragraph in that post?
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1. even a 50% rate would be high enough to make sure that many people would shut down their businesses because their return on investment would be too low let alone insure people don't start new businesses.

2. your last paragraph is not worth my time. too stupid
 
#229
#229
utgibbs said:
In two words - supply and demand. Lets just assume supply is steady (although unlikely as price of material inputs has gone down, but let's just set that aside)

If the price of materials went down for an entire product industry, the pressure would be for lower prices all things being equal. HOWEVER:

1. The savings are unlikely to be 1:1 as well-run companies will be aggresively trying to maximize their returns.

2. (And you might have a lot to say about this) It is possible that plowing a portion of that new money into marketing may influence the demand dynamic where the entire regime changes.
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Now let's go back to your "smart competitor" argument. If the price of inputs went down for all and the industry didn't adjust prices downward somewhere close to 1:1 - wouldn't that proverbial smart competitor drop his price and gain all kinds of market share?

Even if the drop isn't 1:1 don't prices decline?

Now, eventhough taxes are not input costs they do represent a reduction in profits. We would see the same impact with a drop across the board in taxes for an industry. Competitive pressures would result in price drops either via attempts to gain market share or luring new entrants into a now more profitable industry.
 
#230
#230
utgibbs said:
Droski, ugh. This is why I felt forced to define PROFITS yesterday.

Even if the government suddenly placed 100% tax on all corporate profits NO CORPORATION WOULD HAVE TO GO OUT OF BUSINESS. Shareholders would be PO'ed, but the company could still keep running as they make more money than it takes to run the business.

But they would have no more money than it takes to run the business. Any quarter with negative profitability could not salvage the any number of quarters with positive profitability yet no profits due to 100% taxation.

Now, is that sensible? No. Do we want reinvestment? Yes. So look what happens with the "natural monopolies" of the municipal utilities. Surely I don't have to go over the economic science of those for you?
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This argument is ludicrous. Businesses with no effective profits (due to 100% taxation) would not be sustainable.
 
#231
#231
droski said:
1. even a 50% rate would be high enough to make sure that many people would shut down their businesses because their return on investment would be too low let alone insure people don't start new businesses.

2. your last paragraph is not worth my time. too stupid
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1. One of our highest growth rates ever saw 90% tax bracket on the highest earners. History does not support you.

2. And now we see fecklessness in action!
 
#232
#232
volinbham said:
This argument is ludicrous. Businesses with no effective profits (due to 100% taxation) would not be sustainable.
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The argument was clearly a model. History, however, has a lot to say about a 90% tax rate on the highest earners and its affect on wealth creation within this country.

What is ludicrous is y'all arguing this when clearly businesses continue running for some time WITHOUT profits.

Droski's Dustin Colquitt punt on the economic management model for the natural monopolies gives an excellent example.
 
#233
#233
utgibbs said:
1. One of our highest growth rates ever saw 90% tax bracket on the highest earners. History does not support you.

2. And now we see fecklessness in action!
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the 90% tax bracket looked good on paper, but at the time, there were so many loopholes nobody in that bracket paid that amount
 
#234
#234
MG1968 said:
the 90% tax bracket looked good on paper, but at the time, there were so many loopholes nobody in that bracket paid that amount
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Hold up, the wealthy weren't paying and the high earners weren't either? They all paid something reasonable? Sounds crazy.
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#235
#235
So did Reagan cut taxes or close loopholes so people actually paid more taxes? Which one are we supporting?
 
#237
#237
volinbham said:
Now let's go back to your "smart competitor" argument. If the price of inputs went down for all and the industry didn't adjust prices downward somewhere close to 1:1 - wouldn't that proverbial smart competitor drop his price and gain all kinds of market share?

Even if the drop isn't 1:1 don't prices decline?

Now, eventhough taxes are not input costs they do represent a reduction in profits. We would see the same impact with a drop across the board in taxes for an industry. Competitive pressures would result in price drops either via attempts to gain market share or luring new entrants into a now more profitable industry.
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Your last paragraph gives the game away. Taxes represent a reduction in profitability not profits. Moreover, as droski has pointed out, international competition would simply negate a tax effect (if one actually existed). Finally, we've had sixty years of tax reductions, but haven't had negative inflation since 1949. I'm afraid that's a lot of data not supporting your premise. :hi:

Historical Inflation Rates: 1914-2011, Annual and Monthly Tables - US Inflation Calculator
 
#238
#238
MG1968 said:
the 90% tax bracket looked good on paper, but at the time, there were so many loopholes nobody in that bracket paid that amount
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I don't doubt it, however, we were in surplus (1947 - 49), and it had more progressivity.

Although, I know Gore Vidal gets very p.o.'ed talking about it. I believe in an essay he says he made $100K in 1948 and paid $90K to the government. Now, he didn't scan his tax return, so we can't verify, but there you go.

And Vidal was among the only literary figures to praise Edmund Wilson's polemic The Cold War and the Income Tax.
 
#239
#239
utgibbs said:
One of our highest growth rates ever saw 90% tax bracket on the highest earners. History does not support you.
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So if tomorrow the government put all rental property owners in a 90% tax bracket, you would not raise your rent?
 
#241
#241
Weezy said:
So did Reagan cut taxes or close loopholes so people actually paid more taxes? Which one are we supporting?
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he did both. as an example before reagan changed the law you could invest in oil drilling tax shelters and deduct 2 to 3 times of your initial investment.
 
#243
#243
utgibbs said:
1. One of our highest growth rates ever saw 90% tax bracket on the highest earners. History does not support you.

2. And now we see fecklessness in action!
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Problems with #1

- the rate was on individuals income not on corp. profits. The difference is material

- the rate was a marginal rate on the highest level of income for individuals - it was not a rate across all their earnings yet Droski's argument was clearly based on a 50% rate on all profits.

Try again
 
#244
#244
volinbham said:
Problems with #1

- the rate was on individuals income not on corp. profits. The difference is material

- the rate was a marginal rate on the highest level of income for individuals - it was not a rate across all their earnings yet Droski's argument was clearly based on a 50% rate on all profits.

Try again
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Like you had to ask...
 
#245
#245
utgibbs said:
I don't doubt it, however, we were in surplus (1947 - 49), and it had more progressivity.

2 years is the evidence? Awesome.

Although, I know Gore Vidal gets very p.o.'ed talking about it. I believe in an essay he says he made $100K in 1948 and paid $90K to the government. Now, he didn't scan his tax return, so we can't verify, but there you go.

So you are suggesting that tax rates were flat at 90% in 1948 - that we didn't have marginal rates and that the entire sum of his income was taxable at 90%. Interesting.

And Vidal was among the only literary figures to praise Edmund Wilson's polemic The Cold War and the Income Tax.
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Vidal is clearly wrong in his tax example if you've stated it correctly.
 
#246
#246
utgibbs said:
Your last paragraph gives the game away. Taxes represent a reduction in profitability not profits. Moreover, as droski has pointed out, international competition would simply negate a tax effect (if one actually existed). Finally, we've had sixty years of tax reductions, but haven't had negative inflation since 1949. I'm afraid that's a lot of data not supporting your premise. :hi:

Historical Inflation Rates: 1914-2011, Annual and Monthly Tables - US Inflation Calculator
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Tax rates clearly impact how much profits a company gets to keep. Reduce that number and the company has less return to investors, less for expansion and growth and generally a higher cost of capital.

Looking at nearly 100 years of inflation data shows nothing - the pattern fluctuates wildly and to attribute that fluctuation to changes in corp tax rates is absurd.
 
#247
#247
volinbham said:
Tax rates clearly impact how much profits a company gets to keep. Reduce that number and the company has less return to investors, less for expansion and growth and generally a higher cost of capital.

Looking at nearly 100 years of inflation data shows nothing - the pattern fluctuates wildly and to attribute that fluctuation to changes in corp tax rates is absurd.
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And now you hit it on the head. Investors pay for tax increases, not consumers.

As for the inflation data, it should follow, from your own argument, that inflation should have followed tax cuts in some form or fashion.

The inflation rate is merely more evidence supporting my argument. Namely, corporations cannot set what price they want.

However, I was mistaken regarding corporate tax rate. I thought they were decoupled later than they were. Regardless, the trend still supports my thesis, although I have to retract the 90% historical rate on corporations. Here is the data:

Individual+and+Corporate+Tax+Rates.gif
 
#248
#248
BigPapaVol said:
It's just something "we all know" and that the "people want."
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Interesting choice of words. But you ignore the fact that the polls show the foundations of the Ryan plan to be EXTREMELY unpopular. Just 21 percent favor cutting Medicare spending, for example.
 
#249
#249
Investors pay for taxes? Party true but to believe that is absolute is the dumbest thing I've ever heard. To not realize that a company factors in product cost, of which taxes are a part of, into the price of doing business which in turn determines product cost which in turn is passed on to the consumer is just plain... Well, dumb
 
#250
#250
hohenfelsvol said:
Investors pay for taxes? Party true but to believe that is absolute is the dumbest thing I've ever heard. To not realize that a company factors in product cost, of which taxes are a part of, into the price of doing business which in turn determines product cost which in turn is passed on to the consumer is just plain... Well, dumb
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:yes:
 
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