Obama's tax plan aims at rich, but catches small employers too

Quote from Gotchaforce : "Its owner, Sam Caucci, said cutting anyone from his 10-person team isn't an option. " Hmm, weird, these guys dont make any sense. I thought raising taxes on them meant they were gonig to have to fire people?? isnt that how it works?? and then if you lower taxes theyll hire more people? and if you keep taxes the same theyll keep the same amount of employees? isnt that always the line?? Perhaps its because you dont hire people to fill roles that dont need to be filled, you hire people when you have more revenue coming in and you need more people to properly realize that revenue. Taxes have absolutely nothing to do with it. Even the damn business owners cant make a convincing argument, all they're doing is wheeling out the typical empty threats of "well i guess im not hiring those guys anymore!" bullshit, you hire them because revenue is revenue. If your revenue would grow at the same rate without hiring them you wouldnt hire them. Its so utterly transparent how they play their game yet so many fools fall for it. Its the childhood tactic of "fine if you dont do this for me im going to go tell on you" or whatnot, then you dont do it, and they dont tattle, you learn to call their bluff or people play you your whole life. Stop getting played conservatives.

All the revenue in the world is meaningless if you have no profit left over.

Money left over in the bank is what lets you hire, expand, etc. If it goes up, you can afford to hire and expand. If it goes down, then you cant.

Quote from 124nic8 : That's what business credit is for.....

I guess you don't know much about the business credit environment these days. There's a reason why Warren Buffet likes to have a nice cash cushion....

Quote from DJPlayer : I'm just gonna roll with this.. but if a company does hire you they must pay: 6.2% of income up the first $7k or so for federal unemployment. Medicare and SS tax. The one employees had lowered, wasn't lowered for businesses. Then there's the possible 401k matching, and medical etc.. etc.. they normally say each employee costs .40 for each dollar they are paid. Granted I'm sure that varies by union vs. non union, type of job etc.. etc.. But in general it's rather expensive to employee someone here in the U.S. In comparison it's rather cheap to employ someone in another country. The scary thing is that it's cheaper to hire someone else in another country, and ship the product across an ocean than having it made here. Really makes you wonder (and know I don't know the details behind it). I think over time other countries will have their quality of living increased while ours lower. Eventually the benefit to go elsewhere won't make enough economical sense. Problem being that as their quality of life goes up.. our must comes down. So we do end up spreading the wealth.. except on a global level.

Wow that is scary, imagine if we had something to solve that? its called higher tax rates

Low tax rates invite outsourcing, this is a fairly complicated fact that most people overlook. Like you said its expensive for a company to employ someone here, that means you write it off as one big business expense. When the tax rate is low you dont care about trying to minimize your net profit, so when you see outsourcing youre looking at an employee that isnt that expensive, which means less write offs in "costs", but you dont care, youre barely getting taxed on your net profits. When companies have high tax rates it greatly reduces the amount of outsourcing they do because theyre concerned more about raising their revenue and keeping their margins high, as opposed to having more revenue, having more american works, but keeping their margins slim.


25% tax rate
outsourced worker: $5,000 per year, he/she is "worth" $20,000 in revenue, you pay tax on the $15,000 net profit they bring in, thats $3,725

40% tax rate:
american worker: $30,000 per year, he/she is "worth" $40,000 in revenue, you pay taxon $10,000 net profit, thats $4,000. Your revenue is twice as much, you have almost the same amount of tax, yes youre bringing in 33% less profit but youre hiring an american worker and putting a lot more money into the american economy rather than just outsourcing shit to india.

Its simple math that flies over most peoples heads.

Quote from MISHNAH : All the revenue in the world is meaningless if you have no profit left over. Money left over in the bank is what lets you hire, expand, etc. If it goes up, you can afford to hire and expand. If it goes down, then you cant.

If you have no profit left over why do you give a damn about taxes

Did you even read the link!?! his tax cuts are affecting those who arent making just a bit of profit every year, but hundreds of thousands as small businesses (like broom closet small, 4 people!) who are filing this as income tax.

Quote from Gotchaforce : Wow that is scary, imagine if we had something to solve that? its called higher tax rates Low tax rates invite outsourcing, this is a fairly complicated fact that most people overlook. Like you said its expensive for a company to employ someone here, that means you write it off as one big business expense. When the tax rate is low you dont care about trying to minimize your net profit, so when you see outsourcing youre looking at an employee that isnt that expensive, which means less write offs in "costs", but you dont care, youre barely getting taxed on your net profits. When companies have high tax rates it greatly reduces the amount of outsourcing they do because theyre concerned more about raising their revenue and keeping their margins high, as opposed to having more revenue, having more american works, but keeping their margins slim. 25% tax rate outsourced worker: $5,000 per year, he/she is "worth" $20,000 in revenue, you pay tax on the $15,000 net profit they bring in, thats $3,725 40% tax rate: american worker: $30,000 per year, he/she is "worth" $40,000 in revenue, you pay taxon $10,000 net profit, thats $4,000. Your revenue is twice as much, you have almost the same amount of tax, yes youre bringing in 33% less profit but youre hiring an american worker and putting a lot more money into the american economy rather than just outsourcing shit to india. Its simple math that flies over most peoples heads.

Except for that little thing where companies have investors or are in the stock market and they HAVE to make a profit!

No profit = no investors = not much potential for growth.

Good luck trying to get credit when your profit is virtually nill because you spend it all on your employees.

Quote from Gotchaforce : If you have no profit left over why do you give a damn about taxes Did you even read the link!?! his tax cuts are affecting those who arent making just a bit of profit every year, but hundreds of thousands as small businesses (like broom closet small, 4 people!) who are filing this as income tax.

If you have no profit, you are running a charity, lol!

Quote from Gotchaforce : "Its owner, Sam Caucci, said cutting anyone from his 10-person team isn't an option." Hmm, weird, these guys dont make any sense. I thought raising taxes on them meant they were going to HAVE to fire people?? isnt that how it works?? and then if you lower taxes theyll hire more people? and if you keep taxes the same theyll keep the same amount of employees? isnt that always the line?? Perhaps its because you dont hire people to fill roles that dont need to be filled, you hire people when you have more revenue coming in and you need more people to properly realize that revenue. Taxes have absolutely nothing to do with it. Nothing. Even the damn business owners cant make a convincing argument, all they're doing is wheeling out the typical empty threats of "well i guess im not hiring those guys anymore!" bullshit, you hire them because revenue is revenue. If your revenue would grow at the same rate without hiring them you wouldnt hire them. Its so utterly transparent how they play their game yet so many fools fall for it. Its the childhood tactic of "fine if you dont do this for me im going to go tell on you" or whatnot, then you dont do it, and they dont tattle, you learn to call their bluff or people play you your whole life. Conservatives need to stop getting played so hard.

Clearly, you think every small business only hires the bare minimum of staff they can get by with, or pays them the bare minimum in salary and benefits they can get away with.



Not surprising, given your usual vitriol for anyone who employs people, (besides the government of course).

A lot of employees that don't work for Ebeneezer Scrooge, are going to experience proof that you're mistaken, when their work load increases, and raises don't seem to be coming. .

Quote from MISHNAH : Except for that little thing where companies have investors or are in the stock market and they HAVE to make a profit! No profit = no investors = not much potential for growth. Good luck trying to get credit when your profit is virtually nill because you spend it all on your employees.

Yes when i think of shitty stock market investment i think of a company with tons of revenue. I much rather invest in companies with all sorts of volatile profit. nailed it

but what you say does have some truth to it, no doubt, because the stock market is unleashed capitalism like that. Its relentless and people never put their money where their mouth is, the stock market will always be dictated myopic viewpoints that emphasize ultimately a long term race to the bottom. Lots of people love to say "why dont companies keep jobs in america?" then turn around and buy a dell computer or whatnot.

Quote from Elmer : Clearly, you think every small business only hires the bare minimum of staff they can get by with, or pays them the bare minimum in salary and benefits they can get away with. A lot of employees that don't work for Ebeneezer Scrooge, are going to experience proof that you're mistaken, when their work load increases, and raises don't seem to be coming. .

You act like this doesnt already happen. I have known small business owners that do just that, their workforce is compromised of mostly young people who they squeeze for all their worth because they are young and ripe for abuse. They would have people who are more or less managing the entire restaurant working for absolute chump change (as in one individual existed more or less as the manager and got paid as much as a starting best buy salesman). Its ridiculous.

Manipulation goes both ways, sure, but more often then not those who are manipulated ARENT the ones writing the paycheck every week.

Quote from MISHNAH : Except for that little thing where companies have investors or are in the stock market and they HAVE to make a profit! No profit = no investors = not much potential for growth. Good luck trying to get credit when your profit is virtually nill because you spend it all on your employees. If you have no profit, you are running a charity, lol!

Thanks for replying b/c I just didn't want to have to explain.. Two biggest reasons companies outsource are: 1). taxes and 2) regulations.

Didn't Obama last night even say he wanted to lower the corporate tax rate from 35% to 28%? Is that to promote outsourcing?

Obama is a fool if he wants to lower the corporate tax rate, unless that includes closing all their loop holes and ending the enormous amounts of corporate welfare. Our corporate tax revenue is LAUGHABLE.

Our effective tax rate for corporations is some abysmally low number like 3%.

I know you dont like to source stuff but can you actually give me the link to his entire quote, i really doubt he just flat out said "yep lowering corporate tax rates 7%!"

edit: big f**kin surprise you only told half the truth, obama claimed that he would lower the rate from 35 to 28% AND close certain loopholes to make it "revenue neutral". Still, lowering tax rates does indeed promote off shoring. Whether or not obama will choose to recognize that is another thing. Just like every other politician he has lots of corporations giving him campaign money for lowering tax rates while also saying theyll hire tons more people as soon as the tax rate is lowered. Obama doesnt give a shit if they actually follow through with it, he already has his campaign money.

"So I want to lower it, particularly for manufacturing, taking it down to 25 percent. But I also want to close those loopholes that are giving incentives for companies that are shipping jobs overseas. I want to provide tax breaks for companies that are investing here in the United States. "

His intentions are to eliminate outsourcing in a direct way, but in an indirect way he is also promoting outsourcing by lowering corporate tax rates. I would like to hear his reasoning as to what will explicitly happen by lowering corporate tax rates. The market bears what the market bears, the concept that if exxon had a lower tax rate theyre going to expand in the market and hire a bunch more people is absurd, theyre going to pay share holders and thats about it. WEEE less government revenue and more money for those who are already wealthy. What a boom to the economy that will be. Even apple if given 35% -> 25% wouldnt magically expand thesmartphone market because they had a whole bunch more money to dump into iphone R&D.

Quote from 124nic8 : Not necessarily; it could under some scenarios. That depends on a host of other factors.

No. Not "could". It does under many, many small business scenarios.

Quote from MISHNAH : All the revenue in the world is meaningless if you have no profit left over. Money left over in the bank is what lets you hire, expand, etc. If it goes up, you can afford to hire and expand. If it goes down, then you cant.

Cash flow problems have killed many companies.

Quote from Gotchaforce : "Its owner, Sam Caucci, said cutting anyone from his 10-person team isn't an option." Hmm, weird, these guys dont make any sense. I thought raising taxes on them meant they were going to HAVE to fire people?? isnt that how it works?? and then if you lower taxes theyll hire more people? and if you keep taxes the same theyll keep the same amount of employees? isnt that always the line?? Perhaps its because you dont hire people to fill roles that dont need to be filled, you hire people when you have more revenue coming in and you need more people to properly realize that revenue. Taxes have absolutely nothing to do with it. Nothing. Even the damn business owners cant make a convincing argument, all they're doing is wheeling out the typical empty threats of "well i guess im not hiring those guys anymore!" bullshit, you hire them because revenue is revenue. If your revenue would grow at the same rate without hiring them you wouldnt hire them. Its so utterly transparent how they play their game yet so many fools fall for it. Its the childhood tactic of "fine if you dont do this for me im going to go tell on you" or whatnot, then you dont do it, and they dont tattle, you learn to call their bluff or people play you your whole life. Conservatives need to stop getting played so hard. On top of all that 124nic8 nailed it again, if you raise tax rates it makes no sense to keep your expenses low, screw sitting on this profit im going to reinvest more of my dollars in my company by spending more of it. Thats what any smart business owner does, they dont try to realize as much net proifit as they can, they try to minimize that profit by having more expenses.

Not every employee is a profit or revenue generating employee. Back office functions are cost centers.

Quote from CNN.com : Moritz is hostile to any talk of raising taxes, insisting he's more efficient at creating jobs with his money than whatever the federal government plans to do with it. If his tax rates increase, Moritz expects his tax bill to increase by $20,000 or more. That's money he planned to use to launch a furniture company and hire two employees to run it. "Every dollar I spend on my business I pay to another business," Moritz said. "The government would collect more revenue if they would just let me spend it."

As a small business owner with an S-corporation, I smell a load of B.S. coming from this small business owner.

Suppose that my business generates $20,000 in additional income. Under a S-corp tax structure, I have two choices: I can pass through this additional income to my personal income OR I can spend this money to expand the business and write off the entire amount as a business expense. In the former case, the $20,000 will be taxed at the higher rates if I already belong to the high tax brackets. In the latter case, the $20,000 will not be taxed at all under any rates.


Here's another load of B.S:

Quote from CNN : If next year proves profitable enough, he plans to finally get around to hiring a project manager and a marketer. Shamim would also buy an office instead lease one at his current Pasadena, Calif., office building. However, higher taxes would make him rethink those plans. "The bold moves we want to make would no longer be afforded to us," he said.

How would the higher personal tax rates prevent the "bold moves" he wants to make for his business? As I mentioned above, if Mr. Shamim's business generates additional income, he has the choice of plowing this additional income into his business or passing it through to his personal income. In the former case, none of the income would be taxed at all. What Mr. Shamim is trying to say is this:

"If the government raises my personal taxes, I will have no choice but to pass through more of the business income to my personal income to make up for the increased taxes so that I can maintain the same 1% lifestyle I currently have. My expensive 1% lifestyle is what would make the 'bold moves' impossible and if the government wants me to make the 'bold moves', then the government better not increase the taxes on my personal income or else. . . . . "

I will bet everyone dollars to donuts that while Bill Clinton was president and the tax rates were much higher, Mr. Shamim did not let the higher Clinton-era personal rates stop him from making similar 'bold moves' to expand the business to where it is today.

Quote : "[Higher taxes] are going to make me work harder," Caucci said. "That means I'll need to cut costs and overhead expenses. I can't let the things happening in Washington affect my company's mission and vision."

Translation:

"Higher personal income taxes will affect my 1% lifestyle and I have to pass through more of the business income just to maintain the same 1% lifestyle. As a smart business owner, I realize that passing through more business income rather than investing it tax-free to expand my business doesn't make any economic sense but dammit, my 1% lifestyle is more important than growing my business. Yes, I could make up for the increased taxes by generating more pass-through income through business expansion like I did when Clinton was President but I have become too lazy under George W. Bush's low-tax rates and don't want to work that hard anymore.".

There we have it, ladies and gentlemen. The Bush-era tax cuts have made the small business owners lazy and they are no longer willing to work hard to generate more income to make up for the higher taxes. Maybe we should invent a time machine and bring the Clinton-era business owners to the future to take over the businesses so that they can apply their Clinton-era work ethic to once again make the United States the greatest economic engine the world has witnessed.

Let me ask you this:
Which action (the Bush tax cuts of 2001 vs. the Clinton tax increases of 1993) more jobs?

HINT: One of them created jobs at twice the rate than the other.

And here's some good info:

http://www.cbpp.org/cms/index.cfm...ew&id=3806

Quote from CBPP : With the economy still suffering from inadequate demand, policymakers should focus on what small businesses (and large businesses) need most: more customers. Until they see a pickup in sales, businesses with excess capacity are unlikely to use the proceeds from any tax cuts to hire more workers or expand capacity further. This is why CBO, even as it has noted that some businesses would profit from an extension of the current top tax rates, rejected the argument that Congress should extend these tax cuts to create jobs in a weak economy: “increasing the after-tax income of businesses typically does not create much incentive for them to hire more workers in order to produce more, because production depends principally on their ability to sell their products.”[15]

Quote from CBPP : Cutting tax rates of high-income owners might lead some of them to increase their work hours in the business (in cases where they actually do work in the business) by raising their after-tax gains from work. On the other hand, such tax cuts might lead other owners to work less, because it would take less work effort at the lower tax rates to maintain their after-tax standard of living. Studies show that overall, cutting the tax rates of high-income taxpayers (within the ranges that policymakers are debating) has a negligible net effect on the amount that they work (with the effects just described essentially cancelling each other out).[18]