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It's also futile to pretend that what worked a decade ago will work now.
If you tax that 5% then they will have to start laying off workers so the unemployed will just go up.
70% of the GDP is consumption. If people don't have money to consume it is detrimental to the economy. Here is an example. What will happen to Walmarts revenue if the federal minimum wage goes up by 1$. Our economy is ALL about the buying power of the consumer, not the profitability of the business owner. The problem with most businesses is when they are forced to asses the increased taxes vs. layoffs, the profit margin is always considered a constant. If my taxes go up I can either reduce my profit and keep my employees, or I can keep my profit, reduce my employees, and demand the same overall work output from less people. Thats great for morale isnt it?
70% of the GDP is consumption. If people don't have money to consume it is detrimental to the economy. Here is an example. What will happen to Walmarts revenue if the federal minimum wage goes up by 1$. Our economy is ALL about the buying power of the consumer, not the profitability of the business owner. The problem with most businesses is when they are forced to asses the increased taxes vs. layoffs, the profit margin is always considered a constant. If my taxes go up I can either reduce my profit and keep my employees, or I can keep my profit, reduce my employees, and demand the same overall work output from less people. Thats great for morale isnt it?
The ACCOUNTANTS and chief financial officers of the corporation handled the taxes and NOT ONCE, NOT ONCE were the taxes the corporation would pay at the end of the year, were brought in to the equation of what i needed to do to run the business and make my sales plans or gross margin plans....
You are absolutely right, for a publicly traded corporation (at least the ones that I have worked for) that CFO & Tax Director have almost no input in any business decision unless its a merger, acquisition, public offering or dissolution.i worked for 3 corporations developing product for a strategic business unit of theirs, as a Product Development Marketing Manager....I was responsible for developing the product and also all of the financials that hit the gross margin of the department i was in charge of....the cost of goods/material costs, labor costs, the initial mark up/retail price, freight costs, mark downs, and gross margin, inventory levels, etc. along with creating the product to sell, and a 1 year and 5 year sales/financial plan for the area.
The ACCOUNTANTS and chief financial officers of the corporation handled the taxes and NOT ONCE, NOT ONCE were the taxes the corporation would pay at the end of the year, were brought in to the equation of what i needed to do to run the business and make my sales plans or gross margin plans....
there are merchandisers/product developers and their are tax accountants. they NEVER MIXED.
I had my initial mark up goals and my gross margin goals over the years but THEY handled the taxes....and they also handled other monitary things, like the value of our dollar and it's purchasing power....the corporation would buy other nations currency if their currency was moving stronger than ours...and other things like that to help us financially....they dotted i's and crossed t's in the financial areas and i did the same around the product materials/labor/import costs, duties on the various materials, (leather was around 17% duty... but PU-poly urethane was 6% duty and fabric was 37.5% duty etc....all calculated in to the cost of goods imported)
Well, there was alot more to it than my simplification of it....but my point is, that sales and having the right products at the right retail price at the right margin, at the right time, with the right inventory level, and all those things that MAKE A BUSINESS...(in my case it was the Shoe Business) were kept separate from those that worried about the business's taxes, BECAUSE TAXES HAD NOTHING TO DO WITH THE ACTUAL BUSINESS....
you make your product and business right and come in to your projected financials and sales plan, and ALL ELSE comes in to place....afterwords.
No one from the chief financial officers office came to me and said you can't do this or spend this money buying this or that because our taxes have gone up....BECAUSE TAXES had nothing to do with the actual product we were selling or business we were in or my time developing this product and sales plan and goals....they just didn't....
they were, what they ended up being, once all was said and done.
(i know i didn't get in to it, but our salesman hired to sell the product to the various department stores/ shoe chain stores/ independent stores were figured after i came up with my projected sales plan and coincided with such, which was the vp of sales, area of responsibility to fit his staff in to my sales plan profitably...)
Now granted, a small business has to do all of this on their own and not have a vp for every darn area of their business with a staff second to none, but i still contend that your business is run by demand and your own supply of the products the customer wants, and getting all of that RIGHT, and building sales staff around that, is the key to a business being profitable, regardless of the tax burden....
care
You are absolutely right, for a publicly traded corporation (at least the ones that I have worked for) that CFO & Tax Director have almost no input in any business decision unless its a merger, acquisition, public offering or dissolution.
Given a high enough rate I am sure it would be an issue, but we could at least go to Regans 50% corporate rate and not have it be an issue impacting business decisions. In fact, tax professionals usually need to yell at the top of our lungs that something is a problem before anyone on the operations side listens to us, it can be frustrating.
We do our tax provision work and thats integrated into the 10-k, the main concern at the operational level is that nothing be missed so there wont be any surprises they failed to accrue for.
I don't work anymore, I am a homemaker now....retired young!!! BUT, what you say is so true regarding us merchandisers/product-business development people vs. you!!!! i had a friend in one of the corps who was the CFO's right hand man and boy did i get an earfull over lunch occaisionally from him on how hands off we really were to them!!!
care
This is because taxes on profits are not part of CoGS but instead apply to capitalization and return on capital. Their impact on business is structural. For example, if Joe is seeking to expand and is looking for investors the question the investor asks is, what is my return. If the return, which is predicated by the amount of taxation, is lower than the investors propensity for risk then it is no sale. In general, the lower taxation on profit the larger the pool of investors easing Joes ability to expand his business. This is how taxation would effect employment--by slowing job creation not because Joe is so dumb as to destroy already created jobs.
Of course, all of this does not consider interest rates or Joes ability to borrow. Here, lower interest rates, as we now have, are probably Joes best bet and where business and job creation would suffer is under high taxes and high interest rates. We do not have those conditions now nor are we likely to see them any time in the near future .
You mean the wealthy don't hire based on the demand for the goods and services they provide?
