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You just claimed that Republicans did nothing to combat the financial collapse and I showed you that it was George W. Bush that pushed through TARP despite strong opposition from many in his party that felt it was wrong
to bail out financial institutions that had let greed overcome prudent business practice. For you to come on here and claim that the GOP did nothing to combat the financial collapse is the "lie", Derp!
Do you even read the nonsense you cite?
See. right there is the problem. If either company would have invested IN THE COMPANY, it would have been with BEFORE TAX MONEY.
A company can't invest next year with retained earnings from this year? Are you sure?
So the question is not which company has more money left over to invest, the question is which company has more money to distribute to stockholders, to buyback stock, or to hold in cash.
Excellent point. Which of the companies in my example has more money to distribute to stockholders, to buyback stock, or to hold in cash?
The after tax rate of return is not a part of typical Monte Carlo stimulation of potential "RETURNS" in capital budget analysis.
Really?
What is important is the marginal tax rate.
Well, which marginal rate is better, 35% or 20%?
The lower the rate the more the company is on the hook for a loss.
The lower the rate the less the company is on the hook for a gain.
Remember what I said, companies are more concerned with the return OF their capital investment than the return ON their capital investment.
I remember thinking that was a silly claim.
Besides, as Warren Buffet has often said, he has never seen a company walk away from a profitable investment because of the tax rate.
I wonder if he's ever had to decide between an investment at a 20% tax rate versus one with a 35% tax rate?
I wonder which one he'd choose, which one you'd choose?
I wonder if he's ever had to decide between an investment at a 20% tax rate versus one with a 35% tax rate?
I wonder which one he'd choose, which one you'd choose?
And there is the problem. Corporations don't get to choose their tax rate, outside of moving an entire operation out of the country. And that can easily be fixed by adjusting the tax code so that they cannot deduct the cost of foreign taxes and by refusing to allow them to postpone the payment of taxes until profits are repatriated.
And yes, a company can invest retained earnings the next year, and they get to deduct that investment from the next year's taxes.
The truth of the matter is that lower taxes encourages corporations to take money OUT OF THE BUSINESS, not to put it back in. And that is a problem in the current environment. But, now that you mentioned the choice of tax rates. Take a doctor. He went to school for many years in order to practice medicine. He makes money. The money he earns doing what he does best, well he pays a higher tax rate on that income than the money he makes doing what he has not been trained to do, invest in the stock market. It is total ignorance and benefits no one but the stock traders.
And there is the problem. Corporations don't get to choose their tax rate, outside of moving an entire operation out of the country.
Really? Nothing a company can do to take advantage of lower rates elsewhere?
And that can easily be fixed by adjusting the tax code so that they cannot deduct the cost of foreign taxes and by refusing to allow them to postpone the payment of taxes until profits are repatriated.
Excellent ideas.....if you want to make our corporations even less competitive.
And yes, a company can invest retained earnings the next year, and they get to deduct that investment from the next year's taxes.
Excellent! And which of those 2 in my example has more to invest next year?
The truth of the matter is that lower taxes encourages corporations to take money OUT OF THE BUSINESS,
So if I start a new business, I shouldn't ever be allowed to take money OUT OF THE BUSINESS?
Could that reduce the incentive to start a new business?
The money he earns doing what he does best, well he pays a higher tax rate on that income than the money he makes doing what he has not been trained to do, invest in the stock market. It is total ignorance and benefits no one but the stock traders.
Only the traders benefit? It sounds like the doctor benefits as well. Right?
If understanding the dynamics behind tax policy is too difficult for you, then let's just look at the historical record. During the 1950's the highest corporate tax rate was north of 50%. Did we have a problem with companies investing? No, we had a huge manufacturing economy, companies invested in their people, and business was booming. How about the 60's? Well the highest tax rate slipped under 50% by two percentage points in 1965, 1966, and 1967 but 1968 and 1969 saw the highest corporate tax rate in our history, 52.8%. And in 1968 GDP growth was 9.84%, 1969 was 7.28%. The highest tax increase in US history was signed in 1982. 1983 saw GDP growth of 11.39%.
During the 1950's the highest corporate tax rate was north of 50%. Did we have a problem with companies investing?
The fact that most of the world was still rebuilding may have played a part in that as well.
The highest tax increase in US history was signed in 1982.
Really? Which rates rose? By how much?
If you can, give me the before and after rates. Thanks!
And yes, a company can invest retained earnings the next year, and they get to deduct that investment from the next year's taxes.
Excellent! And which of those 2 in my example has more to invest next year?
Seems like you missed this question.
So if I start a new business, I shouldn't ever be allowed to take money OUT OF THE BUSINESS?
Could that reduce the incentive to start a new business?
And these two.
Oh yeah, the old "the world was rebuilding" excuse. Which basically means, regardless of the corporate tax rates, businesses will expand when the opportunity presents itself. So it appears we should be looking at ways to generate opportunities instead of toying with the corporate tax rate.
And to the largest tax increase in American history, it was the Tax Equity and Fiscal Responsibility Act of 1982. It rescinded many of the original Reagan tax cuts but it mostly involved things like reducing accelerated depreciation and reducing cost basis to recapture part of the investment tax credit. Even conservative commentators have credited the TEFRA to increasing taxes by a full percentage point of GDP.
Now, to the investment question. I don't think you get it. Company A has a profit of one million dollars and faces a tax rate of 90%. Company B has a profit of one million dollars and faces a tax rate of 20%. How much money does each company have to invest? I will give you a hint. They both have the same amount to invest.
Here is the thing.
US GDP Growth Rate by Year
http://www.taxpolicycenter.org/site.../content/PDF/corporate_historical_bracket.pdf
The first table is the GDP growth rate by year. The second table is the highest corporate tax rate by year. If you take an honest look at it you can see that when the corporate tax rate was cut in 1988 it basically cut the legs out from under GDP growth. Most certainly, where we had double digit GDP growth in several years that the corporate tax rate was higher, it has never happened since that decrease in 1988.
The first table is the GDP growth rate by year. The second table is the highest corporate tax rate by year. If you take an honest look at it you can see that when the corporate tax rate was cut in 1988 it basically cut the legs out from under GDP growth. Most certainly, where we had double digit GDP growth in several years that the corporate tax rate was higher, it has never happened since that decrease in 1988.
See, I love this crap. On the hand you say the government should never interfere in the economy, but here you are complaining about dems doing nothing for the poor or middle class.Democrats make actual policy that benefits the poor and middle class even if some of them are self-serving assholes.The truth of the matter is that republicans in office only care about their own financial interests, so they will only formulate policy for that reason.
Yeah, Democrats never do that.
Salisbury News: Dianne Feinstein’s Husband Wins Near-Billion Dollar California ‘High Speed Rail’ Contract
Sure they do. That's why the poverty rate in this country is exactly the same as it was 50 years ago when they started "helping" everyone
The truth is that many democrat policies either do, or would benefit the poor had republicans allowed them to pass. ACA gave health insurance to 20 million more people. Raising the minimum wage wouid help the poor. I can name more examples if you'd like.
Obamacare does not benefit the poor.
Raising minimum wage would do not a fucking thing for anyone.
Try again, Buttnugget.
Bush adding $4.9 trillion to $5.7 trillion was less than doubling it.
Wait - now you're saying the debt was $5.7T when Bush the Dumber took office? That's not what you said before. Bush didn't add $4.9T to the debt, he added $5.849T to the debt. His debt increase was 101% from the end of Clinton's FY budget.
Obama adding $9.3 trillion to $10.6 trillion was less than doubling it.
Right. So Bush was a worse offender at growing the debt than Obama. Glad we cleared that up.
Also, what did Bush have to show for his doubling of the debt? Nothing. Absolutely nothing. Obama's got an historically-low uninsured rate, 11,000,000 net private sector jobs, a stock market that finished above 20,000 (from the 6,500 he inherited), and cut the employment rate in half by the end of his term, reduced the deficit by 2/3, and wages also grew faster during Obama than Bush the Dumber, particularly for people age 25-39. So that's what Obama has to show for it. Conservatives have nothing to show for their debt load.
Yup. Reagan adding $2 trillion to the debt to win the Cold War was awful!
Wait - so debts are OK, then? What an about face! And Reagan only won the Cold War like that because the USSR bankrupted first. They too ran massive deficits. It's also debatable that Reagan's military spending was what beat the USSR and not perestroika, the famine, and their occupation of Afghanistan.
Bush adding $4.9 trillion was worse, Obama adding $9.3 trillion.....no big deal,
Exactly, because you all have nothing to show for Bush's debt, whereas Obama has plenty to show; job creation, deficit reduction, record low uninsured rate, dramatically lower renewable energy costs, record stock market highs, record corporate profits, and a dead Osama bin Laden. What do you guys have to show for Bush's debt? Nothing other than a poorly-conceived expansion of Medicare that wasn't funded at all (where's that fiscal responsibility?), and that Obama had to fix with the ACA.
I want to know why $4.9 trillion in 2009 was equivalent to $9.3 trillion in 2017?
It's not equivalent. It's far fucking worse because we have nothing to show for Bush's debt other than a ham-fisted expansion of Medicare that Obama had to fix, and millions of wounded soldiers who fought dumb wars we had no business fighting, that we now must take care of for the next 60+ years.
You really aren't that bright...are you, Derp? The ONLY reason that Clinton was able to pay down the Public Debt was because he increased Intragovernmental debt by an even larger amount! That isn't a real surplus...it's budget "sleight of hand"! The only people who think there was a REAL surplus during the Clinton years are people who can't do simple eighth grade math.
You blithering moron, he was only able to increase intragovernmental debt because he had a budget surplus. And if he was using the SS surplus to pay down the debt, why didn't he just exhaust the Trust right away and pay off a large chunk of the debt in one shot, if what you're saying is true? Why did he wait until 1998 before doing that? Why didn't he start doing it in 1993, when he took office?
And there was most definitely a budget surplus...even without SS, the government ran a surplus in 1999 and 2000.
You. Know. Nothing. Just what you glean off other message board posters. You don't actually think for yourself.
Are you brain damaged? There never was a "surplus"! Borrowing from a flush Social Security Fund (pumped up from the Dot Com Boom) to run the government instead of running a deficit doesn't mean you had a surplus! It simply means you transferred the debt to a different place. Social Security isn't revenue...it's money that's owed.
Let me put it this way. If you were given a thousand dollars to hold for your friend until next year and you spent half of that money to pay your rent instead of taking it out of your checking account...that doesn't mean you have a "surplus"! You still owe your friend the thousand dollars.
You have a surplus when you bring in more money than you send out. Social Security taxes are taxes. The government brings them in. We ran a surplus because we took more money in than we sent out. Or do you believe like Al Gore, that Social Security taxes go in some lockbox.
Social Security isn't revenue, Winston! It's money that the government owes...not money that it's taken in as revenue. The fact that you two can't seem to grasp this concept BAFFLES me!
You conservatives are a hypocritical bunch aren't you. You count Social Security taxes as revenue when it serves your purpose. And you count it as a liability when it serves your purpose. You might want to remember that it was Ronald Reagan that started the practice of raiding Social Security receipts. And it was also Ronald Reagan that significantly expanded both the amount of income subject to the Social Security tax and the rates collected. In fact, the income subject to Social Security taxes will go up again next year thanks to Ronald Reagan.
The difference is simple. The government can borrow money on the public market, that is called Treasury bonds. Or the government can borrow money from itself. As I have explained already, it is like the difference in borrowing money from a bank or borrowing money from your life insurance policy.
Only because that's what the US Treasury says.
Right, Bush's $5.7 trillion will be harder to repay than Obama's $9.3 trillion. Because.......percentages..
Reagan's $2 trillion in debt making the world safer is better than Obama's $9.3 trillion in debt making the world more dangerous.
You have a surplus when you bring in more money than you send out. Social Security taxes are taxes. The government brings them in. We ran a surplus because we took more money in than we sent out. Or do you believe like Al Gore, that Social Security taxes go in some lockbox.
Social Security isn't revenue, Winston! It's money that the government owes...not money that it's taken in as revenue. The fact that you two can't seem to grasp this concept BAFFLES me!
You conservatives are a hypocritical bunch aren't you. You count Social Security taxes as revenue when it serves your purpose. And you count it as a liability when it serves your purpose. You might want to remember that it was Ronald Reagan that started the practice of raiding Social Security receipts. And it was also Ronald Reagan that significantly expanded both the amount of income subject to the Social Security tax and the rates collected. In fact, the income subject to Social Security taxes will go up again next year thanks to Ronald Reagan.
The difference is simple. The government can borrow money on the public market, that is called Treasury bonds. Or the government can borrow money from itself. As I have explained already, it is like the difference in borrowing money from a bank or borrowing money from your life insurance policy.
For your information it was LBJ that was the first US President to raid the Social Security fund. That took place back in 1968 to help pay for the Vietnam war.
But what Reagan did was nothing less than a total con job. He promised to cut taxes, and he did on the wealthy. But what he did to the poor and middle class was beyond the pale. In fact, until Obama came along Reagan was the only president to cut taxes on the wealthy while simultaneously increasing them on the poor. Trump is slated to do the very same thing.
Reagan's administration completely revamped Social Security, increasing both the rate of the tax and the income subject to that tax. I remember it well. Everyone got a little bit of a raise on their check and then, a couple of weeks later, it magically disappeared. It went to Social Security. And Reagan's reasoning to do so was to shore up the "reserves" for the coming retirement of the boomers. Then he promptly raided every damn penny of the additional revenue for the General Fund.
The whole right wing agenda of cutting taxes can be boiled down to one simple statement. The rich figured out it was better to loan the government money at interest than pay the government taxes.
The Reagan tax cuts in 1981 were a 25% across the board cut, Winston. You're claiming Reagan increased taxes on the poor? Please show where that took place.
Only because that's what the US Treasury says.
So, fine...then Obama and Bush grew the debt by equal rates...yet Obama has a ton of stuff to show for his contribution, while Bush had nothing to show for his. Unless you want to count two unwinnable wars of occupation, four record high deficits, an unfunded entitlement expansion, and a loss of 460,000 net private sector jobs. But I'm sure you don't want to recognize that shit, right? Who would? That's why Conservatives have Bush amnesia...where they pretend he wasn't President and none of their policies failed spectacularly.
Right, Bush's $4.9 trillion will be harder to repay than Obama's $9.3 trillion. Because.......percentages..
When does that debt have to be paid? What is the exact date? Because debts are ultimately collected when a person dies. That's a worst-case scenario for debt collectors, right? So when is the US going to die and have to pay back all its debt?
Also, Obama has plenty to show for his debt: 11 million net private sector jobs created; a stock market above 20,000 from 6,500; unemployment rate cut in half; deficit reduced by 2/3; record low uninsured rate; record low renewable energy costs.
And Bush? What does he have to show for his debt?
...
...
...
...
...
...
nothing good.
So I get why you are trying to make debt an issue...you can't defend your policies on any other grounds so the fiscal health of the country magically becomes your chief concern. Tell me something, where was all this concern over the fiscal health of the country when Bush cut taxes, erased a surplus, and doubled the debt,? Because back when the Bush Tax Cuts, which caused all that shit, were passed, Conservative deficit hawks were strangely silent. Why is that?
Reagan's $2 trillion in debt making the world safer is better than Obama's $9.3 trillion in debt making the world more dangerous.
Make the world safer? LOL! That's hilarious. He didn't make anything safer and, in fact, ran from Lebanon the minute heat was turned up. How many 9/11's did Obama have? None. How many 9/11's did Bush have? One. So Bush made the world less safe, and Obama made it more safe.
Also, "safety" is a subjective stance because if we are looking at who kept Americans safe, it's clear from American fatalities from terrorism that Obama beats both Bush and Reagan.
And yet, $9.3 trillion is a lot more to repay than $4.9 trillion.
Well, the 1 year T-Bills have to be repaid 1 year after they are issued.
The 10 year T-Notes have to be repaid 10 years after they are issued.
The 30 year T-Bonds have to be repaid 30 years after they are issued.
The US Treasury issues an assortment of securities to finance government spending.
Really? I managed to pay off car debts and home debts while I was alive.
Yes, defeating the Evil Empire and freeing Eastern Europe from the Soviet boot was very funny.
Besides wrecking Libya and Syria, making Iraq worse, and unleashing a stream of refugees into Europe, what were Obama's foreign policy successes? Maybe his Russia reset? LOL!
And yet, $9.3 trillion is a lot more to repay than $4.9 trillion.
So when does the debt have to be paid? It doesn't. We've carried a debt load since the 1840's.
Well, the 1 year T-Bills have to be repaid 1 year after they are issued.
The 10 year T-Notes have to be repaid 10 years after they are issued.
The 30 year T-Bonds have to be repaid 30 years after they are issued.
The US Treasury issues an assortment of securities to finance government spending.
Right, so it varies when they're issued and it's all on the Public Debt. Just curious, how often are T-Bills/T-Notes sold? Every fucking day, right? So there is no absolute day when all the debt has to be repaid. So why are you pretending as if there is and what's the motivation for you making that pretense?
Really? I managed to pay off car debts and home debts while I was alive.
And if you didn't pay it all off when you were alive, what happens to your debt then? It gets visited on your family. The government doesn't die, therefore the debt toll never comes due because, as you point out, the government issues T-Bills and T-Notes every day. So the entirety of the $20T debt isn't all due at the same time, is it? So why are you posturing as if it is?
Yes, defeating the Evil Empire and freeing Eastern Europe from the Soviet boot was very funny.
Reagan didn't do that himself, and you give him far too much credit. Funny how other factors like perestroika, the Soviet famine, and their boondoggle occupation of Afghanistan doesn't seem to be on your radar. Those had more to do with the Soviet Union collapsing than Reagan's tripling of the debt did.
Besides wrecking Libya and Syria, making Iraq worse, and unleashing a stream of refugees into Europe, what were Obama's foreign policy successes? Maybe his Russia reset? LOL!
Wrecking Libya? How so? And Syria is a mess created by you fucking clowns who invaded and occupied Iraq, disbanded the Iraqi Army, appointed an Iran-friendly Shi'ite to run the country, then stood by and watched as those Shi'ites drove Sunnis out of Baghdad and into Syria, where they got money from their Saudi allies to form ISIS. Obama had nothing to do with that. It was all you. Furthermore, Syria's problems began not because of all that shit, but because of the drought that forced millions of farm and rural Syrians into the cities, looking for work, food, and water. Because Assad is a dictator, rather than address those people's concerns, he turned his guns on them instead. And thus, the Syrian Civil War started. The flood of refugees is a combination of your ham-fisted Bush Doctrine and Climate Change.
Obama's successes? Easy; Iran sanctions and the nuclear deal, Paris Climate Accords, new START Treaty with Russia, and getting Osama bin Laden. As far as Russia goes, I find it highly suspicious that prior to July 2016, the Conservative position on Ukraine was anti-Russia, then suddenly and miraculously, the position changed to pro-Russia. Why is that?
Depends on what is coming due, how much is being spent, how much is collected in revenue.
Right, the debt will never be totally repaid.
Does the fact it won't be totally repaid at once make Obama's $9.3 trillion smaller than or equal to Bush's $4.9 trillion?
Carter certainly didn't do it.
Reagan had nothing to do with factors like perestroika and Afghanistan?.
And the collapse in oil prices that Reagan engineered.
It happened before Jan 20, 2009?
Or was it while Obama was President?
Smartest President ever couldn't get the world to love us enough to stop fucking things up?
Yeah, allowing the mullahs to continue to build nukes will be one of his legacies.
Paris? DERP!
As far as Russia goes, I find it highly comical that prior to 2012, the liberal position on Russia was all reset and flexibility and "the 80s want their foreign policy back" and now they agree with Reagan and Romney that Russia is a threat.
I wonder if he's ever had to decide between an investment at a 20% tax rate versus one with a 35% tax rate?
I wonder which one he'd choose, which one you'd choose?
And there is the problem. Corporations don't get to choose their tax rate, outside of moving an entire operation out of the country. And that can easily be fixed by adjusting the tax code so that they cannot deduct the cost of foreign taxes and by refusing to allow them to postpone the payment of taxes until profits are repatriated.
And yes, a company can invest retained earnings the next year, and they get to deduct that investment from the next year's taxes.
The truth of the matter is that lower taxes encourages corporations to take money OUT OF THE BUSINESS, not to put it back in. And that is a problem in the current environment. But, now that you mentioned the choice of tax rates. Take a doctor. He went to school for many years in order to practice medicine. He makes money. The money he earns doing what he does best, well he pays a higher tax rate on that income than the money he makes doing what he has not been trained to do, invest in the stock market. It is total ignorance and benefits no one but the stock traders.
And there is the problem. Corporations don't get to choose their tax rate, outside of moving an entire operation out of the country.
Really? Nothing a company can do to take advantage of lower rates elsewhere?
And that can easily be fixed by adjusting the tax code so that they cannot deduct the cost of foreign taxes and by refusing to allow them to postpone the payment of taxes until profits are repatriated.
Excellent ideas.....if you want to make our corporations even less competitive.
And yes, a company can invest retained earnings the next year, and they get to deduct that investment from the next year's taxes.
Excellent! And which of those 2 in my example has more to invest next year?
The truth of the matter is that lower taxes encourages corporations to take money OUT OF THE BUSINESS,
So if I start a new business, I shouldn't ever be allowed to take money OUT OF THE BUSINESS?
Could that reduce the incentive to start a new business?
The money he earns doing what he does best, well he pays a higher tax rate on that income than the money he makes doing what he has not been trained to do, invest in the stock market. It is total ignorance and benefits no one but the stock traders.
Only the traders benefit? It sounds like the doctor benefits as well. Right?
If understanding the dynamics behind tax policy is too difficult for you, then let's just look at the historical record. During the 1950's the highest corporate tax rate was north of 50%. Did we have a problem with companies investing? No, we had a huge manufacturing economy, companies invested in their people, and business was booming. How about the 60's? Well the highest tax rate slipped under 50% by two percentage points in 1965, 1966, and 1967 but 1968 and 1969 saw the highest corporate tax rate in our history, 52.8%. And in 1968 GDP growth was 9.84%, 1969 was 7.28%. The highest tax increase in US history was signed in 1982. 1983 saw GDP growth of 11.39%.
During the 1950's the highest corporate tax rate was north of 50%. Did we have a problem with companies investing?
The fact that most of the world was still rebuilding may have played a part in that as well.
The highest tax increase in US history was signed in 1982.
Really? Which rates rose? By how much?
If you can, give me the before and after rates. Thanks!
And yes, a company can invest retained earnings the next year, and they get to deduct that investment from the next year's taxes.
Excellent! And which of those 2 in my example has more to invest next year?
Seems like you missed this question.
So if I start a new business, I shouldn't ever be allowed to take money OUT OF THE BUSINESS?
Could that reduce the incentive to start a new business?
And these two.
Oh yeah, the old "the world was rebuilding" excuse. Which basically means, regardless of the corporate tax rates, businesses will expand when the opportunity presents itself. So it appears we should be looking at ways to generate opportunities instead of toying with the corporate tax rate.
And to the largest tax increase in American history, it was the Tax Equity and Fiscal Responsibility Act of 1982. It rescinded many of the original Reagan tax cuts but it mostly involved things like reducing accelerated depreciation and reducing cost basis to recapture part of the investment tax credit. Even conservative commentators have credited the TEFRA to increasing taxes by a full percentage point of GDP.
Now, to the investment question. I don't think you get it. Company A has a profit of one million dollars and faces a tax rate of 90%. Company B has a profit of one million dollars and faces a tax rate of 20%. How much money does each company have to invest? I will give you a hint. They both have the same amount to invest.
Here is the thing.
US GDP Growth Rate by Year
http://www.taxpolicycenter.org/site.../content/PDF/corporate_historical_bracket.pdf
The first table is the GDP growth rate by year. The second table is the highest corporate tax rate by year. If you take an honest look at it you can see that when the corporate tax rate was cut in 1988 it basically cut the legs out from under GDP growth. Most certainly, where we had double digit GDP growth in several years that the corporate tax rate was higher, it has never happened since that decrease in 1988.
Which basically means, regardless of the corporate tax rates, businesses will expand when the opportunity presents itself.
And when they have two options, expansion in an area with a 20% tax or expansion in an area with a 35% tax, which do you feel they would favor?
So it appears we should be looking at ways to generate opportunities instead of toying with the corporate tax rate.
Fine. As long as we don't ignore opportunities generated by a lower corporate tax rate.
And to the largest tax increase in American history, it was the Tax Equity and Fiscal Responsibility Act of 1982. It rescinded many of the original Reagan tax cuts
AFAIK, that stopped future cuts in rates that hadn't gone into effect yet.
Now, to the investment question. I don't think you get it.
Excellent. Show me my error.
Company A has a profit of one million dollars and faces a tax rate of 90%. Company B has a profit of one million dollars and faces a tax rate of 20%. How much money does each company have to invest?
Well, after year one, Company A has $100,000 in the bank and company B has $800,000 in the bank.
I will give you a hint. They both have the same amount to invest.
Interesting claim. Post your math.
If you take an honest look at it you can see that when the corporate tax rate was cut in 1988 it basically cut the legs out from under GDP growth.
Use logic and explain why a cut from 40% to 34% would cut GDP growth.
And when they have two options, expansion in an area with a 20% tax or expansion in an area with a 35% tax, which do you feel they would favor?
There you go again with that false choice. If a company wants to operate in the United States they have to pay the United States corporate tax rate. Just like if a company wants to operate in the United Arab Emirates they have to pay the HIGHER United Arab Emirates tax rate. US companies invested almost ten billion dollars in the UAE last year. Guess tax rates were not part of the decision making process.
Well, after year one, Company A has $100,000 in the bank and company B has $800,000 in the bank.
Thanks for proving my point. At the end of year one they both have one million dollars to invest. But AFTER year one, well there is a huge difference in "money in the bank". So tell me, does not a lower corporate tax rate either encourage investing TOMORROW instead of today, or encourage the stockpiling of cash. Which of course, the current trillions of dollars in company cash reserves kind of indicates that the corporate tax rate is TOO LOW, not that it is too high.
Use logic and explain why a cut from 40% to 34% would cut GDP growth
I have already done that and you seem not to understand. First, the weighted average cost of capital is inversely related to the marginal tax rate. Second, the internal rate of return required to justify an investment increases as the marginal tax rate declines. Which results in, as tax rates decline, companies take less and less risky investments. It also means that rent seeking increases as tax rates decline, and rent seeking is toxic to a growing economy. And finally, as our example has clearly indicated, the opportunity cost of NOT INVESTING in any given year is higher when the tax rate is lower.
And there is the problem. Corporations don't get to choose their tax rate, outside of moving an entire operation out of the country.
Really? Nothing a company can do to take advantage of lower rates elsewhere?
And that can easily be fixed by adjusting the tax code so that they cannot deduct the cost of foreign taxes and by refusing to allow them to postpone the payment of taxes until profits are repatriated.
Excellent ideas.....if you want to make our corporations even less competitive.
And yes, a company can invest retained earnings the next year, and they get to deduct that investment from the next year's taxes.
Excellent! And which of those 2 in my example has more to invest next year?
The truth of the matter is that lower taxes encourages corporations to take money OUT OF THE BUSINESS,
So if I start a new business, I shouldn't ever be allowed to take money OUT OF THE BUSINESS?
Could that reduce the incentive to start a new business?
The money he earns doing what he does best, well he pays a higher tax rate on that income than the money he makes doing what he has not been trained to do, invest in the stock market. It is total ignorance and benefits no one but the stock traders.
Only the traders benefit? It sounds like the doctor benefits as well. Right?
If understanding the dynamics behind tax policy is too difficult for you, then let's just look at the historical record. During the 1950's the highest corporate tax rate was north of 50%. Did we have a problem with companies investing? No, we had a huge manufacturing economy, companies invested in their people, and business was booming. How about the 60's? Well the highest tax rate slipped under 50% by two percentage points in 1965, 1966, and 1967 but 1968 and 1969 saw the highest corporate tax rate in our history, 52.8%. And in 1968 GDP growth was 9.84%, 1969 was 7.28%. The highest tax increase in US history was signed in 1982. 1983 saw GDP growth of 11.39%.
During the 1950's the highest corporate tax rate was north of 50%. Did we have a problem with companies investing?
The fact that most of the world was still rebuilding may have played a part in that as well.
The highest tax increase in US history was signed in 1982.
Really? Which rates rose? By how much?
If you can, give me the before and after rates. Thanks!
And yes, a company can invest retained earnings the next year, and they get to deduct that investment from the next year's taxes.
Excellent! And which of those 2 in my example has more to invest next year?
Seems like you missed this question.
So if I start a new business, I shouldn't ever be allowed to take money OUT OF THE BUSINESS?
Could that reduce the incentive to start a new business?
And these two.
Oh yeah, the old "the world was rebuilding" excuse. Which basically means, regardless of the corporate tax rates, businesses will expand when the opportunity presents itself. So it appears we should be looking at ways to generate opportunities instead of toying with the corporate tax rate.
And to the largest tax increase in American history, it was the Tax Equity and Fiscal Responsibility Act of 1982. It rescinded many of the original Reagan tax cuts but it mostly involved things like reducing accelerated depreciation and reducing cost basis to recapture part of the investment tax credit. Even conservative commentators have credited the TEFRA to increasing taxes by a full percentage point of GDP.
Now, to the investment question. I don't think you get it. Company A has a profit of one million dollars and faces a tax rate of 90%. Company B has a profit of one million dollars and faces a tax rate of 20%. How much money does each company have to invest? I will give you a hint. They both have the same amount to invest.
Here is the thing.
US GDP Growth Rate by Year
http://www.taxpolicycenter.org/site.../content/PDF/corporate_historical_bracket.pdf
The first table is the GDP growth rate by year. The second table is the highest corporate tax rate by year. If you take an honest look at it you can see that when the corporate tax rate was cut in 1988 it basically cut the legs out from under GDP growth. Most certainly, where we had double digit GDP growth in several years that the corporate tax rate was higher, it has never happened since that decrease in 1988.
Which basically means, regardless of the corporate tax rates, businesses will expand when the opportunity presents itself.
And when they have two options, expansion in an area with a 20% tax or expansion in an area with a 35% tax, which do you feel they would favor?
So it appears we should be looking at ways to generate opportunities instead of toying with the corporate tax rate.
Fine. As long as we don't ignore opportunities generated by a lower corporate tax rate.
And to the largest tax increase in American history, it was the Tax Equity and Fiscal Responsibility Act of 1982. It rescinded many of the original Reagan tax cuts
AFAIK, that stopped future cuts in rates that hadn't gone into effect yet.
Now, to the investment question. I don't think you get it.
Excellent. Show me my error.
Company A has a profit of one million dollars and faces a tax rate of 90%. Company B has a profit of one million dollars and faces a tax rate of 20%. How much money does each company have to invest?
Well, after year one, Company A has $100,000 in the bank and company B has $800,000 in the bank.
I will give you a hint. They both have the same amount to invest.
Interesting claim. Post your math.
If you take an honest look at it you can see that when the corporate tax rate was cut in 1988 it basically cut the legs out from under GDP growth.
Use logic and explain why a cut from 40% to 34% would cut GDP growth.
And when they have two options, expansion in an area with a 20% tax or expansion in an area with a 35% tax, which do you feel they would favor?
There you go again with that false choice. If a company wants to operate in the United States they have to pay the United States corporate tax rate. Just like if a company wants to operate in the United Arab Emirates they have to pay the HIGHER United Arab Emirates tax rate. US companies invested almost ten billion dollars in the UAE last year. Guess tax rates were not part of the decision making process.
Well, after year one, Company A has $100,000 in the bank and company B has $800,000 in the bank.
Thanks for proving my point. At the end of year one they both have one million dollars to invest. But AFTER year one, well there is a huge difference in "money in the bank". So tell me, does not a lower corporate tax rate either encourage investing TOMORROW instead of today, or encourage the stockpiling of cash. Which of course, the current trillions of dollars in company cash reserves kind of indicates that the corporate tax rate is TOO LOW, not that it is too high.
Use logic and explain why a cut from 40% to 34% would cut GDP growth
I have already done that and you seem not to understand. First, the weighted average cost of capital is inversely related to the marginal tax rate. Second, the internal rate of return required to justify an investment increases as the marginal tax rate declines. Which results in, as tax rates decline, companies take less and less risky investments.
It also means that rent seeking increases as tax rates decline, and rent seeking is toxic to a growing economy. And finally, as our example has clearly indicated, the opportunity cost of NOT INVESTING in any given year is higher when the tax rate is lower.
