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Old 11-06-2013, 11:00 AM
 
29,463 posts, read 15,444,180 times
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Quote:
Originally Posted by MTAtech View Post
What I believe celcius was describing is that taxes are not hindering business investment, which is true. Businesses invest to make a return on their investment. Until taxes become confiscatory, taxes are not a consideration to invest or not invest. U.S. taxes are not confiscatory. Thus, lowering taxes does not encourage businesses to invest.
Do you know what a dividend is?

In case you don't I'll explain it. A dividend is the money a corporation pays out to its investors (stock holders). Traditionally, dividends are only paid when a company makes a profit and decides to pay those profits out to the investors. The lower the dividend payouts are, the less people generally tend to invest. (Some people do purchase stock in companies that don't make a profit gambling that one day they will and at that time the price will soar; however, the dotcom bubble taught us that at some point these companies do need to make a profit)

Are you stating that corporate earnings are taxed after the dividends to stock holders are paid? (Before you answer that question, you may want to read this - What is the double taxation of dividends?) If they are being taxed prior to dividend payouts, that means the dividends are reduced; therefore, people are less likely to invest.

Once again it comes back to risk versus reward. The lower the possible reward, the less likely you are to invest. Taxing earnings lowers the reward via dividends.

It's math.
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Old 11-06-2013, 11:18 AM
 
17,751 posts, read 15,647,793 times
Reputation: 6391
Quote:
Originally Posted by Malloric View Post
It's not just now recognizing this. It's always known it. It's just that there's recently been a wholesale subscription to Keynesian economics on a level that previously didn't exist. And it's not even Keynesian economics. Even Keynesian economics always recognized that it was detrimental to just create massive amounts of credit and binge on deficit spending. It's just that under Keynesian economics it was considered better to do overall harm across business cycles to smooth them out.
Since Keynesian economics developed under a gold standard, I could certainly see why "it's not even Keynesian economics". What I can't figure out is why no one would change their financial model after the end of Bretton Woods. Its bananas to me. There is now no monetary equity of any kind. It used to be the entire gold float with with no debt, gold would still exist so that their was a monetary equity. Now canceling all debts leaves no money. But why change an economic model from the antediluvians ones ? Talk about nostalgia. Of course it still recognized and was universally observed that owners of government debt did trade it and use it as money. After all, gold or Treasuries were used as "reserves"..


And may I ask did you actually read The General Theory of Employment, Interest and Money or is this the Urban dictionary version?

Quote:
Whenever you hear something like "austerity causing economies to decline" or whatever, that's not really the whole picture even according to Keynesian economics. Even Keynes knew you had to pay the piper eventually. It's just his policy was one of doing overall harm to the economy across several business cycles to smooth out the lumps.
You would under a gold standard. And the only "Keynesian" way to pay off government debt is to shrink it according to enough gold coming out of the mines and addition bank credit. On a fixed gold supply, and tight lending policy its virtually impossible to pay off.

By definition austerity is financial shrinkage, or stasis. The argument is where it fits into the real economy, and as I keep saying until I am blue, how don't we get inflation when empty lots sell for millions with bank credit? The inflation from the 2000s was from mortgage debt that rolled onto the public debt, with native government deficits being a fraction of it, even with the war.


You'd think that those that rail upon "Keynsian stimulus" would go through the roof over money creation with no tangible product except mouldering houses in exurbia. You'd think they would despise bank bailouts that stimulated bankers where we did not even get a drop from a water project out of it.

20 Years of Sears: Forlorn Stores, Happy Investors. Thank Spinoffs | Michael Santoli - Yahoo Finance

How is the tangible product of Sears? Nothing but da guberment monopoly FIRE sector as far as the eye could see. They done dumped their insurance and credit and now its the real estate.....You think Sears increase local property values? Living near a Sears a selling point? Quite the opposite, the selling point of their assets is because the land is near a Walmart where they can slap up some condos.



Quote:
But policy makers operate on election cycles, which generally shorter than any one economic cycle, so they don't care. They'll send the country to hell in a hand basket if it means getting reelected. Ultimately, the buck stops at the voters. The only reason the policy makers have any reason to behave the way they do is that we're as a nation selfish and shortsighted. We elect the politicians we want. There's sort of a shift in that with the Tea Party (ignoring all the religious garbage that's tacked onto it) which is encouraging.

There has been no Keynesian stimulus. A Keynesian stimulus is government spending on tangible assets that creates demand in the labor market and produces infrastructure. Why is this even being talked about since it quite clearly did not happen? I have seen no "Keynesian" anything. The deficits were all set off by automatic stabilizers in the social safety net. Where is that prescription in his theory?


What has Keynes really have to do with anything since the 70s when it was completely butchered by joining it with neo classical crap which has no concept of economic rent? No, creating financial instruments to encourage labor does not fix natual resouces that are not a product of human labor. Using Keynesian economics to stimulate the expansion to the 4th dimension just makes toilet paper and kindling.
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Old 11-06-2013, 11:30 AM
 
17,751 posts, read 15,647,793 times
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Quote:
Originally Posted by Malloric View Post
So if you had the choice of investing in Ireland, corporate tax rate 0%, and the US, corporate tax rate 35%, all things else being equally, you'd invest in the US? Is that what you're saying? That might be true for you, but it's not true in reality. Apple invested in Ireland because for the facet of business it put there, Ireland collects no income taxes. Those are jobs that could be in the US with US workers paying income taxes and sales taxes. Now, maybe you can't compete with 0%. You have to draw a line somewhere. The problem is the US corporate tax rate is very high. That's offset to some degree by the fact that we have an extraordinarily complex tax code that means a lot of income isn't subject to being taxed. That might work okay for Fortune 1000 companies, provided you don't mind the hundreds of millions spent just paying taxes annually in this country.
Do you know why we have a high corporate tax rate? Look into debt verse equity financing and see which one is tax deductible. In fact just ask Romney since his equity firm used the high corporate tax rate as his business model.

* take a company over
* convert all equity in to debt for cash flows.
* deduct the interest expense.


With the new credit cash flow they would look for efficiencies. Sometimes they would find them and sometime they would not. Why would they lever up? Well debt is high risk but a small division in an equity firm doesn't care so its good for big money and bad for organic capital. In other words the pizza follows the banker recipe, not that of the chef . But the whole bond sale to buy up equity scam would not work well with low corporate tax rates.

You think bleeding heart *******s are behind this tax to fund social welfare? That's a laugh. Its FIRE again.

Why Do We Encourage Corporate Debt? - Daniel Indiviglio - The Atlantic
Tax experts for decades have bemoaned the tax code's bias toward debt over equity: Interest on most corporate debt is tax deductible, while dividend payments are not.
I know how they feel.
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Old 11-06-2013, 02:42 PM
 
Location: TX
795 posts, read 1,222,358 times
Reputation: 783
Quote:
Originally Posted by PedroMartinez View Post
ROFLMAO!!!

Try telling a business owner that the taxes they pay are not a burden.

If I own a business, and my profit is $60,000 and I have to pay (hypothetically) $15,000 of taxes, that's not a burden? Really?

BTW, you might want to contact the CEO of the corporation I work for and tell him that he should not make any of his decisions regarding opening more facilities or investing in additional R&D based upon profit. The idiot actually seems to think it matters. You need to correct him (and probably every other CEO out there as well).
You clearly did not catch the nuance. Let's try again.

Taxes are a personal burden on the business owners, yes. I stated that. But they do not affect the operating profitability of the business itself. Taxes are assessed on operating income minus interest expense (EBT), i.e. after the business has already earned its profits, so they are not a "business expense" nor a "cost" of actually doing business.

It's a pedantic distinction, but CEOs like to launder their personal issues by saying A or B is "bad for the business." It's a load of crap. It's bad for them, not necessarily the business.
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Old 11-06-2013, 04:00 PM
 
Location: San Diego California
6,797 posts, read 6,319,071 times
Reputation: 5175
Quote:
Originally Posted by MTAtech View Post
You must have been asleep this year. The deficit has been falling dramatically which undercuts your assertion that the rate is accelerating. Those trillion plus deficits are a thing of the past.

Your further assertion that "increasing tax rates takes money directly from the economy which lowers both GDP and tax revenue," was exactly what the 1990s GOP argued. They told Clinton that raising taxes would tank te economy. The opposite occurred.

Whenever anyone writes about raising taxes, the right-wing counters with the 'even taking all the money of the rich,' narrative. However, just having the top 40 hedge fund managers pay ordinary income would raise enough to obviate the recent cut to SNAP.
If you can stomach some reality instead of the CNN propaganda you live off you may want to check out the real numbers here. U.S. National Debt Clock : Real Time
Unfunded liabilities now stands at around a million per taxpayer, but hey; don't sweat it we will just borrow more to pay that too.. Just don't cry too much when they do the same to your 401K that you do to truth and reality.
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Old 11-06-2013, 05:35 PM
 
8,883 posts, read 3,934,744 times
Reputation: 1720
Quote:
Originally Posted by jimhcom View Post
If you can stomach some reality instead of the CNN propaganda you live off you may want to check out the real numbers here. U.S. National Debt Clock : Real Time
Unfunded liabilities now stands at around a million per taxpayer, but hey; don't sweat it we will just borrow more to pay that too.. Just don't cry too much when they do the same to your 401K that you do to truth and reality.
The USA (and the world) will grow, and more USD will be created to meet all the demands. We should never be materially limited by USD's. USD's are not wealth or resources or real goods or services. In the future we can only be limited by the productive capacity of our country (and world). We already proved this with WW2.

Of course crazy things have and can happen. But it makes no sense for a monetarily sovereign national Gov't by and for the people to confiscate private wealth like retirement accounts to pay its bills. Taxes are crazy enough!
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Old 11-06-2013, 07:34 PM
 
Location: Michigan
2,198 posts, read 2,244,904 times
Reputation: 2091
Quote:
Originally Posted by PedroMartinez View Post
Do you know what a dividend is?

In case you don't I'll explain it. A dividend is the money a corporation pays out to its investors (stock holders). Traditionally, dividends are only paid when a company makes a profit and decides to pay those profits out to the investors. The lower the dividend payouts are, the less people generally tend to invest. (Some people do purchase stock in companies that don't make a profit gambling that one day they will and at that time the price will soar; however, the dotcom bubble taught us that at some point these companies do need to make a profit)

Are you stating that corporate earnings are taxed after the dividends to stock holders are paid? (Before you answer that question, you may want to read this - What is the double taxation of dividends?) If they are being taxed prior to dividend payouts, that means the dividends are reduced; therefore, people are less likely to invest.

Once again it comes back to risk versus reward. The lower the possible reward, the less likely you are to invest. Taxing earnings lowers the reward via dividends.


It's math.
The overwhelming majority of stock purchases are on the secondary market. The transaction is between two individuals, the corporation is not getting any money from stock purchases after the IPO unless they issue more shares, which investors also don't like because it dilutes the stock's value. The corporation doesn't get any money when Fred sells his shares to Tom. Only ~20% of stocks actually pay a dividend anyway.

If a company can expand and make an extra $100,000 in EBITDA, they're going to do it whether they're paying 20% taxes or 30%. 70% of $100,000 is more than 0% of $100,000.

Taxes aren't really holding back investment/expansion, weak demand is.
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Old 11-06-2013, 07:38 PM
 
17,751 posts, read 15,647,793 times
Reputation: 6391
Quote:
Originally Posted by jimhcom View Post
If you can stomach some reality instead of the CNN propaganda you live off you may want to check out the real numbers here. U.S. National Debt Clock : Real Time
Unfunded liabilities now stands at around a million per taxpayer, but hey; don't sweat it we will just borrow more to pay that too.. Just don't cry too much when they do the same to your 401K that you do to truth and reality.

The national debt clock is one of the biggest displays of propaganda there is. They print money.
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Old 11-06-2013, 07:47 PM
 
17,751 posts, read 15,647,793 times
Reputation: 6391
Quote:
Originally Posted by EugeneOnegin View Post
The overwhelming majority of stock purchases are on the secondary market. The transaction is between two individuals, the corporation is not getting any money from stock purchases after the IPO unless they issue more shares, which investors also don't like because it dilutes the stock's value. The corporation doesn't get any money when Fred sells his shares to Tom. Only ~20% of stocks actually pay a dividend anyway.

If a company can expand and make an extra $100,000 in EBITDA, they're going to do it whether they're paying 20% taxes or 30%. 70% of $100,000 is more than 0% of $100,000.

Taxes aren't really holding back investment/expansion, weak demand is.


SUNE just issued stock a stock I happen to own( and have used as a fine cash machine)

SunEdison Prices Offering of 30 Million Shares (SUNE)

SUNE Basic Chart | SunEdison, Inc. Common Stock Stock - Yahoo! Finance

Seems like it did just fine. The reason is because they get cash in return so whoever those investors are that think issuing stock dilutes value , then they are mistaken. What drives investors nuts are stock options that dilute shares with no tangible compensation.


Taxes weaken demand. That is what taxes do. It removes buying power from the public.
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Old 11-06-2013, 08:06 PM
 
Location: Michigan
2,198 posts, read 2,244,904 times
Reputation: 2091
Quote:
Originally Posted by gwynedd1 View Post
SUNE just issued stock a stock I happen to own( and have used as a fine cash machine)

SunEdison Prices Offering of 30 Million Shares (SUNE)

SUNE Basic Chart | SunEdison, Inc. Common Stock Stock - Yahoo! Finance

Seems like it did just fine. The reason is because they get cash in return so whoever those investors are that think issuing stock dilutes value , then they are mistaken. What drives investors nuts are stock options that dilute shares with no tangible compensation.

Taxes weaken demand. That is what taxes do. It removes buying power from the public.
I know not all stock issues are looked at negatively. DDD has diluted their shares several times while I owned shares, but they raised needed capital as a quickly growing company so the dilution wasn't looked at too negatively and the stock price didn't suffer much. NBG on the other hand went from ~$30 to $3 in a matter of months because of all the dilution.

I'm with you on taxes. I would like to see far lower taxes, but lowering corporate taxes isn't going to increase demand. I don't have any more money to spend on iStuff and going out to eat if Wal-Mart pays 15% in taxes instead of 20%.
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