Scottrade being acquired....we just can't seem to keep corporate HQ's in this area.... (Houston: vehicle registration, houses)

[RisingAurvandil]

Originally Posted by 1grin_g0

So eliminating corporate taxes would cause a business to fail? And I thought I heard it all, LOL! Lowering corporate taxes by the way has nothing to do with productivity. It is about competitiveness, as in creating an environment that allows businesses to lower their costs and thereby offer products or services at a more competitive price.

You have reading comprehension issues. Where did I mention lower taxes causing a business to fail?

And if you don't understand the difference between production and efficiency, you probably shouldn't gargle a response. You can't run a firm without grasping these concepts. They are both related to being competitive, so perhaps you understood that.

Originally Posted by 1grin_g0

Nobody said copy by the way, just learning would be suffice. Learning what works and what doesn't. Of course you could just bury your head in the sand and pretend that you have nothing to learn. Missouri needs a tax policy that is tailored to its strengths.

I haven't heard any new ideas from you. Just references to policies in other states. Do you have any solutions other than lower taxes and RTW?

[1grin_g0]

Originally Posted by RisingAurvandil

You have reading comprehension issues. Where did I mention lower taxes causing a business to fail?

And if you don't understand the difference between production and efficiency, you probably shouldn't gargle a response. You can't run a firm without grasping these concepts. They are both related to being competitive, so perhaps you understood that.



I haven't heard any new ideas from you. Just references to policies in other states. Do you have any solutions other than lower taxes and RTW?

What are you proposing? You have contributed little, besides criticism. What new ideas have you submitted?
"To become a leader, we have to innovate policies that have never been tested", sounds great, but it is not a solution. "We have to push harder", ok .

What specifically have I suggested that would "cause a business to fail?" I suggested eliminating the income tax and the corporate tax. Which one would destroy business?

Where did I suggest RTW?

There really is no point in continuing this if you are going to act like a 12 year old.

[FrankMiller]

Originally Posted by 1grin_g0

Lowering corporate taxes by the way has nothing to do with productivity. It is about competitiveness, as in creating an environment that allows businesses to lower their costs and thereby offer products or services at a more competitive price.

But we use those taxes to help pay for roads and schools and such. What's the point of lowering taxes to lure companies here; so they can post job openings for people who are too stupid to perform them and can't drive to the office? All else being equal, companies will prefer lower taxes. But all else will not be equal, because those taxes pay for things.

[1grin_g0]

Originally Posted by FrankMiller

But we use those taxes to help pay for roads and schools and such. What's the point of lowering taxes to lure companies here; so they can post job openings for people who are too stupid to perform them and can't drive to the office? All else being equal, companies will prefer lower taxes. But all else will not be equal, because those taxes pay for things.

Revenues from the corporate income tax are not as substantial as you might think. The 6.25% corporate rate has been unchanged since the early 90s, yet in recent years revenues derived from it have steadily declined. Not a good sign, as it indicates corporations are either leaving the state, or not performing very well. The corporate income tax represents roughly 4% of the general fund, and slightly more than 1% of the overall $26 billion operating budget. Eliminating this tax is a no-brainer in my opinion.

However, after taking a closer at the subject, it is probably unrealistic to assume that the state can maintain current spending and eliminate the personal income tax at the same time. The state is just too heavily dependent on that as a source of revenue. Offsetting it by an increase to the state sales tax would prove to be overly regressive, even for my taste, lol.

[FrankMiller]

It seems a little disingenuous to suggest simultaneously that the corporate tax is an insignificant amount of revenue and that eliminating it would be a substantial boon to corporate competitiveness. Do we have so few corporations in the state that these could both be true at the same time?

In any case, I still think that luring corporations here with tax cuts is an uphill battle that is not worth winning.

[1grin_g0]

1% of a $26 billion state budget is immaterial. 6.25% of a corporation's net income is not. What is the cost of collecting the tax? What is the cost of reporting income and preparing the required forms? What would a corporation do with the extra 6.25%? Would it go towards expanding the business? Would expanding the business create jobs? Would jobs create more revenue for the state?

Of course Missouri could just leave it at 6.25% and watch revenue from the tax continue to decline. Or maybe you want to jack it up higher to make up for declining revenues and gamble that corporations will stay? Is that what you suggest?

[FrankMiller]

I think if you're going to use tax policy to grow the economy, targeted tax credits work better than blanket tax cuts. If you think most of the corporate tax cut wouldn't just benefit companies that are here anyway, then you're expecting hundreds of corporations to move here; that strikes me as absurd. I also doubt companies would reinvest tax credits in the business; generally speaking, corporations aren't likely to be cash-constrained. If they thought expanding their business would be profitable, they'd do it without the cut, except in the thin zone where the tax cut happened to tip a project from barely unprofitable to barely profitable.

Keep in mind that the personal income tax is, what, 6%? So a company would have to take their savings from the corp tax and invest sixteen times that amount into payroll in order for Missouri to break even. Maybe you make up some of the rest by reducing welfare rolls slightly, but you've got a long way to go before you can assume a positive budget impact.

[1grin_g0]

Originally Posted by FrankMiller

I think if you're going to use tax policy to grow the economy, targeted tax credits work better than blanket tax cuts. If you think most of the corporate tax cut wouldn't just benefit companies that are here anyway, then you're expecting hundreds of corporations to move here; that strikes me as absurd. I also doubt companies would reinvest tax credits in the business; generally speaking, corporations aren't likely to be cash-constrained. If they thought expanding their business would be profitable, they'd do it without the cut, except in the thin zone where the tax cut happened to tip a project from barely unprofitable to barely profitable.

Keep in mind that the personal income tax is, what, 6%? So a company would have to take their savings from the corp tax and invest sixteen times that amount into payroll in order for Missouri to break even. Maybe you make up some of the rest by reducing welfare rolls slightly, but you've got a long way to go before you can assume a positive budget impact.

Relative to total assets, cash and cash equivalents don't amount to much. In fact, excessive levels of cash are a sign of poor financial management. Why would you want to keep more cash on hand than necessary when inflation is chipping away at it? Corporations are always looking to convert that cash in to an asset that will produce a desirable rate of return.

You are absolutely correct about the 16X, assuming of course that their employees will camp out in Forest Park, scavenge for food in back alleys, hunt squirrels and other small game, make their own clothes, own no taxable property, and save all of their after-tax wages . You know, normal people stuff. If you are going to conduct a break even analysis, then you should at least attempt to get both sides of the equation correct.

Also, you are assuming no job growth on my side of the equation, and yet assuming that your side manages to not lose jobs, even though there is evidence that supports the contrary.

[FrankMiller]

Cash constrained isn't just a lack of cash on hand, but also an inability to raise cash.

The macroeconomic multiplier for economic stimulus is usually, what, 1.5-3x? I'm not saying that there's absolutely no growth to be had from tax cuts, but you've a long row to hoe if you want to break even on a state-revenue basis and avoid even further spending cuts. Do the math to prove me wrong, if you want to.

I'm assuming no meaningful change in jobs because I don't expect tax changes to meaningfully impact jobs. I don't recall any strong evidence for tax cuts creating jobs that didn't also come alongside, say, an oil boom or something. The best cases are when taxes are at something like 70%, rather than 6%.

[1grin_g0]

Originally Posted by FrankMiller

Cash constrained isn't just a lack of cash on hand, but also an inability to raise cash.

The macroeconomic multiplier for economic stimulus is usually, what, 1.5-3x? I'm not saying that there's absolutely no growth to be had from tax cuts, but you've a long row to hoe if you want to break even on a state-revenue basis and avoid even further spending cuts. Do the math to prove me wrong, if you want to.

I'm assuming no meaningful change in jobs because I don't expect tax changes to meaningfully impact jobs. I don't recall any strong evidence for tax cuts creating jobs that didn't also come alongside, say, an oil boom or something. The best cases are when taxes are at something like 70%, rather than 6%.

Well, I think if you begin the analysis by looking at the break even point from the state's perspective then you are putting the cart before the horse. That approach is flawed and it explains why Missouri is seeing a decline in revenues from the corporate tax. In my opinion, you have to first consider what the break even point is for businesses, if the goal is to keep companies and perhaps attract new ones. Considering that Missouri's primary source of internally generated revenue is from the personal income tax, the state would be wise to focus on job growth. From a business's perspective, taxes are essentially added costs. If you want to compete globally, then you are forced to find ways to lower costs.