Hi, I have some Economics 101 questions - please help, thanks (tax, money)

[NJBest]

Another problem with the current economy that I personally push is that people have gotten complacent taking up a job. In the 40s-70s people used to work for a business for 5 to 10 years, learn the know-how, and then open up their own business. Now we have people who stay at companies taking up jobs rather than creating them. This leads to less job creation and a handful of large corporations rather than several small competing businesses.

[Kenneth-Kaunda]

My tax question referred to income bands.

So up to what kind of annual salary do you pay 0% tax?

and isn't a bigger company better and more efficient anyway?

[NJBest]

Same answer. There are people in all levels of income that pay no taxes due to tax deductions. This includes the poor, middle and upper classes.

If you have a few larger companies controlling the market, there's less innovation and competition. There's no incentive for them to innovate if they control the market and they have control over pricing which hurts consumers. If you have several smaller companies, they're always fighting to have the best product, the best prices, and best customer service.

Industries to research: Pharma, Computer, Telecommunications, Wireless, Software, Coffee shops, softdrinks.

There's been paradigm shifts (multiple) in how these industries worked over the past 50 years.

[Trackwatch]

Originally Posted by Kenneth-Kaunda

My tax question referred to income bands.

So up to what kind of annual salary do you pay 0% tax?

Depends on your dependents, the charts are available online.

These figures are after any deductions http://www.irs.gov/pub/irs-pdf/i1040tt.pdf

http://www.irs.gov/publications/p17/ch20.html

[Kenneth-Kaunda]

ok thanks.

onto the next question:

4. Does opening a new, small business actually create wealth?

Let's say I decide to open a sandwich shop and employ 10 people at $10/hour (a nice sum to work with).

How does this actually generate wealth, and isn't it just redistribution of wealth that is occurring here?

[le roi]

Originally Posted by Kenneth-Kaunda

ok thanks.

onto the next question:

4. Does opening a new, small business actually create wealth?

Let's say I decide to open a sandwich shop and employ 10 people at $10/hour (a nice sum to work with).

How does this actually generate wealth, and isn't it just redistribution of wealth that is occurring here?

Wealth is created when resources are reallocated to a more optimal use.

So with an omniscient government that always puts resources to their optimal use, centrally planned economies make sense.

[MrRational]

Originally Posted by NJBest

In the 40s-70s people used to work for a business for 5 to 10 years, learn the know-how, and then open up their own business.

You have that backwards. The people who did this sort of thing then were the very rare exception.

It wasn't until the entrepreneur era of the 80's with the lack of job security, the loss of pensions
and reliable (often union backed) salary and other benefits that such thinking changed.
In a sense... the thinking was forced to be changed.

Through the 70's most people had solid pensions and job security that their depression
weaned brains were more than happy to be appreciative of and stick with into retirement.
---

I suspect that this next generation will remember these years and look for exactly the sort of
security their grandfathers once had... and see it ultimately as a far more stable economic model
than the serial shifting of the sand their fathers spent their working lives enduring.

Of course to achieve that will probably require the sort of labor actions that their great-grandfathers engaged in to achieve the wage and hour laws (among so many other benefits) so many now find themselves up against when attempting to find ANY work... being coerced into "salary" jobs with
required and uncompensated OT being a prime exmple.

Maybe they'll eventually grow the collective pair needed to make it happen.

[Willy702]

Originally Posted by Kenneth-Kaunda

thanks for the long reply

so is there a way around this problem?

ie: tax too much and businesses lose out, tax too little govt. loses out.

what is the answer?

Here is where our brand of democracy can get us into trouble. When you tell elected officials then can and should micromanage every government decision we have a mess. The mess is created by lobbying and influence peddling. The ideal government for today's society would be one where we respected that we are a republic and a republic is supposed to be where you elect someone to speak on your behalf on major decisions. But when you allow those people to meddle in things like tax breaks of all kinds and regulations regarding how govt money is spent you really cant make tax rates and targeted breaks or subsidies work efficiently. They will just go to those with the most influential voice. When people say theu think government is inefficient they should be pointing at this very situation, but instead they just take the easy route and say government is always wasteful and can never do good, which as a blanket statement is not correct.

[Momma_bear]

Originally Posted by Kenneth-Kaunda

My tax question referred to income bands.

So up to what kind of annual salary do you pay 0% tax?

and isn't a bigger company better and more efficient anyway?

Most people who pay zero income taxes are poor people with low incomes.

[Kenneth-Kaunda]

that's what I thought.

so what is it with the line I keep hearing, that many people pay 0% income tax - even those on middle to high end earnings.

some kind of exception I imagine?