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how is a failing company going to increase revenues?
Well, they look for ways to do it, obviously real world business isn't that easy. Though, we can illustrate the point with a simple supply and demand exercise.
A business generates $1,000 in revenue by selling 100 widgets for $10 each. They think that they can cut the price to $7 each and sell 150 widgets, a net increase in revenue so they try it. Unfortunately it doesn't work and they still only sell 100 widgets, but now only generate $700 in revenue. They misjudged the demand curve for their product. Would it not be logical then to raise the price back to $10 and attempt to recapture the revenue since we have a case of apparently static demand, or should we lay people off?
Taxes for a government work much like supply and demand curves in economics. The concept is known as the Laffer Curve and it basically illustrates that there is a point where governments can place their tax rates to generate the greatest amount of revenue. At any point lower on the scale, they are foregoing revenue. At any point higher, they are hurting productivity because people simply won't work just to pay taxes. As much as we Americans like to **** and moan about taxes, we are nowhere near the equillibrium point on the Laffer Curve. The Laffer Curve also applies to business in determining pricing.
Conceptual theories aside there is real proof that taxes are too low. Heck, I posted the graph that proves it.
When Bush instituted his tax cuts it was based on 10 year revenue projections that showed the government taking in excess revenues. This assumed many things such as stable spending and consistent economic growth. This is where Clinton got his surplus from as well. It wasn't an instant year surplus, it was a projected future surplus. Bush gave that money back.
The problem was that all of the constructs that went into determining that there was a surplus to give back essentially blew up. With two wars and an economic disaster those projections that showed we could afford a tax cut would actually show us still in the red today, just not as bad if we didn't mess with the tax rates.
Since our tax rates are at historical lows, why would we not consider raising taxes back to at least what they were a scant 10 years ago instead of instantly saying that we need to cut to balance to this new lower revenue? This is like our fictional company laying off employees instead of rasing prices to make up for a revenue shortfall they created.
you havent heard democrats go after them. i believe the ryan budget was passed by the house and it does address those things. i dont think he was aggressive enough (democrats said it was draconian). but you can expect it to be addressed come 2013, not earlier. probably not so much in the elections since its a dangerous issue to take a position on.
David Brooks figured out that his budget doesn't require baby boomers to give up anything. Generation X pays for the baby boomers defined benefit plan as well as their own defined contribution plan.
One of the recurring themes from many folks--particularly those of a right-wing bent--is that our government "should be run like a business".
The notion that government "should be run like a business" is an obvious fallacy. Functions that are better performed by the private sector should be turned over to the private sector.
Where there are functions that the private sector are perform, it is because they don't lend themselves to a payment for delivery of goods and services model, and therefore the government cannot use the metrics available to a business to decide whether or not the program is cost effective.
For example, how much profit does the food stamps program make ? For those who don't believe in food stamps, how much profit did the department of defense, department of homeland security, and the CIA make last year ?
It's a trick question of course. There is no price discovery on either the value of services provided or for the most part, the cost of providing them. So you can't run "government like a business" because you can't measure the results the way a business can measure their results.
i would say 0% for corporate income. tax the money when it goes to people.
Hmmm...I suppose that we should actually open up the US Treasury, and just pay out the remaining monies to the corporations that you seem to favor so much.
Oh--wait--we are already doing that!
As but one example, in 2010, General Electric booked $10.3 Billion in pre-tax income. Their tax "liability" was....a refund of $1.1 Billion from the US Treasury. So, you and all other individual taxpayers are already subsidizing GE and other corporates that are actually sucking money out of the US Treasury.
Should we open up the faucets even further, in view of the number of jobs (almost none) that GE and other corporates are providing in exchange for this largesse from the US government? Yup, let's just drain the US Treasury and put the onus for taxation on the people.
And, just in case you think that I am some kind of radical, or wild-eyed hippie, or revolutionary, in reality, I am a fiscally conservative, socially moderate retired person who holds over $500,000 in shares of Fortune 500 companies, and who derives a significant portion of his income from those investments. However, my morals dictate that a reduction in that income would be a decent trade-off for corporations actually shouldering the burden of taxation that they should be paying.
Just like multi-millionaires, huge corporations have been getting away with too much for too long, to the detriment of the average taxpayer. Forbes magazine (which is hardly a bastion of liberal thinking or radical ideas) even detailed the disgraceful disparity in tax liability between the GEs and Chevrons of the world (both of which I hold stock in) and the individual taxpayer.
Hmmm...I suppose that we should actually open up the US Treasury, and just pay out the remaining monies to the corporations that you seem to favor so much.
Oh--wait--we are already doing that!
As but one example, in 2010, General Electric booked $10.3 Billion in pre-tax income. Their tax "liability" was....a refund of $1.1 Billion from the US Treasury. So, you and all other individual taxpayers are already subsidizing GE and other corporates that are actually sucking money out of the US Treasury.
That's one example but it paints a misleading picture.
The corporate tax rate is quite high (30%), but it is riddled with loopholes. 30% is very high compared to other countries. The end result is that companies that don't spend resources on exploiting loopholes are at a serious disadvantage. This is the problem with systems that are riddled with special favors -- resources get diverted towards exploiting the favors.
So what they should do is reduce the rate and broaden the base.
i would say 0% for corporate income. tax the money when it goes to people.
democrats were forced to compromise with themselves, not republicans.
well, i don't know. if you don't tax the companies, then you further reduce revenue. companies paid somewhere around 50% of federal revenues going back to the early 70s. now they pay around 20% i believe. so now, move it to 0%?
and the democrats absolutely compromised with republicans. you don't see it that way, because even "center" is liberal to you, but it's the truth. democrats sent there in 2008 have done little even remotely close to what they were voted in to do.
Hmmm...I suppose that we should actually open up the US Treasury, and just pay out the remaining monies to the corporations that you seem to favor so much.
Oh--wait--we are already doing that!
As but one example, in 2010, General Electric booked $10.3 Billion in pre-tax income. Their tax "liability" was....a refund of $1.1 Billion from the US Treasury. So, you and all other individual taxpayers are already subsidizing GE and other corporates that are actually sucking money out of the US Treasury.
Should we open up the faucets even further, in view of the number of jobs (almost none) that GE and other corporates are providing in exchange for this largesse from the US government? Yup, let's just drain the US Treasury and put the onus for taxation on the people.
And, just in case you think that I am some kind of radical, or wild-eyed hippie, or revolutionary, in reality, I am a fiscally conservative, socially moderate retired person who holds over $500,000 in shares of Fortune 500 companies, and who derives a significant portion of his income from those investments. However, my morals dictate that a reduction in that income would be a decent trade-off for corporations actually shouldering the burden of taxation that they should be paying.
Just like multi-millionaires, huge corporations have been getting away with too much for too long, to the detriment of the average taxpayer. Forbes magazine (which is hardly a bastion of liberal thinking or radical ideas) even detailed the disgraceful disparity in tax liability between the GEs and Chevrons of the world (both of which I hold stock in) and the individual taxpayer.
Why do you want to subsidize corporations that are not hiring, despite years of VERY favorable tax treatment?
in all fairness to GE, you have to recognize that they aren't just exploiting odd tax laws. They get rebates for investment in renewable energy, which GE invests heavily in. I get the point you're making, but people keep using GE as an example, and I think it's a poor example.
well, i don't know. if you don't tax the companies, then you further reduce revenue. companies paid somewhere around 50% of federal revenues going back to the early 70s. now they pay around 20% i believe. so now, move it to 0%?
and the democrats absolutely compromised with republicans. you don't see it that way, because even "center" is liberal to you, but it's the truth. democrats sent there in 2008 have done little even remotely close to what they were voted in to do.
i think you are hitting companies with lots of taxes when they purchase things and tons of fees. the only tax loss would be the income tax. that money would have to either be invested in the business or paid out to shareholders. if its paid out to shareholders, its taxed. if its invested in the business, it creates more economic activity. businesses should be engines for economic growth which leads to more jobs and hopefully more jobs staying in america. giving more tax dollars to government doesnt really have an economic benefit when you need things to get better. the more money government has and the more it grows, the less we can grow because they have to take from the private sector. thats why everyone becomes equally poor as you go further into socialism.
if you just want to balance the budget you end up cutting tons of jobs but not creating any improvement in their ability to get jobs in the private sector. sure, welfare benefits are cheaper than government jobs but id rather move them into real private sector jobs. so action needs to be taken to help business. right now, businesses are being hit with all these additional fees in a time where revenues are down. its hurting them and ultimately they are the ones who need to drive a recovery, not government.
i think you are hitting companies with lots of taxes when they purchase things and tons of fees. the only tax loss would be the income tax. that money would have to either be invested in the business or paid out to shareholders. if its paid out to shareholders, its taxed. if its invested in the business, it creates more economic activity. businesses should be engines for economic growth which leads to more jobs and hopefully more jobs staying in america. giving more tax dollars to government doesnt really have an economic benefit when you need things to get better. the more money government has and the more it grows, the less we can grow because they have to take from the private sector. thats why everyone becomes equally poor as you go further into socialism.
if you just want to balance the budget you end up cutting tons of jobs but not creating any improvement in their ability to get jobs in the private sector. sure, welfare benefits are cheaper than government jobs but id rather move them into real private sector jobs. so action needs to be taken to help business. right now, businesses are being hit with all these additional fees in a time where revenues are down. its hurting them and ultimately they are the ones who need to drive a recovery, not government.
What do you mean businesses are being hit with tons of taxes when they purchase things and tons of fees? What exactly are you talking about?
I don't disagree with you on principle, businesses are the engines of the economy and will drive the recovery. However, the government is the regulator that establishes the "rules of the game" that businesses play by. Right now businesses are hoarding cash and not investing because the rules are in flux and no one knows where things are headed. The government needs to create a stable situation to allow businesses to begin investing.
On the tax front, the government needs to use taxation and penalties to promote behavior from businesses that is positive to the United States. You can never expect a business to do anything but maximize profits for their shareholders, that's their job. However, that doesn't mean that's a positive thing for the country as a whole.
We need to overhaul the entire tax code, but especially that for businesses. For instance, why not close the loopholes and lower the overall tax rate while offering incentives to lower the liability. Something like x% off for every dollar invested in the US or $x back for every fulltime worker hired in the US.
What do you mean businesses are being hit with tons of taxes when they purchase things and tons of fees? What exactly are you talking about?
I don't disagree with you on principle, businesses are the engines of the economy and will drive the recovery. However, the government is the regulator that establishes the "rules of the game" that businesses play by. Right now businesses are hoarding cash and not investing because the rules are in flux and no one knows where things are headed. The government needs to create a stable situation to allow businesses to begin investing.
On the tax front, the government needs to use taxation and penalties to promote behavior from businesses that is positive to the United States. You can never expect a business to do anything but maximize profits for their shareholders, that's their job. However, that doesn't mean that's a positive thing for the country as a whole.
We need to overhaul the entire tax code, but especially that for businesses. For instance, why not close the loopholes and lower the overall tax rate while offering incentives to lower the liability. Something like x% off for every dollar invested in the US or $x back for every fulltime worker hired in the US.
i agree with everything you said here (while not advocating the incentive idea, but agreeing in principle with finding ways to encourage investment in usa rather than abroad). "wall street" and business in general is a profit seeking animal that needs proper regulation that allows it to grow but also deters "bad behavior."
when i say they are hit by tons of taxes and fees, im referring to sales taxes when they buy products, payroll taxes when they pay employees, fees for things like unemployment insurance plus a special assessment we are currently being hit with, we are often hit by random assessments and now more than ever because of the government's spending, many businesses pay high energy bills and are taxed on that, etc. etc. some of it is the same stuff as everyone else and some are special for businesses, but they are contributing to government revenues in many ways, and the better they do the more revenue they can contribute.
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