While nobody likes taxes and most people agree we have a terrible system something needs to be done to raise revenue. We can not allow people to make claims that raising taxes on the wealthy kill jobs without forcing them to supply some facts and examples of just how many jobs it kills. For instance explain how raising taxes on a professional athlete, pop star, or the CEO of a publicly traded company kill jobs. These people that have and make millions are not going to lay off people or change their spending habits because they take in a little less money next year.
The people that make that claim, with out substantiating it, like to fall back to the story of “Joe the Plumber.” Of course they do not even explain how raising the small business owners taxes kills jobs. They just think if they say it often enough it comes true and they do not have to prove it. But for those of you who do not know how a small business works let me point something out. They are in business to make a profit, so they only hire people that are going to add to the profit of their company. If all the sudden you find you have pay another $5,000 in taxes how does laying off one of your plumbers help you? Let’s say the total compensation cost of that plumber is $60,000 but he produces $70,000 worth of revenue. (Remember if he was not producing more revenue than his salary you would not have hired him in the first place.) So how do you solve your $5,000 additional tax bill by loosing a $10,000 profit you earned off the back of your associate Plumber? The only way that makes sense if the owner is going to assume all that work himself (hard to believe since most small business owners already work 60 hour weeks) or he can pass the work on to his other plumbers, to whom he must pay overtime, eating into his profits. Anyway you look at it laying someone off does not help with his additional tax bill. Clearly the additional tax does affect how much he the owner will take home. So the real question is how much will this affect his spending habits? Remember he is making over $250,000 a year.
What really causes small and large business to lay people off is not having enough people to buy their products or services. The more people we can get back to work the more our economy can grow. Do not let people convince you that something is bad just because they say so. Don't let them convince you with simple one liners. Me good, taxes bad, Ugh! Ask the tough questions. Ask them to provide specific examples to back up their claims, and make sure they provide logical well thought out answers
If you are a true “Fiscal Conservative”, you should be more concerned with the government spending too much, not raising anybody’s taxes.
ReplyDeleteIf rich liberals like Warren Buffett think they don’t pay enough, they can always send the IRS more money instead of taking all of their tax write offs.
See article: Warren Buffett's Tax Dodge
http://online.wsj.com/article/SB10001424053111903918104576504650932556900.html
Taxes are a complex subject.
Since stories can make even the most complex ideas seem very simple, I would like to include one about taxes. (Long, but worth the read).
I believe the story was originally from a Professor of Economics at the University of Georgia by the name of David R. Kamerschen, Ph.D.
Suppose that, every day, 10 men go out for dinner and the total bill comes to $100. Suppose, too, that they decide to pay the bill the way we pay our taxes. This is what happens:
The first four men (the poorest) pay nothing.
The fifth pays $1.
The sixth pays $3.
The seventh pays $7.
The eighth pays $12.
The ninth pays $18.
The tenth man (the richest) pays $59.
The 10 men are happy with the arrangement. But then, one day, the owner of the restaurant throws them a curve. "Since you are all such good customers," he says, "I'm going to reduce the cost of your daily meal by $20." Dinner for the 10 now costs just $80.
The group still wants to pay their bill the way we pay our taxes, so the first four men are unaffected. They still eat for free. But what about the other six men - the paying customers? How do they divide the $20 windfall so that everyone gets his "fair share"?
They realize that $20 divided by six is $3.33. But if they subtract that amount from everybody's share, the fifth and sixth men would end up being paid to eat their meals.
So the restaurant owner suggests that it would be fair to reduce each man's bill by roughly the same amount - and he proceeds to work out how much each one should pay.
And so:
The fifth man, like the first four, now pays nothing (a 100% savings).
The sixth now pays $2 instead of $3 (a 33% savings).
The seventh now pays $5 instead of $7 (a 28% savings).
The eighth now pays $9 instead of $12 (a 25% savings).
The ninth now pays $14 instead of $18 (a 22% savings).
The tenth now pays $49 instead of $59 (a 16% savings).
All six of these men are now better off than they were before. And the other four continue to eat for free.
But once outside the restaurant, the men began to compare their savings.
"I only got a dollar out of the $20," declares the sixth man. He points to the tenth man, "But he got $10!"
"Yeah, that's right," exclaims the fifth man. "I only saved a dollar too. It's unfair that he got 10 times more than me. "
"That's true!" shouts the seventh man. "Why should he get $10 back when I get only $2? The wealthy get all the breaks!"
"Wait a minute!" the first four men yell in unison.
"We didn't get anything at all. This system exploits the poor!"
The nine men surround the tenth and beat him up.
The next night, the tenth man doesn't show up for dinner, so the nine sit down and eat without him. But when it comes time to pay the bill, they make a disturbing discovery. They don't have enough money between all of them to cover even half of the bill.
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may stop showing up. In fact, they might start eating overseas, where the atmosphere is somewhat friendlier.
Not Always PC
Not Always PC,
ReplyDeleteI do not think that this site is for you. This is for ppl that believe that a balanced budget is important, and not for those that think that cutting taxes is all that there is.