Wednesday, November 07, 2012

What I Don't Understand Part 2

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What I don't understand is why so many otherwise intelligent American citizens don't get a simple concept: 

People who earn over $250,000 a year are the business owners; the ones that create the jobs. If taxes are raised on these business owners/job creators, they will not continue to offer their goods and services at the same prices. They will not accept losses in their bottom line, no matter how patriotic they are! And, that bottom line is profit

There are only two ways a business can recoup the loss of profit due to higher taxes

1. They will raise the prices on their goods and services. They will have to to keep their profit margin at the same levels as before the higher taxes were levied upon them. 

Do you think they will give themselves a cut in pay? Dream on, little Liberal. 

And, when they raise the prices on their goods and services, the consumer will not buy those goods or services as readily as they would have if the prices were still low, thus, making it necessary for the business owner to raise the prices yet again to compensate for the loss of sales. This cycle  will continue on and on and on until the business goes bankrupt and/or out of business, or, 

2. The business owner will begin to lay off employees because he can no longer afford to pay them. If that happens, there are less people employed and, consequently,  less people who can afford the higher prices started because the business owner had to pay ever increasing higher taxes. This will undoubtedly happen to enough business owners that it will have a lasting impact on each and everyone of us, the taxpaying public.

In the end, due to ever increasing taxes, higher and higher prices on goods and services, and more people on the unemployment rolls, the Government is all that is left to provide for the people. 

Now, here's a question for all you big Government loving Liberals:

How does the Government provide for the ever increasing number of newly unemployed and newly impoverished citizens? Where do they get the funds? 

Naturally, by increasing taxes on the rich again, which merely exacerbates the problem the Government was trying to solve in the first place.

Then, what do we have? Government trying to stretch all the revenue generated by less and less taxes collected from the few businesses fortunate enough to still be in business despite such a heavy burden of taxes and redistributed to take care of the hundreds of thousands, possibly millions, that the Government itself put out of work. 

It will mean breadlines every bit as long as those that afflicted the Soviet Union in the mid 20th century.

Do you understand, Liberals? If you do, will you be so anxious to vote for a tax and spend Liberal again?

Sadly, I still don't think you get it yet. 

That's what I don't understand.

11 comments:

Jim said...

You simply have no effing idea what you are talking about.

A small business owner has a profit and loss statement based on sales revenues, salaries, administrative costs, costs of goods sold, sales costs, etc. Notice what's not in there?

Taxes. A small business owner's taxable income does not even start until after he has paid the salaries and expenses of all his employees whether there are three or thirty employees. The amount of taxes he pays has nothing to do with whether or not he can hire another employee (except that if he hires another employee without increasing revenues, his taxes will actually go down).

Under the current law, in 2013, a small business owner will do all his business for the year, making, selling, paying salaries and all and when he's done if he has a good year, he'll have a profit. And if he has a profit, he'll pay taxes on the profit (remember that's after paying as many employees as he needs to keep up with demand). If that profit is less than $250,000, nothing will change in his taxes. If he makes $250,100, he'll pay $4.60 more in taxes because the increase only applies to profits over $250,000.

Mark said...

Really, Jim? Well, I'm embarrassed! I said I don't understand it. I have long said I don't know economics, so I have no idea whether you are correct or not, but it sounds good.

Perhaps some Conservative economics expert can add something to the discussion should I ever get readers again.

Anyway, the taxes I (and Obama) am talking about are Federal taxes on income, not on profits. I was just working on the assumption that most people who make more than a quarter million a year probably own their own business. I'm sure that isn't always true. Obama said he would raise taxes on people who make 250 thousand or more. He didn't say those who's businesses make 250,000 profit, so, even if you are correct (and I have no reason to believe you aren't) raising taxes on anyone is not conducive to a happy citizen.

Thanks for your input.

Mark said...

Wait a minute. I missed my own point!

Is that the percentage that taxes on the wealthy will be raised? $4.60?

I always thought you Libs were all about fairness. Do you think it's fair that people who make over 250,000 have to pay 4.6% more on their income than someone making 249,000 a year?

Doesn't sound fair to me. Why do you hate wealthy people so much, Jim? Did a rich guy take your sucker when you were a baby?

Dan said...

You economics are sound Mark. No matter how you slice it, a dollar taken by the government is one taken from the citizen, and it will have the impact you're talking about. One need only look out his window to see it. Higher taxes a good economy does not make, but it does help someone get re elected if they are imposed on the minority of payers. I'm sure that extra four dollars and sixty cents will go a long way to closing that trillion plus dollar spending deficit.

Mark said...

Thanks Dan. I'm afraid I'm a little too ignorant to understand how my economics are sound given what Jim has said, but I appreciate the encouragement.

However, I do think I have a point about taxation of the wealthy being unfair.

Every time you hear Obama speak, it's all about "We want everyone to pay their fair share" Well, what's fair about forcing to pay more taxes than the guy on the other side of the tracks? Shouldn't we all pay the same percentage of our income?

And, anyway, if we all pay our "fair share", doesn't that apply to the people on welfare and food stamps that don't work for a living? It isn't fair that they can sit on their duffs and collect money for doing nothing while the rest of us have to work for our living. And then, the Government takes some of that and gives it to that guy? What's fair about that? I think those people should pay the same percentage of taxes as Jim does. And do away with ALL tax loopholes, and deductions, and tax shelters. Tax everyone the exact same percentage of their total assets, not just their income. We'll see if the wealthy Democrats woul be on board with that!

Ducky's here said...

Let's keep it simple Mark.

The tax rate on small business profits increases.

The small business owner lays of workers so that he can make less and lose business to his competitors.

There, does that help? You're welcome.

Jim said...

Anyway, the taxes I (and Obama) am talking about are Federal taxes on income, not on profits.

For most all small businessmen, their income is their profits. No company pays taxes on its revenue. They pay taxes on their profits: revenue minus expense. That's profit and for a small businessman, that is his income.

Obama said he would raise taxes on people who make 250 thousand or more.

Again, a small businessman's income IS his profit from his business.

Do you think it's fair that people who make over 250,000 have to pay 4.6% more on their income than someone making 249,000 a year?

Pay close attention, this is important. A person who makes more than $250,000 ONLY pays 4.6% more on the amount OVER $250,000. So both are paying the same for the first $250,000 (or $249,000 in your example).

Today, under today's tax rates, a person who makes more that $250,000 pays more on the amount over $250,000 than the person who makes $249,000. We have a progressive tax system where we have multiple tax "brackets". Obama only proposes that the higher tax rate on higher earners will increase by 4.6% and again only for the dollars OVER $250,000.

Why do you hate wealthy people so much, Jim?

I'm already in a higher tax bracket than the majority of Americans. I don't have any problem with that. I don't hate rich people.

Dan is only right in that a dollar "taken" is a dollar taken. Otherwise, he also doesn't know what the eff he's talking about.

Jim said...

Here is how I look at the progressive tax system and whether it is "fair".

If a family earns $80,000 and they get taxed 25%, they have $60,000 to live off of and save.

If a family earns $800,000 and they get taxed 25%, they have $600,000 to live off of and save. But if they are taxed at 30%, they have $560,000 to live off of and save. Clearly it is much lower impact on this family to pay 5% more and have $40,000 less net than for the first family to pay 5% more.

That is the nature of a progressive tax system. I think it is quite fair.

Parklife said...

"For most all small businessmen, their income is their profits. No company pays taxes on its revenue. They pay taxes on their profits: revenue minus expense. That's profit and for a small businessman, that is his income."

Jim, thank you for writing this. Ive seen many comments by conservatives that dont understand income vs. profit. It seems basic, but I guess thats the level we are dealing at.

Joe said...

Jim: "I think it is quite fair."

I think it is quite unfair to steal something someone earned just because he was willing to do what needed to be done legally to earn it.

You, however, favor stealing.

Jim said...

I favor taxation. I do not favor stealing.

"Stealing" is a word for something else, not for taxation. Taxation is the way societies have provided for themselves for millenia.

Time to learn to deal with it, Joe.