I imagine meetings like this

[byu71]

are going on all over America.

A group has a great idea for a business venture. They don't have the money and banks just aren't loaning for a start up idea. They approach someone with money and he likes the idea. He arranges for a meeting with a group of people who have money, some of it sitting in the bank earning nothing, but it is safe and won't go down in value.

The presentation is made and there is a general consensus the idea is a good one. The enticement is that if it works, it could be a 50% a year income flow on the investment. Of course the downside is within six months investors could lose all their money.

You know what could end up being the deal killer, which in this case could represent the employment of about 40 people. The deal killer could be the rise in income taxes.

Recovery of investment goes from 3 years to 4 years. You just increased the risk.

I guess you could go to people whose taxes aren't going up and approach them. Instead of 4 investors putting up $250,000 each, you could try and find 100 investors putting up $10,000 each.

I just don't understand how people can't see how over taxing the "rich" doesn't hurt the economy.

[Goatnapper'96]

I just don't understand how people can't see how over taxing the "rich" doesn't hurt the economy.

I don't think they really care whether or not it hurts the economy. They can't say that and they need their various "think tanks" to generate propaganda that it doesn't, but it is my opinion that in their hearts it is an issue of "fairness" in that the lower classes are benefitted more by government entitlements than free market low level jobs.

I recall the President saying so much in a debate. Well he didn't articulate what he meant by "fairness" but he attributed raising the capital gains tax to the issue of "fairness."

It is an ideology of re-distribution is the right way to go because it lifts the lower classes more than leaving them in the hands of filthy capitalists who will pay them the lowest amount they can.

So I really think the economic argument is pointless as both sides are talking past each other as they have no common ground. The argument you need to make is that lower level jobs create more wealth for the lower classes than government entitlements. That is the crux of their debate, creating jobs is just not good enough, the jobs must compensate better than the government imagines it can.

[byu71]

I don't think they really care whether or not it hurts the economy. They can't say that and they need their various "think tanks" to generate propaganda that it doesn't, but it is my opinion that in their hearts it is an issue of "fairness" in that the lower classes are benefitted more by government entitlements than free market low level jobs.

I recall the President saying so much in a debate. Well he didn't articulate what he meant by "fairness" but he attributed raising the capital gains tax to the issue of "fairness."

It is an ideology of re-distribution is the right way to go because it lifts the lower classes more than leaving them in the hands of filthy capitalists who will pay them the lowest amount they can.

So I really think the economic argument is pointless as both sides are talking past each other as they have no common ground. The argument you need to make is that lower level jobs create more wealth for the lower classes than government entitlements. That is the crux of their debate, creating jobs is just not good enough, the jobs must compensate better than the government imagines it can.

I am not a fan of filthy capitalists myself. They are just preferrable to filthy politicians, IMHO.

The argument that needs to be made is at some point you run out of money for the entitlments unless you actually start confiscating wealth in addition to income.

I think one could argue that raising taxes on the rich might in a few years result in the rich paying less in absolute taxes.

Let's say a rich guy takes a chance and earns 50,000 a year on an investment. Taxed at 40%, he pays $20,000. At 50%, he decides not to take that risk and earns 10,000 a year on his investment. He pays $5,000 in taxes.

You can say, that's bull, if the guy can earn $50,000, even if he pays more in taxes he still will go for that investment instead of one earning $10,000.

Problem is you aren't understanding the though process of a very, very rich person. They don't even need the $10,000. They have plenty to live on.

I know of people who are sitting on 30% of their investment dollars in cash earning nothing. Offer them 2% in a 10 year treasury and they say no thanks. After tax I am getting next to nothing anyway.

Maybe the 50% tax rate isn't the rate that will dissaude the rich people enough. However, there will be a rate that will. At some point even the rich won't have enough money to cover all the entitlements.

[Goatnapper'96]

The argument that needs to be made is at some point you run out of money for the entitlments unless you actually start confiscating wealth in addition to income.

You better watch it before somebody thinks up a death tax or something!

[Moliere]

Most liberals and even some conservatives don't understand how taxes are used in business decisions. Many politicians think that companies must only look at pre-tax profits when determine profitability of projects, which is assinine.

Taxes are a cash outflow just like operating expenses. All cash flows are treated the same under either NPV, FCF, or IRR calculations. If you increase taxes you impact these metrics or whatever metrics a company uses to determine return on projects. The lower the return, the less likely a business will spend money on the project. The less the number of projects, the less jobs that are available.

This is not an advocation for trickle-down economics, but simply a justification that at some point a graduated tax scale squeezes out any temptation for a company/person to invest (just like '71 stated).

[byu71]

You better watch it before somebody thinks up a death tax or something!

LOL, I have thought of a "OK, you got enough tax".

It works this way. I feel bad for the guy who is making $500,000 a year, but hasn't been able to build a net worth of any size yet. He is income rich, but he isn't really rich. You take another $50,000 a year away from him in taxes and you add a year or so to his ability to obtain a million in net worth.

So not to punish these folks, here is my idea.

At $10,000,000 net worth, "you got enough". Once you hit that mark in net worth, your taxes go up to 80%. Now we are really talking about soaking it to the rich. You might have got to $10,000,000 net worth legitimately, but anyone over $10,000,000 in net worth had to have screwed tons of people to get there. We will just be getting it back.

[byu71]

Most liberals and even some conservatives don't understand how taxes are used in business decisions. Many politicians think that companies must only look at pre-tax profits when determine profitability of projects, which is assinine.

Taxes are a cash outflow just like operating expenses. All cash flows are treated the same under either NPV, FCF, or IRR calculations. If you increase taxes you impact these metrics or whatever metrics a company uses to determine return on projects. The lower the return, the less likely a business will spend money on the project. The less the number of projects, the less jobs that are available.

This is not an advocation for trickle-down economics, but simply a justification that at some point a graduated tax scale squeezes out any temptation for a company/person to invest (just like '71 stated).

As I walked away from this meeting, I was there as a consultant not investor since I don't have that kind of money, I had a smile on my face.

People weren't talking about getting some advice from marketing people, industry people, et. al. They were talking about getting in touch with their tax people to see if there was any way to structure things to avoid or lessen the tax hit. What the tax guys come back with might be more influential than the business plan.

One other thing. One could say, well if the guy loses his $250,000 he can just write it off against his income and so the government takes a 50% hit. Yea, but unless he has huge capital gains in other area's, his write off is $3,000 a year. Whoopee tee do.

[statman]

The lower the return, the less likely a business will spend money on the project. The less the number of projects, the less jobs that are available.

As a risk guy, I can't let you omit "...with a given level of risk..."

[statman]

This is not an advocation for trickle-down economics, but simply a justification that at some point a graduated tax scale squeezes out any temptation for a company/person to invest (just like '71 stated).

It's also a reason why people NEED to be able to anticipate what their tax burden is going to be. How ridiculous is it that we're three months away from a significant tax increase that may or may not happen?

And we're facing a string of new Obamacare restrictions/taxes on business - the asinine $600 W2 requirement (that would include the gas station where you fill up for business travel, and for office supplies at Office Max!) Lunacy!

Businesses - especially small businesses - are facing HUGE uncertainty right now. What other regulations are coming down the line? Cap-and-trade will be in economy killer if it happens. What other provisions are there within Obamacare that we had to pass first in order to discover?

How is a small business affected by the new consumer protection nightmare in the Fed? I know that under it's rules, ANY BUSINESS that lends to consumers (and that would include anyone with an AR department that doesn't deal exclusively with other businesses - doctors, lawyers, dentists, plus small mom & pop retailers like carpet stores, furniture stores, etc.) If you let people pay over time for a good or service you provide, you've now got to comply. That means disclosure forms need to be given to all customers and need to be retained. Records must be kept. Bureaucracy must be served. It will potentially be a deal breaker for many businesses.

It's the uncertainty of all this recklessly-thrown-together, progressive gobbledygook that is causing the lack of investments and the lack of jobs returning to the stabilizing economy...

[il Padrino Ute]

My biggest issue with the farcical "fairness" that liberals talk about in wanting the rich to pay higher taxes is that it is absolute nonsense. When half of the folks in this country are paying zero income taxes, how is it possible that anyone else isn't paying their fair share?

[mUUser]

I don't think they really care whether or not it hurts the economy. They can't say that and they need their various "think tanks" to generate propaganda that it doesn't, but it is my opinion that in their hearts it is an issue of "fairness" in that the lower classes are benefitted more by government entitlements than free market low level jobs.

I recall the President saying so much in a debate. Well he didn't articulate what he meant by "fairness" but he attributed raising the capital gains tax to the issue of "fairness."

It is an ideology of re-distribution is the right way to go because it lifts the lower classes more than leaving them in the hands of filthy capitalists who will pay them the lowest amount they can.

So I really think the economic argument is pointless as both sides are talking past each other as they have no common ground. The argument you need to make is that lower level jobs create more wealth for the lower classes than government entitlements. That is the crux of their debate, creating jobs is just not good enough, the jobs must compensate better than the government imagines it can.

The Philadelphia debate. The day, and moment, I decided I wouldn't be voting for him.

[Portland Ute]

LOL, I have thought of a "OK, you got enough tax".

It works this way. I feel bad for the guy who is making $500,000 a year, but hasn't been able to build a net worth of any size yet. He is income rich, but he isn't really rich. You take another $50,000 a year away from him in taxes and you add a year or so to his ability to obtain a million in net worth.

So not to punish these folks, here is my idea.

At $10,000,000 net worth, "you got enough". Once you hit that mark in net worth, your taxes go up to 80%. Now we are really talking about soaking it to the rich. You might have got to $10,000,000 net worth legitimately, but anyone over $10,000,000 in net worth had to have screwed tons of people to get there. We will just be getting it back.

If a person has a 10million net worth, they have screwed tons of people to get there?

[Portland Ute]

It's also a reason why people NEED to be able to anticipate what their tax burden is going to be. How ridiculous is it that we're three months away from a significant tax increase that may or may not happen?

And we're facing a string of new Obamacare restrictions/taxes on business - the asinine $600 W2 requirement (that would include the gas station where you fill up for business travel, and for office supplies at Office Max!) Lunacy!

Businesses - especially small businesses - are facing HUGE uncertainty right now. What other regulations are coming down the line? Cap-and-trade will be in economy killer if it happens. What other provisions are there within Obamacare that we had to pass first in order to discover?

How is a small business affected by the new consumer protection nightmare in the Fed? I know that under it's rules, ANY BUSINESS that lends to consumers (and that would include anyone with an AR department that doesn't deal exclusively with other businesses - doctors, lawyers, dentists, plus small mom & pop retailers like carpet stores, furniture stores, etc.) If you let people pay over time for a good or service you provide, you've now got to comply. That means disclosure forms need to be given to all customers and need to be retained. Records must be kept. Bureaucracy must be served. It will potentially be a deal breaker for many businesses.

It's the uncertainty of all this recklessly-thrown-together, progressive gobbledygook that is causing the lack of investments and the lack of jobs returning to the stabilizing economy...

As a small business owner in the healthcare industry, you are depressing me heading into the weekend.

I sure hope USU wins their game tonight. That might cheer me up until Monday.

Thanks, statman.

[il Padrino Ute]

At $10,000,000 net worth, "you got enough". Once you hit that mark in net worth, your taxes go up to 80%. Now we are really talking about soaking it to the rich. You might have got to $10,000,000 net worth legitimately, but anyone over $10,000,000 in net worth had to have screwed tons of people to get there. We will just be getting it back.

Isn't this Obama's belief as well? That at some point, you've made enough money?

[RobinFinderson]

How big of a deal is taxes to a startup? Don't most new businesses operate at a significant loss for few years while they set down roots? During the lean years, aren't many of the workers putting in a lot of sweat equity and accepting stock options and such in lieu of big dollars? Doesn't this all mean that there is virtually no tax burden until the business is profitable, and even then, it will be able to deduct previous operating losses against future years of profit?

I'm not a business guy myself, but I'd love to hear a business guy explain where this is all wrong.