They're economic geniuses, really

[SSG Snuggle Bunny]

Yavin4  (1000+ posts)        Thu May-12-11 05:43 PM
Original message
Debunking the "Tax Cuts Create Jobs" Argument
 Let's say Corp. A made $300 million in profit, and on that profit, they paid 15% in taxes or $45 million.


Now, let's say that the corp. tax rate was eliminated entirely. So now Corp. A keeps all of their profit. What will Corp. A do with it's additional money:

There are many scenarios, let's look at a few:

1) Open up a new plant and hire more workers.

And?

2) Use their tax savings to merge with Corp. C, and thus make an even greater profit by eliminatin redundant workers.

Or expand operations and service areas

3) Further enhance their tax savings by maximizing profit with job cuts and layoffs.

Why the hell would they do that? Companies lay-off when profits are decreasing, not when they have the potential to reach more markets.

4) Further enhance their tax savings by maximizing profit by moving jobs offshore.

Why? If they can operate locally they will.

5) Pay out bigger dividends to shareholders.

Yeah! **** the people who fronted the money in the first place! And **** grandma and her dead husbnad's 401k!

6) Pay out bigger bonuses to management.

So tell Soros to stop supporting BowelMoveOn.org. and give the money to charity--and by charity I mean the IRS.

I could go on, but one look at that list tells you, that "creating more jobs" is only one possible option. In fact, the other non-job creating options are far better, more profitable choices.

The whole idea that tax cuts = higher job creation rates is nuts.

 

OK jeenyus...

...when has increased operating costs created jobs?

Explain how that even works.

mchill (158 posts)      Thu May-12-11 05:49 PM
Response to Original message
3. Doesn't only "Demand" neccessitate opening up a new factory
 and hiring new workers?

 

And what if the cost of production outstrips what the consumer can/will pay for it?

We have plenty of demand for petroleum and electricity so why hasn't production exploded?

DenverDad (203 posts)      Thu May-12-11 05:56 PM
Response to Reply #3
5. Exactly!
 I never heard ONE company say that they laid off workers or downsized because their taxes were too high.

 

Never heard of one?

How many dildos DO you have stuffed into your ears?

taught_me_patience  (1000+ posts)        Thu May-12-11 05:57 PM
Response to Reply #3
9. Tax cuts to consumers means discretionary spending increases
 thereby increasing demand.

And tax increases on business puts prices of the goods and services out of the consumer's range.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1091553#1091576

The next time you asshats are trying to sell your woven hemp macrame at a craft fair let some government flunky come in and jack the price by 45% and tell us how the sales figures turn out for you at the end of the day.

[USA4ME]

Unlike the simpleminded primtives, which would be each and everyone of them, I'm under no false pretense of why corporations exist.  Corporations are in business to make money.  If they hire people to work for them, that's a bonus.  If they make something that's good for society, or otherwise voluntarily contribute back to the community by way of charitable gifts, etc..., then that's a bonus.  But they don't exist to pay people money to work there, and they don't exist to do the bidding of the employees, the community, or society at large.

If corps payed no taxes, they would do what they normally do, which is take the additional income and pay higher dividends, or plow it back into the business to expand market share, or do any number of things to strenghten their position.  That's what they do if they want to continue to exist.  But if the hope was to debunk the notion that "Tax Cuts Create Jobs," then this whole exercise by the primitive is a gaint fail.  Lowering taxes certainly provides the corp with the opportunity to create new jobs, something even the primitive admits.  But taking the opposite viewpoint, that "Tax Increases Creates Jobs,".... well, I've never heard of a corp saying "We're paying more in taxes, so let's hire more people."  We can easily conclude that tax increases don't cause corporations to hire more people, so this primitive has painted themselves into a corner where, from their POV, neither tax increases nor decreases will be of any benefit when it comes to job creation.

Of course, this foolish primitive believes that by increasing tax revenues, the money derived can be used to create more public sector jobs, meaning employees are dependent upon the gov't for their existance, which is part of their end game.  What the primitive wants is the elimination of capitalism and the emergence of corporatism and nationalism (via workers dependent upon gov't), which is also definded as fascism, the very thing they claim they don't want.

It's a good thing these dolts are marginalized and ignored by the bulk of productive society.

.

[miskie]

Dolts.

The fundamental problem with the primitive's logic, is that the only way to insure profitability is to expand and innovate. A business virtually guarantees failure by cashing in for personal wealth or downsizing only. Sometimes moving overseas will help increase profitability for a business, but it depends on what the business does.

Expanding and innovating is also what makes CEOs etc. of small companies attractive to larger companies - which means more profit for the upwardly mobile CEO.

In other words, the primitve is incapable of seeing the big picture. He is correct that corporations are motivated by greed, However, there is more money available to a CEO and BOD who work on expansion and innovation in the long term, than cutting & profit taking in the short term will provide.

[ChuckJ]

Frito-Lay North America is a division of PepsiCo that makes Cheetos. Frito-Lay North America is a business. Frito-Lay North America has to make a certain amount of money in order to stay in business and continue making Cheetos. When you raise the taxes that Frito-Lay North America has to pay in it cuts into the money that they need to make in order to stay in business. As a business they have a few options. One is to go out of business and stop making Cheetos. Another option is to raise the price of Cheetos to cover the tax increase.

So tell me oh wise smartest people on the innerwebz, how much do like Cheetos?

[delilahmused]

Frito-Lay North America is a division of PepsiCo that makes Cheetos. Frito-Lay North America is a business. Frito-Lay North America has to make a certain amount of money in order to stay in business and continue making Cheetos. When you raise the taxes that Frito-Lay North America has to pay in it cuts into the money that they need to make in order to stay in business. As a business they have a few options. One is to go out of business and stop making Cheetos. Another option is to raise the price of Cheetos to cover the tax increase.

So tell me oh wise smartest people on the innerwebz, how much do like Cheetos?

I love Frito-Lay. Frito-Lay gave my baby brother a job. He barely got through high school (granted I thought he deserved it, the little tattle-tale). Now he's  a regional manager. Buying chips made by Frito-Lay (sorry bro...just can't do diet Pepsi...I'm insanely attached to diet Coke) keeps my brother employed which means my nieces and nephew are happy and well provided for so they can grow up in a secure, happy home, thus insuring their children grow up in a secure happy home, thus able to pursue their own dreams and make their lives better for their children...it's the American way.

Cindie

[Rebel]

Damn, these people are stupid.  

[NHSparky]

Yavin4  (1000+ posts)        Thu May-12-11 05:43 PM
Original message
Debunking the "Tax Cuts Create Jobs" Argument
 Let's say Corp. A made $300 million in profit, and on that profit, they paid 15% in taxes or $45 million.


Now, let's say that the corp. tax rate was eliminated entirely. So now Corp. A keeps all of their profit. What will Corp. A do with it's additional money:

There are many scenarios, let's look at a few:

1) Open up a new plant and hire more workers.

Bzzzzzzt!  Try more like 40 percent.  That's the current US corporate tax rate.

A company, any company, at the end of the day, has two basic functions:

1--Make as much money (generate revenue) as they can.
2--Spend as little as they have to (minimize expenses) to do it.

Now does that "obscene profit" go to the CEO's?  Some, yes--but most goes to other, far more numerous shareholders in the form of dividends and stock prices.  A company does well, the shares go up.  It doesn't, the shares go down, or worse, become worthless when the company goes bankrupt.

Does that mean companies are out to screw the little guy?  Not at all, DUmmies.  If I were truly concerned only about profit, I'd put fiberglass in Cheetos and charge you dumb ****ers $100 a bag for your daily bagged dose of cheesy goodness.  But that's only a short-term solution--once you found out because your shit turns pink and the septic tank is well insulated, coupled with the fact you can only get a couple of bags per welfare check (and maybe--gasp!!--only be able to afford 10 bongloads a day), you'd go somewhere else, thereby driving me out of business.

Actions, consequences, shit like that.

And companies "outsourcing" has plenty of pitfalls of its own...now the market is thousands of miles away, transportation costs skyrocket, the political situation and labor market in the new country might not be up to snuff, productivity and product suffer, and...you get the idea.  Companies DON'T want to move--unless you give them no choice.

Right now, Obumbles and the Democrats are giving the American business no choice.  Businesses don't WANT to screw anyone over per se, DUmmies.  But you believe what you want.

[jukin]

The self proclaimed giftedest and talentedest strike again!!!!111!!!1eleventy

[DumbAss Tanker]

Man, they sure are smart, at least if you overlook all the logical flaws and half-sets of facts they set up in their arguments anyway.

[SSG Snuggle Bunny]

Man, they sure are smart, at least if you overlook all the logical flaws and half-sets of facts they set up in their arguments anyway.

Stop harshing the mellow of social justice, man.

[DumbAss Tanker]

Stop harshing the mellow of social justice, man.

Two great tastes that taste great together!

 

[movie buff]

"DenverDad (203 posts)      Thu May-12-11 05:56 PM
Response to Reply #3
5. Exactly!
 I never heard ONE company say that they laid off workers or downsized because their taxes were too high."
Hey moron, in 2008 I got laid off from a job I had at a small hardware- store chain due to budget cuts! At least one other worker was also laid off, and the ones who stayed all had their hours cut!
People wonder why I believe in trickle- down economics: It's because I experienced the negative side of it (Higher taxes on the wealthy inevitably causes the workers to be the ones who suffer) firsthand!

[miskie]

DenverDad is not long for the island... Believing in trickle down economics is a cardinal sin punishable by tombstone.