GOP's official report says tax cuts for the rich just don't do much of anything to help the economy.

[-Jrabbit]

It is only "academic" in the sense that you do not know what you are talking about JR.

I never claimed to have a business school or economics background. But I know a lot of business owners, and not one of them would hold back their company from expanding because of potential tax burden increase. Their entire focus is to grow their companies, and they regard their taxes like any other MLB expense. This whole "disincentive" argument has a strong element of fear-mongering.

IMVHO.

[Ben Kenobi]

But I know a lot of business owners, and not one of them would hold back their company from expanding because of potential tax burden increase.

Wow. Must be some businesses. Every business I've worked for has cut back employees and fought tax increases. When I worked for a developer - I spent most of my time fighting with the government cutting through red tape.

[Ben Kenobi]

If the rate of profit decreases and we still have economic growth then how can you say that taxes cause economic contraction by reducing the rate of profit?

Christ.

f'(x) measures the slope of the function not it's value.

[Kidlicious]

I'm not even going to ask.

[Kuciwalker]

I never claimed to have a business school or economics background. But I know a lot of business owners, and not one of them would hold back their company from expanding because of potential tax burden increase. Their entire focus is to grow their companies, and they regard their taxes like any other MLB expense. This whole "disincentive" argument has a strong element of fear-mongering.

IMVHO.

Marginal changes in the tax on investment income only affect the behavior of the marginal investor.

[-Jrabbit]

Wow. Must be some businesses. Every business I've worked for has cut back employees and fought tax increases.

Obviously, all businesses try to control/reduce expenses. No one embraces a tax increase. Just like they don't embrace increased materials cost or higher electric bills. Duh.

[Kidlicious]

I think most expenses are passed on to the consumer if they affect the entire industry.

[MrFun]

This is just an opinion piece, but thought I'd share it anyway.

Ideology Over Reality
By ANDREW ROSENTHAL
In a brazen example of putting ideology ahead of reality, Senate Republicans seem to have pressured the Congressional Research Service to withdraw a report debunking conservative economic orthodoxy. Cutting tax rates at the top appears “to have little or no relation to the size of the economic pie,” the report said. “However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.” So charging the rich lower tax rates doesn’t promote economic growth; it merely increases economic inequality.

The CRS is a highly respected, independent agency that prepares reports for members of Congress and routinely issues findings that disappoint or even irritate their clients, who usually just grin and bear it, or at least bear it. But Congressional Republicans seem to think that the CRS should function like Pravda.

In recent months, Republicans have been on a paranoid tear. They attacked the private and equally authoritative Tax Policy Center because it bothered to analyze Mitt Romney’s tax plan and found that it’s pretty much impossible to cut taxes by 20 percent without increasing the deficit. And they claimed there was a conspiracy at the Bureau of Labor Statistics when it reported last month that the unemployment rate had dipped below 8 percent.

Don Stewart, a spokesman for the Senate Republican leader, Mitch McConnell, said Mr. McConnell and other senators “raised concerns about the methodology and other flaws” in the CRS report. Antonia Ferrier, a spokeswoman for the Senate Finance Committee, said the panel had relayed its objections to the CRS. “We had a good discussion,” she said, “Then it was pulled.”

In case you don’t speak fluent bureaucratese, “good discussion” means that the Republicans made it clear the report had to go. And “it was pulled” means the CRS obeyed. The Times quoted a person with knowledge of the deliberations as saying the decision on Sept. 28 to withdraw the report was “made against the advice of the research service’s economics division” and that the author, Thomas Hungerford, stood by its findings.

Whatever their substantive objections to the report, Senate Republican aides told the Times that they objected to the use of the terms “Bush tax cuts” and “tax cuts for the rich” in the document. While those may not count as strictly academic descriptions, they’re perfectly accurate. Perhaps Republicans expected the CRS to call rich people “job creators”?

[Hauldren Collider]

Your opinion piece is wrong for the same reasons that the study itself is wrong. But, in true MrFun style, you are ignoring posts that challenge any of your presumptions and charging ahead with misunderstood essays by other people.

[Hauldren Collider]

I never claimed to have a business school or economics background. But I know a lot of business owners, and not one of them would hold back their company from expanding because of potential tax burden increase. Their entire focus is to grow their companies, and they regard their taxes like any other MLB expense. This whole "disincentive" argument has a strong element of fear-mongering.

IMVHO.

As Kuci said, it affects the marginal investor. If they raise the price of gas, I am still going to drive my car. I am still going to buy gas. I probably won't even change my driving habits. ON THE MARGIN, someone is going to drive their car less and use less gas. Similarly, when you raise taxes on businesses, on the margin, there will be some investor somewhere who decides, because of this, not to invest and grow their business.

[Dauphin]

If the new people bring in more revenue than they cost, then it makes sense to hire them whether taxes on profits are higher or not. But of course, Obamacare doesn't raise the corporate tax rate so I don't see how this is relevant.

Not necessarily. Your returns post tax may no longer be worth the additional investment and working capital requirement.

[MRT144]

Not necessarily. Your returns post tax may no longer be worth the additional investment and working capital requirement.

Right, but how does this affect anyone outside of a business that is just formed as a passthrough for personal income? We aint talking bout corporate tax rates.

[Dauphin]

Right, but how does this affect anyone outside of a business that is just formed as a passthrough for personal income? We aint talking bout corporate tax rates.

You mean, for example, does project planning affect business partnerships like lawyers, architects, dentists etc?

[Jaguar]

"In finance, rate of return (ROR), also known as return on investment (ROI), rate of profit or sometimes just return, is the ratio of money gained or lost (whether realized or unrealized) on an investment relative to the amount of money invested."
-wiki

Maybe you don't like the term because it proves you wrong. What exactly is the problem with (profit/capital invested)? Your claim is that taxes reduce rate of profit and thus reduce economic growth, is it not? Rate of profit is what has decreased from 45 to 80. Yet there was much economic growth during that period. If the rate of profit decreases and we still have economic growth then how can you say that taxes cause economic contraction by reducing the rate of profit?

Huh?!


That's irrelevant. edit: actually it's telling that the rate of profit decreased and the nominal interest rate increased, yet we STILL had economic growth for almost 40 years.

You're not being coherent because you're not using a precise term. Sure, I understand that you're vaguely talking about some sort of return to capital - some sort of interest rate on it. But interest rate for whom? There are all sorts of people who own capital. Some people get better returns to capital than others, and we can't possibly measure them all. Usually, the one that's important to macroeconomics is the marginal one.

In the absence of you pointing out the specific interest rate on capital you're concerned with, I will continue to assume you mean the risk-free nominal interest rate for the marginal investor, as indicated by US treasury bonds - which went up during that time period. Way, way, way up.

[Jaguar]

I'm not even going to ask.

You should. He has a better understanding of the concept of economic elasticity than you do.