Tax Cuts

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Tax Cuts
10.28.04 (7:25 am)   [edit]
One of the keystones of the Bush Administration and campaign has been tax cuts. While channel flipping yesterday I came across a talk show with a Bush flunkie. The flunkie said that Kerry would raise taxes. The show host replied that Kerry said he would repeal the tax cut on people making $200,000. The flunkie looked aghast and said in a smug voice that such a cuts hurts jobs since most people making over that amount are business owners and it removes an incentive for them to hire more people.


Once again the Bush logic is terribly wrong. (If challenged the Bush Administration would probably say that the flunkie didn't understand the topic well enough to comment properly - always blame someone else!) Let's examine this.


While many Americans earnings over $200,000 may own businesses, many do not. For those who don't how can they increase the number of jobs? They can't! For those who do own businesses it's highly unlikely that they are sole proprietors (meaning the person is essentially the business) therefore a taxcut for the person has no influence on the business. None! Zilch! Nada! Again, a tax cut for a person has absolutely no bearing on a business that employs that person. A CEO getting a massive tax cut isn't going to go to work and spend HIS money on hiring more employees. It doesn't happen that way.


And look at this. Even with Bush's tax cut the number of jobs hasn't increased. Bush will still show an Administration overall loss of jobs. There is no relationship between personal tax cuts and job hiring.


But Bush quite recently did give a massive tax cut for businesses and that should influence jobs, right? More money for the company, more hiring - that's what Bush says so it must be true. Except it isn't true. A company receiving an influx of money from a tax cut has many choices as to what to do with it. Here's some options:

  • Pay a dividend. Make the shareholders happy. Note that since the Company Executives tend to own more shares than the commoners and employees, this is the equivalent of giving them lots of money.

  • Pay the Employees a bonus. Nice for everyone particularly the Executives since they usually give themselves a disproportionate heftier chunk o' cash.


  • Pay off long term debt or just keep the cash. Either way makes the company look more attractive for a takeover or to take another company over. If that happens the Executives get a nice bonus for a job well done and some employees get a nice pink slip for being redundant.


  • Hire more employees. Sure, it could happen but only on one condition and that is if the market demands it. If a company is finding that their market is loaded (not on a growth path), adding personnel would add any value to the company. In fact, it only adds to the overhead. Why add people if the company growth doesn't need it? That doesn't make sense.


    But maybe I am wrong. If I am would a nice Bushie clearly and calmly explain the logic behind the taxcut and give examples of where the tax cut has directly and demonstrably lead to some sort of economic growth, because I'm not seeing it. In fact, these tax ctus smell suspiciously like Reagan's Voodoo Economics - give more money to the wealthy and the money will trickle down. Well, it didn't then and it sure looks like it isn't happening now.

  •  


    posted by: PatriotActs (reply)
    post date: 10.28.04 (7:43 am)

    Actually Bush's statement that those earning over $200,000 are the largest owners of small business is a LIE. Bush's tax cuts for the rich are a swindle and don't help America and don't provide prosperity for those doing the REAL WORK!

    (Read SpyMaster's blog by Warren Buffett... What the 2nd Richest Man in the World Says About Tax Cuts ..."...)

    Great Blog!!!



    posted by: funnydiscovery (reply)
    post date: 10.28.04 (7:51 am)

    You claim for more taxes ? You forget where the taxes go : it goes mostly to pay the financial interests to the bankers, oh yeah they pretend that some goes to build schools in fact no, the interests due are so huge that there is nothing left so that the banker will lend more that's why debts have grown to a vertiginous proportion.

    Instead of asking for more taxes, people should rather ask for no taxes for people and taxes on corporates which escape taxes by going offshore !



    posted by: funnydiscovery (reply)
    post date: 10.28.04 (7:56 am)

    For people who have no idea of how financial world works there was an article which explains the link between debts, bonds market and taxes: all three are SYNONYMS. Without taxes the PROFITEERS CANNOT CASH THE INTERESTS ON THE BONDS.

    http://www.tblog.com/templates/index.php?bid=funnydiscovery&static=322434

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