Bush tax cut & small business owners

[Anonymous]

Republicans are now arguing that letting the Bush tax cut expire for those making over $200,000 per year will hit small business owners and thereby interfere with job creation. It seems to me that if taking more than $200 K (for an individual -- $250 K for a family) results in higher taxes, that would make it more attractive to plow some of that extra income back into the business by hiring. And if that does not follow automatically, why not introduce legislation specifically directed at encouraging job creation rather than extending the general tax cut?

[Anonymous]

http://online.wsj.com/article/SB10001424052748703977004575393882112674598.html?mod=WSJ_Opinion_LEADTop

Please read this op ed piece published in the Wall Street Journal by Arthur Laffer which discusses why increasing taxes is bad for the economy.

[Anonymous]

Laffer lost all his credibility in the Reagan years. The so-called Laffer Curve has been debunked by both the economists, historians, and members of Reagan's own cabinet. Put a fork in this guy, his only possible paycheck is Rupert Murdoch and the political reform school that is the WSJ op-ed section.

[Anonymous]

Laffer? Come on, just look at the name. He's obviously some liberal plant invented as a joke!

[Anonymous]

Most small business owners (98%) do not make over $200k a year.

See point 2:
http://www.washingtonpost.com/wp-dyn/content/article/2010/07/30/AR2010073002671.html?nav=hcmoduletmv

[Anonymous]

Two questions:

1) Why didn't small businesses create jobs after the 2001-03 Bush tax cuts?
2) Why did small businesses create jobs after the 1993 Clinton tax increases?

Seriously, it's not like we're talking 75% Scandinavian, the pre-Reagan 70%, or the pre-Kennedy 90% tax rates here. I can see how those might be legitimate barriers to across-the-board job growth.

If we're discussing marginal tax rates ranging between 33% and 40%, there's other, way more important factors. Such as the "you hire someone first" attitude that seems to be happening in the initial stages of recession recovery over the past 25 years. (Basically I think Depression era folks who were more scared of high unemployment leading to even more socialism were replaced by folks more scared of corporate takeovers and missing Wall Street forecasts by a penny.)

Except we get a bunch of Joe the Plumber types who:

(1) don't understand the concept of tax brackets (I've heard/seen online many folks complain, "I don't want to work overtime or take a raise because I'll get in a higher tax bracket!")
(2) think grossing $200k means they get taxed on all $200k.

Obama should make a deal with the Chamber of Commerce et al. Companies are sitting on more cash now than at any point in the past half-century. Corporate profits are increasing.

If corporate America makes a commitment to increase private payrolls by X million between now and the end of 2011, we'll keep the Bush tax cuts.

[Anonymous]

1) Why didn't small businesses create jobs after the 2001-03 Bush tax cuts?
2) Why did small businesses create jobs after the 1993 Clinton tax increases?

If you look at this washington post growth chart you can see that there was already an economic boom before the Clinton tax increase.
http://www.washingtonpost.com/wp-dyn/content/graphic/2010/01/01/GR2010010101478.html

Note there's also a ~1.5 year delay between economic event and resulting effect on job growth
(e.g. the 2007 crash which didn't actually turn job creation down until the end of 2009)

Note also that there's about ~1 year delay between Bush's tax cuts and the turn of job growth going up.

A small tax in a time of prosperity don't do too much damage, but any tax during economic hardships is stupid.

[Anonymous]

*doesn't do much damage

[Anonymous]

Anonymous wrote:

1) Why didn't small businesses create jobs after the 2001-03 Bush tax cuts?
2) Why did small businesses create jobs after the 1993 Clinton tax increases?

If you look at this washington post growth chart you can see that there was already an economic boom before the Clinton tax increase.
http://www.washingtonpost.com/wp-dyn/content/graphic/2010/01/01/GR2010010101478.html

Note there's also a ~1.5 year delay between economic event and resulting effect on job growth
(e.g. the 2007 crash which didn't actually turn job creation down until the end of 2009)

Note also that there's about ~1 year delay between Bush's tax cuts and the turn of job growth going up.

A small tax in a time of prosperity don't do too much damage, but any tax during economic hardships is stupid.

That doesn't make sense. If the Clinton tax increases were bad for the economy, by your logic the economy should have taken a dive 1.5 years after they were enacted. But that clearly didn't happen.

[Anonymous]

There are credible arguments on both sides. I think Peter Orzag, President Obama's former budget director, made some good points in his column for The New York Times that argued for extending the tax cuts:

http://www.nytimes.com/2010/09/07/opinion/07orszag.html?_r=1&pagewanted=all

[Anonymous]

Anonymous wrote:

Anonymous wrote:

1) Why didn't small businesses create jobs after the 2001-03 Bush tax cuts?
2) Why did small businesses create jobs after the 1993 Clinton tax increases?

If you look at this washington post growth chart you can see that there was already an economic boom before the Clinton tax increase.
http://www.washingtonpost.com/wp-dyn/content/graphic/2010/01/01/GR2010010101478.html

Note there's also a ~1.5 year delay between economic event and resulting effect on job growth
(e.g. the 2007 crash which didn't actually turn job creation down until the end of 2009)

Note also that there's about ~1 year delay between Bush's tax cuts and the turn of job growth going up.

A small tax in a time of prosperity don't do too much damage, but any tax during economic hardships is stupid.

That doesn't make sense. If the Clinton tax increases were bad for the economy, by your logic the economy should have taken a dive 1.5 years after they were enacted. But that clearly didn't happen.

The economy took off when the republicans took over congress and health car was killed. Hopefully history can repeat itself. Even so, Clinton left the ecomony in a recession for Bush and the dot-com implosion set back the economy untill the real estate explosion took off....and democrats took congress and the economy began to tank again.

[Anonymous]

Kristof recently wrote 2 articles on why US income inequality, mainly created by tax cuts for the rich, has never been so high (and is higher than in many third-world countries), and why this is not helping the economy:

http://www.nytimes.com/2010/11/18/opinion/18kristof.html?_r=1&ref=opinion

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

1) Why didn't small businesses create jobs after the 2001-03 Bush tax cuts?
2) Why did small businesses create jobs after the 1993 Clinton tax increases?

If you look at this washington post growth chart you can see that there was already an economic boom before the Clinton tax increase.
http://www.washingtonpost.com/wp-dyn/content/graphic/2010/01/01/GR2010010101478.html

Note there's also a ~1.5 year delay between economic event and resulting effect on job growth
(e.g. the 2007 crash which didn't actually turn job creation down until the end of 2009)

Note also that there's about ~1 year delay between Bush's tax cuts and the turn of job growth going up.

A small tax in a time of prosperity don't do too much damage, but any tax during economic hardships is stupid.

That doesn't make sense. If the Clinton tax increases were bad for the economy, by your logic the economy should have taken a dive 1.5 years after they were enacted. But that clearly didn't happen.

The economy took off when the republicans took over congress and health car was killed. Hopefully history can repeat itself. Even so, Clinton left the ecomony in a recession for Bush and the dot-com implosion set back the economy untill the real estate explosion took off....and democrats took congress and the economy began to tank again.

That doesn't even make any sense. A. The bill died before the midterm election, in the summer of '94. B. Since nothing in health care changed between '94 and '95, it's hard to imagine how the bill's non-passage caused an economic boom.

You republicans have to pick one story. Half of you are saying the boom started under Bush 1. The other half are trying to argue that it's the Republican Congress that took office in '95. If you are going to try to take credit for the Clinton years, you have to pick one story and stick with it, however incredible it may be.

[Anonymous]

Anonymous wrote:Republicans are now arguing that letting the Bush tax cut expire for those making over $200,000 per year will hit small business owners and thereby interfere with job creation. It seems to me that if taking more than $200 K (for an individual -- $250 K for a family) results in higher taxes, that would make it more attractive to plow some of that extra income back into the business by hiring. And if that does not follow automatically, why not introduce legislation specifically directed at encouraging job creation rather than extending the general tax cut?

OP most small business owners, like myself, need to declare and pay income taxes on all income after expenses each year - there are no "retained earnings" in a small business (Subchapter S). Hiring a new employee, or making a capital expenditure which too stimulates the economy, often is an activity that needs to cross tax years. So if I am 'saving' for new office equipment, or whatever is needed (computer, desk, other equipment, space, first x months of wages as they get up to speed) for a new employee, say I get 80% of the way by Dec 31. By January 1 that number, after taxes, might only be 55%.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Republicans are now arguing that letting the Bush tax cut expire for those making over $200,000 per year will hit small business owners and thereby interfere with job creation. It seems to me that if taking more than $200 K (for an individual -- $250 K for a family) results in higher taxes, that would make it more attractive to plow some of that extra income back into the business by hiring. And if that does not follow automatically, why not introduce legislation specifically directed at encouraging job creation rather than extending the general tax cut?

OP most small business owners, like myself, need to declare and pay income taxes on all income after expenses each year - there are no "retained earnings" in a small business (Subchapter S). Hiring a new employee, or making a capital expenditure which too stimulates the economy, often is an activity that needs to cross tax years. So if I am 'saving' for new office equipment, or whatever is needed (computer, desk, other equipment, space, first x months of wages as they get up to speed) for a new employee, say I get 80% of the way by Dec 31. By January 1 that number, after taxes, might only be 55%.

But you don't save up wages. As for equipment, the administration is proposing that equipment can be expensed, which is a huge tax benefit.