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The idea that high taxes discourage success

Frederick53
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8/24/2012 5:27:29 PM
Posted: 4 years ago
I can't comprehend it. The idea that people are so childish and pissy that they would rather be poor and not taxed than rich and highly taxed is mind bogglingly stupid.

Of all of the arguments against taxation, among which there are many reasonable ones, this one seems pretty ridiculous. I can't imagine someone honestly saying, "Well, if I earn $300,000 a year and 35% percent is taxed away instead of 15%, then I won't even bother. Welfare checks and a cardboard box here I come!" Nobody possesses such a defeatist mentality.
In 1975, the Second Vietnam War began -1Historygenius

Like no wonder that indian dude rejected you.- Darkkermit to royalpaladin

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thett3
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8/24/2012 5:32:00 PM
Posted: 4 years ago
I dont think anyone ever argued that people would just stop working, more like they have less incentive to do so.

Pretend that there are two tax brackets, 100k to 300k is 20% and 300k+ is 30%. If working a few extra days will bring the person up to, say, 303,000 as opposed to 300k even. In that case, they wont do it because they'll lose an incredible amount of money by working more. Those are productive man hours wasted.

You also need to look at general incentives...even if it has no relation to the amount of work one will do (unlikely) a progressive tax system transfers wealth from those who produce more to those who produce less. The incentive to produce more is obviously lowered.
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: At 11/12/2016 11:49:40 PM, Raisor wrote:
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Frederick53
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8/24/2012 5:35:17 PM
Posted: 4 years ago
At 8/24/2012 5:32:00 PM, thett3 wrote:
I dont think anyone ever argued that people would just stop working, more like they have less incentive to do so.

Pretend that there are two tax brackets, 100k to 300k is 20% and 300k+ is 30%. If working a few extra days will bring the person up to, say, 303,000 as opposed to 300k even. In that case, they wont do it because they'll lose an incredible amount of money by working more. Those are productive man hours wasted.

You also need to look at general incentives...even if it has no relation to the amount of work one will do (unlikely) a progressive tax system transfers wealth from those who produce more to those who produce less. The incentive to produce more is obviously lowered.

Bill O'Rielly, among others, claimed that if taxes were raised his extremely well paying job wouldn't be worth it anymore and he and all the other high earning people would quit.

I accept everything else you said.
In 1975, the Second Vietnam War began -1Historygenius

Like no wonder that indian dude rejected you.- Darkkermit to royalpaladin

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thett3
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8/24/2012 5:36:09 PM
Posted: 4 years ago
At 8/24/2012 5:35:17 PM, Frederick53 wrote:
At 8/24/2012 5:32:00 PM, thett3 wrote:
I dont think anyone ever argued that people would just stop working, more like they have less incentive to do so.

Pretend that there are two tax brackets, 100k to 300k is 20% and 300k+ is 30%. If working a few extra days will bring the person up to, say, 303,000 as opposed to 300k even. In that case, they wont do it because they'll lose an incredible amount of money by working more. Those are productive man hours wasted.

You also need to look at general incentives...even if it has no relation to the amount of work one will do (unlikely) a progressive tax system transfers wealth from those who produce more to those who produce less. The incentive to produce more is obviously lowered.

Bill O'Rielly, among others, claimed that if taxes were raised his extremely well paying job wouldn't be worth it anymore and he and all the other high earning people would quit.

I accept everything else you said.

Lol did he really? That's just stupid..... you can see why I refuse to identify with the republican party lol
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: At 11/12/2016 11:49:40 PM, Raisor wrote:
: thett was right
Lordknukle
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8/24/2012 5:43:06 PM
Posted: 4 years ago
The problem is that high taxes on the rich discourages private investment into the economy and substitutes it for public investment. That's the main criticism about high taxes on the rich.
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
JaxsonRaine
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8/24/2012 5:44:46 PM
Posted: 4 years ago
At 8/24/2012 5:32:00 PM, thett3 wrote:
I dont think anyone ever argued that people would just stop working, more like they have less incentive to do so.

Pretend that there are two tax brackets, 100k to 300k is 20% and 300k+ is 30%. If working a few extra days will bring the person up to, say, 303,000 as opposed to 300k even. In that case, they wont do it because they'll lose an incredible amount of money by working more. Those are productive man hours wasted.

Except.. it doesn't work that way.

You are taxed 20% on the income from 100-300k. You are taxed 30% on income over $300k. You don't pay 30% on ALL your income just because you cross that threshold.

You also need to look at general incentives...even if it has no relation to the amount of work one will do (unlikely) a progressive tax system transfers wealth from those who produce more to those who produce less. The incentive to produce more is obviously lowered.
twocupcakes: 15 = 13
thett3
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8/24/2012 5:48:48 PM
Posted: 4 years ago
At 8/24/2012 5:44:46 PM, JaxsonRaine wrote:
At 8/24/2012 5:32:00 PM, thett3 wrote:
I dont think anyone ever argued that people would just stop working, more like they have less incentive to do so.

Pretend that there are two tax brackets, 100k to 300k is 20% and 300k+ is 30%. If working a few extra days will bring the person up to, say, 303,000 as opposed to 300k even. In that case, they wont do it because they'll lose an incredible amount of money by working more. Those are productive man hours wasted.

Except.. it doesn't work that way.

You are taxed 20% on the income from 100-300k. You are taxed 30% on income over $300k. You don't pay 30% on ALL your income just because you cross that threshold.

Ok, but even given that the incentive to make more is lowered if you have more taken from you the higher up you go in income.

Besides, the OP was talking about tax rates in general

You also need to look at general incentives...even if it has no relation to the amount of work one will do (unlikely) a progressive tax system transfers wealth from those who produce more to those who produce less. The incentive to produce more is obviously lowered.
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"Don't quote me, ever." -Max

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"Walmart should have the opportunity to bribe a politician to it's agenda" -Max

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"You fit the character of Regina George quite nicely"- Sam

: At 11/12/2016 11:49:40 PM, Raisor wrote:
: thett was right
JaxsonRaine
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8/24/2012 5:53:25 PM
Posted: 4 years ago
At 8/24/2012 5:48:48 PM, thett3 wrote:
At 8/24/2012 5:44:46 PM, JaxsonRaine wrote:
At 8/24/2012 5:32:00 PM, thett3 wrote:
I dont think anyone ever argued that people would just stop working, more like they have less incentive to do so.

Pretend that there are two tax brackets, 100k to 300k is 20% and 300k+ is 30%. If working a few extra days will bring the person up to, say, 303,000 as opposed to 300k even. In that case, they wont do it because they'll lose an incredible amount of money by working more. Those are productive man hours wasted.

Except.. it doesn't work that way.

You are taxed 20% on the income from 100-300k. You are taxed 30% on income over $300k. You don't pay 30% on ALL your income just because you cross that threshold.

Ok, but even given that the incentive to make more is lowered if you have more taken from you the higher up you go in income.

Besides, the OP was talking about tax rates in general

You also need to look at general incentives...even if it has no relation to the amount of work one will do (unlikely) a progressive tax system transfers wealth from those who produce more to those who produce less. The incentive to produce more is obviously lowered.

I was just talking about your example.

You can say the incentive to work past that 300k mark is reduced by 12.5%(decrease from keeping 80% to 70%).

The bigger area, I think, is capital gains taxes. Raising the capital gains tax by 10% increases risk by, IIRC, close to 20% for 2:1 Risk/Reward kind of trading.

Even more than that, is attracting new investment. People with money all around the world have to justify paying an extra 10-30% taxes on investments if they invest in America compared to somewhere else.
twocupcakes: 15 = 13
JaxsonRaine
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8/24/2012 5:55:04 PM
Posted: 4 years ago
Fred...

Let's say that with 0% taxes, incentive is 100%.

At 100% taxes, what is the incentive to work?

So clearly, between 0% taxes, and 100% taxes, somewhere you have to decrease incentive.

You can't say that higher taxes has no discouragement, unless you think 100% tax rates wouldn't discourage.
twocupcakes: 15 = 13
Frederick53
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8/24/2012 6:00:52 PM
Posted: 4 years ago
At 8/24/2012 5:55:04 PM, JaxsonRaine wrote:
Fred...

Let's say that with 0% taxes, incentive is 100%.

At 100% taxes, what is the incentive to work?

So clearly, between 0% taxes, and 100% taxes, somewhere you have to decrease incentive.

You can't say that higher taxes has no discouragement, unless you think 100% tax rates wouldn't discourage.

I specified 'high' tax rates as being in the realm of 35%. I agree that once you cross the threshold of 50% and head towards 100% that incentive is decreased.
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Frederick53
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8/24/2012 6:05:45 PM
Posted: 4 years ago
At 8/24/2012 5:43:06 PM, Lordknukle wrote:
The problem is that high taxes on the rich discourages private investment into the economy and substitutes it for public investment. That's the main criticism about high taxes on the rich.

I agree that high taxes somewhat discourage private investment, but at rates of 30% percent or lower I can't see it being that detrimental.
In 1975, the Second Vietnam War began -1Historygenius

Like no wonder that indian dude rejected you.- Darkkermit to royalpaladin

Social Darwinism is a justification- 1Historygenius

Equal opportunity exists, so there is no problem- EvanK
thett3
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8/24/2012 6:07:02 PM
Posted: 4 years ago
At 8/24/2012 6:05:45 PM, Frederick53 wrote:
At 8/24/2012 5:43:06 PM, Lordknukle wrote:
The problem is that high taxes on the rich discourages private investment into the economy and substitutes it for public investment. That's the main criticism about high taxes on the rich.

I agree that high taxes somewhat discourage private investment, but at rates of 30% percent or lower I can't see it being that detrimental.

Why 30%? If you agree that with certain rates incentive decreases, why does that principle not apply across the board?
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"Walmart should have the opportunity to bribe a politician to it's agenda" -Max

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"You fit the character of Regina George quite nicely"- Sam

: At 11/12/2016 11:49:40 PM, Raisor wrote:
: thett was right
Lordknukle
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8/24/2012 6:09:13 PM
Posted: 4 years ago
At 8/24/2012 6:07:02 PM, thett3 wrote:
At 8/24/2012 6:05:45 PM, Frederick53 wrote:
At 8/24/2012 5:43:06 PM, Lordknukle wrote:
The problem is that high taxes on the rich discourages private investment into the economy and substitutes it for public investment. That's the main criticism about high taxes on the rich.

I agree that high taxes somewhat discourage private investment, but at rates of 30% percent or lower I can't see it being that detrimental.

Why 30%? If you agree that with certain rates incentive decreases, why does that principle not apply across the board?

This. No matter whether it's 1% or 99%, the fact that taxes decrease private investment and replace it with public investment is universal.
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
OllerupMand
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8/24/2012 6:10:59 PM
Posted: 4 years ago
At 8/24/2012 6:00:52 PM, Frederick53 wrote:
At 8/24/2012 5:55:04 PM, JaxsonRaine wrote:
Fred...

Let's say that with 0% taxes, incentive is 100%.

At 100% taxes, what is the incentive to work?

So clearly, between 0% taxes, and 100% taxes, somewhere you have to decrease incentive.

You can't say that higher taxes has no discouragement, unless you think 100% tax rates wouldn't discourage.

I specified 'high' tax rates as being in the realm of 35%. I agree that once you cross the threshold of 50% and head towards 100% that incentive is decreased.

I don't know. I pay a bit more than 50% on the last dollar I earn and I never really think about it when my boss ask me if I want to work an hour more. I think that most people take a pride in their work and want to do it as well as they are able to.

At the same time I see what Jaxson say. I have a hard time seeing myself working with a 100% taxe rate.
Frederick53
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8/24/2012 6:12:09 PM
Posted: 4 years ago
At 8/24/2012 6:07:02 PM, thett3 wrote:
At 8/24/2012 6:05:45 PM, Frederick53 wrote:
At 8/24/2012 5:43:06 PM, Lordknukle wrote:
The problem is that high taxes on the rich discourages private investment into the economy and substitutes it for public investment. That's the main criticism about high taxes on the rich.

I agree that high taxes somewhat discourage private investment, but at rates of 30% percent or lower I can't see it being that detrimental.

Why 30%? If you agree that with certain rates incentive decreases, why does that principle not apply across the board?

Because at some point it becomes infinitesimal.

But in any case, what I was referring to was employment, not investment. Just to make it clear, high taxes do discourage private investment, but not work as some Republicans suggested.
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Like no wonder that indian dude rejected you.- Darkkermit to royalpaladin

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OllerupMand
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8/24/2012 6:44:48 PM
Posted: 4 years ago
At 8/24/2012 5:27:29 PM, Frederick53 wrote:
I can't comprehend it. The idea that people are so childish and pissy that they would rather be poor and not taxed than rich and highly taxed is mind bogglingly stupid.

Of all of the arguments against taxation, among which there are many reasonable ones, this one seems pretty ridiculous. I can't imagine someone honestly saying, "Well, if I earn $300,000 a year and 35% percent is taxed away instead of 15%, then I won't even bother. Welfare checks and a cardboard box here I come!" Nobody possesses such a defeatist mentality.

I spend a long time thinking on how that argument would give any meaning and I think I got anexample.

With out any education you will earn 100.000 a year. With 10% taxes that gives you 90.000 a year.
With a good education you will instead earn 150.000 a year, but as your studies costed you quit a bit you will also have to pay of your dept with 25.000 each year. So with a 10% taxe rate you still earn 110.000 after paying to reduce your dept. That is 20.000 more than the uneducated.

Now if increase the tax rate to 35% the uneducated will have 65.000 a month, the educated will only have 72.500 after paying of on his loan. The difference is only 7.500 so one can wonder if it was really worth the time and risk of taking an education and getting a large depth only to earn a very little more each month.

That will properly lead to less people taking an education and we get that high taxes discourage succe, because it is simply not worth it.
Frederick53
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8/24/2012 6:55:15 PM
Posted: 4 years ago
At 8/24/2012 6:44:48 PM, OllerupMand wrote:
At 8/24/2012 5:27:29 PM, Frederick53 wrote:
I can't comprehend it. The idea that people are so childish and pissy that they would rather be poor and not taxed than rich and highly taxed is mind bogglingly stupid.

Of all of the arguments against taxation, among which there are many reasonable ones, this one seems pretty ridiculous. I can't imagine someone honestly saying, "Well, if I earn $300,000 a year and 35% percent is taxed away instead of 15%, then I won't even bother. Welfare checks and a cardboard box here I come!" Nobody possesses such a defeatist mentality.

I spend a long time thinking on how that argument would give any meaning and I think I got anexample.

With out any education you will earn 100.000 a year. With 10% taxes that gives you 90.000 a year.
With a good education you will instead earn 150.000 a year, but as your studies costed you quit a bit you will also have to pay of your dept with 25.000 each year. So with a 10% taxe rate you still earn 110.000 after paying to reduce your dept. That is 20.000 more than the uneducated.

Now if increase the tax rate to 35% the uneducated will have 65.000 a month, the educated will only have 72.500 after paying of on his loan. The difference is only 7.500 so one can wonder if it was really worth the time and risk of taking an education and getting a large depth only to earn a very little more each month.

That will properly lead to less people taking an education and we get that high taxes discourage succe, because it is simply not worth it.

The gap between the salaries of educated and uneducated people is way larger in reality. Or in America anyway.
In 1975, the Second Vietnam War began -1Historygenius

Like no wonder that indian dude rejected you.- Darkkermit to royalpaladin

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OllerupMand
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8/24/2012 7:02:41 PM
Posted: 4 years ago
At 8/24/2012 6:55:15 PM, Frederick53 wrote:
At 8/24/2012 6:44:48 PM, OllerupMand wrote:
At 8/24/2012 5:27:29 PM, Frederick53 wrote:
I can't comprehend it. The idea that people are so childish and pissy that they would rather be poor and not taxed than rich and highly taxed is mind bogglingly stupid.

Of all of the arguments against taxation, among which there are many reasonable ones, this one seems pretty ridiculous. I can't imagine someone honestly saying, "Well, if I earn $300,000 a year and 35% percent is taxed away instead of 15%, then I won't even bother. Welfare checks and a cardboard box here I come!" Nobody possesses such a defeatist mentality.

I spend a long time thinking on how that argument would give any meaning and I think I got anexample.

With out any education you will earn 100.000 a year. With 10% taxes that gives you 90.000 a year.
With a good education you will instead earn 150.000 a year, but as your studies costed you quit a bit you will also have to pay of your dept with 25.000 each year. So with a 10% taxe rate you still earn 110.000 after paying to reduce your dept. That is 20.000 more than the uneducated.

Now if increase the tax rate to 35% the uneducated will have 65.000 a month, the educated will only have 72.500 after paying of on his loan. The difference is only 7.500 so one can wonder if it was really worth the time and risk of taking an education and getting a large depth only to earn a very little more each month.

That will properly lead to less people taking an education and we get that high taxes discourage succe, because it is simply not worth it.

The gap between the salaries of educated and uneducated people is way larger in reality. Or in America anyway.

Yah the gap isn't that large here, but I think that the genral idea of my example is something like this:
Education is an investment
The higher taxe rate, the less you get out of the investment
The less you get out an investment, the fewer people want to do it

But your right that it is a long shot. It was just the only thing I could come up with :(
JaxsonRaine
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8/24/2012 7:44:34 PM
Posted: 4 years ago
At 8/24/2012 6:00:52 PM, Frederick53 wrote:
At 8/24/2012 5:55:04 PM, JaxsonRaine wrote:
Fred...

Let's say that with 0% taxes, incentive is 100%.

At 100% taxes, what is the incentive to work?

So clearly, between 0% taxes, and 100% taxes, somewhere you have to decrease incentive.

You can't say that higher taxes has no discouragement, unless you think 100% tax rates wouldn't discourage.

I specified 'high' tax rates as being in the realm of 35%. I agree that once you cross the threshold of 50% and head towards 100% that incentive is decreased.

Ok.. so in your mind, the Incentive-TaxRate curve is flat all the way through 50%? There is no more incentive to work or invest at 0% than 50%?

Get real. We already discourage investment at 35%(effectively 29%).
twocupcakes: 15 = 13
Frederick53
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8/25/2012 1:44:21 AM
Posted: 4 years ago
At 8/24/2012 7:44:34 PM, JaxsonRaine wrote:
At 8/24/2012 6:00:52 PM, Frederick53 wrote:
At 8/24/2012 5:55:04 PM, JaxsonRaine wrote:
Fred...

Let's say that with 0% taxes, incentive is 100%.

At 100% taxes, what is the incentive to work?

So clearly, between 0% taxes, and 100% taxes, somewhere you have to decrease incentive.

You can't say that higher taxes has no discouragement, unless you think 100% tax rates wouldn't discourage.

I specified 'high' tax rates as being in the realm of 35%. I agree that once you cross the threshold of 50% and head towards 100% that incentive is decreased.

Ok.. so in your mind, the Incentive-TaxRate curve is flat all the way through 50%? There is no more incentive to work or invest at 0% than 50%?

Get real. We already discourage investment at 35%(effectively 29%).

No, it's not flat. It's small, but not flat.

And like I said, I'm referring to encouraging/discouraging employment.
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Like no wonder that indian dude rejected you.- Darkkermit to royalpaladin

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Stephen_Hawkins
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8/25/2012 4:06:02 AM
Posted: 4 years ago
At 8/24/2012 5:32:00 PM, thett3 wrote:
I dont think anyone ever argued that people would just stop working, more like they have less incentive to do so.

Pretend that there are two tax brackets, 100k to 300k is 20% and 300k+ is 30%. If working a few extra days will bring the person up to, say, 303,000 as opposed to 300k even. In that case, they wont do it because they'll lose an incredible amount of money by working more. Those are productive man hours wasted.

You also need to look at general incentives...even if it has no relation to the amount of work one will do (unlikely) a progressive tax system transfers wealth from those who produce more to those who produce less. The incentive to produce more is obviously lowered.

This happened in Britain. You know what people did? They negotiated so they got loads of non-financial bonuses (I forgot the technical term, but you know what I mean) and then only just nudge underneath the tax bracket to retain the most.

Or, and this is a lot more sane, I think, you have it so the money you earn over the 300k is at the 35% tax rate. so you pay 15% on the 300k, and 15% on the 3k. That means you earn roughly 256.95. If you don't, you'd get 255. The extra days mean you earn more.

Further, the number of industries that suffer due to this disincentive is terribly small. Let's say that if you earn £50k the tax goes up from 15% to 30%. If you are a minimum wage caretaker, will you be demotivated from this? Of course not. No matter how good you are, there's essentially no caretakers even coming close to that limit.

Or imagine you are a doctor earning average 80k a year. The tax rate still won't act as a disincentive, because you'd firstly lose masses of money if you went down the bracket, but you'd have to be horribly horribly bad at your job to drop a tax bracket.
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Chaos88
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8/25/2012 5:40:02 AM
Posted: 4 years ago
In regards to employment, high taxes can discourage someone from hiring and growing a company.

Say I own a business and I employ X people. Let's further say that my taxable income is at the bottom dollar of the top bracket. So, if I make one more dollar, I'll be taxed at 35%, plus state tax and since it's my business, probably Medicare, too.

Now, I could hire someone, and reap more in profits because my business should grow (after all, that's why you hire people, right). So, the question becomes, should I take the risk of hiring someone and taking on more work for the benefit of about 55% on the dollar? Is it worth it?

To some, yes, to others, no. This new employee could be disasterous to the company and ruin it. This employee could cost the company money as no expected extra work materializes. And this puts extra stress on assets used, which could cost money, or money faster than anticipated. The question for the owner is: does 55 cents on the dollar outweigh these risks? If not, there will be no new hire.

This works at all brackets, and is probably more scary looking at the 40-50% rate of taxation around $80K (25% fed, state, and 15% payroll). I think more are likely to err on safety here, largely due to the lesser income level; there isn't much of a safety net for a failed hire.
NixonianVolkswagen
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8/25/2012 8:30:40 AM
Posted: 4 years ago
At 8/25/2012 5:40:02 AM, Chaos88 wrote:
In regards to employment, high taxes can discourage someone from hiring and growing a company.

Say I own a business and I employ X people. Let's further say that my taxable income is at the bottom dollar of the top bracket. So, if I make one more dollar, I'll be taxed at 35%, plus state tax and since it's my business, probably Medicare, too.

Now, I could hire someone, and reap more in profits because my business should grow (after all, that's why you hire people, right). So, the question becomes, should I take the risk of hiring someone and taking on more work for the benefit of about 55% on the dollar? Is it worth it?

To some, yes, to others, no. This new employee could be disasterous to the company and ruin it. This employee could cost the company money as no expected extra work materializes. And this puts extra stress on assets used, which could cost money, or money faster than anticipated. The question for the owner is: does 55 cents on the dollar outweigh these risks? If not, there will be no new hire.

This works at all brackets, and is probably more scary looking at the 40-50% rate of taxation around $80K (25% fed, state, and 15% payroll). I think more are likely to err on safety here, largely due to the lesser income level; there isn't much of a safety net for a failed hire.

Except these aren't unknowns, businesses, by and large, obsess over productivity, etc. They would know, in terms of averages and generalities, what an additional worker would cost and benefit them. Either the 55% cumulative rate is profitable vis-a-vis hiring more, or it isn't.
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TheBossToss
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8/25/2012 6:05:33 PM
Posted: 4 years ago
At 8/25/2012 8:30:40 AM, NixonianVolkswagen wrote:
At 8/25/2012 5:40:02 AM, Chaos88 wrote:
In regards to employment, high taxes can discourage someone from hiring and growing a company.

Say I own a business and I employ X people. Let's further say that my taxable income is at the bottom dollar of the top bracket. So, if I make one more dollar, I'll be taxed at 35%, plus state tax and since it's my business, probably Medicare, too.

Now, I could hire someone, and reap more in profits because my business should grow (after all, that's why you hire people, right). So, the question becomes, should I take the risk of hiring someone and taking on more work for the benefit of about 55% on the dollar? Is it worth it?

To some, yes, to others, no. This new employee could be disasterous to the company and ruin it. This employee could cost the company money as no expected extra work materializes. And this puts extra stress on assets used, which could cost money, or money faster than anticipated. The question for the owner is: does 55 cents on the dollar outweigh these risks? If not, there will be no new hire.

This works at all brackets, and is probably more scary looking at the 40-50% rate of taxation around $80K (25% fed, state, and 15% payroll). I think more are likely to err on safety here, largely due to the lesser income level; there isn't much of a safety net for a failed hire.

Except these aren't unknowns, businesses, by and large, obsess over productivity, etc. They would know, in terms of averages and generalities, what an additional worker would cost and benefit them. Either the 55% cumulative rate is profitable vis-a-vis hiring more, or it isn't.

But as the tax rate increases, the profitability margin decreases. Obviously, the lower that margin is, the less businesses will want to employ people because each person hired is a risk taken. And while your assessment is correct for large corporations, small businesses would not have those numbers and would need to err on the side of caution, further reducing the desire of a small business to hire someone.
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8/25/2012 6:43:47 PM
Posted: 4 years ago
At 8/25/2012 6:05:33 PM, TheBossToss wrote:
At 8/25/2012 8:30:40 AM, NixonianVolkswagen wrote:
At 8/25/2012 5:40:02 AM, Chaos88 wrote:
In regards to employment, high taxes can discourage someone from hiring and growing a company.

Say I own a business and I employ X people. Let's further say that my taxable income is at the bottom dollar of the top bracket. So, if I make one more dollar, I'll be taxed at 35%, plus state tax and since it's my business, probably Medicare, too.

Now, I could hire someone, and reap more in profits because my business should grow (after all, that's why you hire people, right). So, the question becomes, should I take the risk of hiring someone and taking on more work for the benefit of about 55% on the dollar? Is it worth it?

To some, yes, to others, no. This new employee could be disasterous to the company and ruin it. This employee could cost the company money as no expected extra work materializes. And this puts extra stress on assets used, which could cost money, or money faster than anticipated. The question for the owner is: does 55 cents on the dollar outweigh these risks? If not, there will be no new hire.

This works at all brackets, and is probably more scary looking at the 40-50% rate of taxation around $80K (25% fed, state, and 15% payroll). I think more are likely to err on safety here, largely due to the lesser income level; there isn't much of a safety net for a failed hire.

Except these aren't unknowns, businesses, by and large, obsess over productivity, etc. They would know, in terms of averages and generalities, what an additional worker would cost and benefit them. Either the 55% cumulative rate is profitable vis-a-vis hiring more, or it isn't.

But as the tax rate increases, the profitability margin decreases. Obviously, the lower that margin is, the less businesses will want to employ people because each person hired is a risk taken. And while your assessment is correct for large corporations, small businesses would not have those numbers and would need to err on the side of caution, further reducing the desire of a small business to hire someone.

Then those businesses will do better which are more attuned to their overheads, what's the problem? Plus, small businesses are aware, in general terms, of how productive their workers ought to be. Certainly, it's not like data on small businesses is nonexistent (it's not even clear that someone working for Apple would necessarily work less hard were they at a smaller outlet).
"There is an almost universal tendency, perhaps an inborn tendency, to suspect the good faith of a man who holds opinions that differ from our own opinions."

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8/25/2012 11:00:56 PM
Posted: 4 years ago
At 8/24/2012 5:27:29 PM, Frederick53 wrote:
I can't comprehend it. The idea that people are so childish and pissy that they would rather be poor and not taxed than rich and highly taxed is mind bogglingly stupid.

Of all of the arguments against taxation, among which there are many reasonable ones, this one seems pretty ridiculous. I can't imagine someone honestly saying, "Well, if I earn $300,000 a year and 35% percent is taxed away instead of 15%, then I won't even bother. Welfare checks and a cardboard box here I come!" Nobody possesses such a defeatist mentality.

This misses a different point. True, most rich people will still work hard to get high after-profit income, but there is a limit. After they make, say $250,000, the additional $1,000 they could earn by working several more hours gives them less happiness (utility) than earning the prior large sums of income. The tax burden on that income reduces their utility to earn more, and thus causes less work, and lower economic growth. It varies among people where this limit comes from, but it always happens eventually.
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8/26/2012 12:11:51 AM
Posted: 4 years ago
People in favor of no taxes have won the moral arguments and the economic arguments, but they have not won the "Oh, sh!t. There's a gun to my head forcing to pay taxes. I can either pay taxes or be kidnapped, then thrown into a rape-box by men with guns, and be psychologically and physically abused" argument.
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Frederick53
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8/26/2012 12:32:57 AM
Posted: 4 years ago
I'm simply calling bullsh!t on the people who say that they'd quit their well paying jobs because of high income taxes.
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8/26/2012 12:52:05 AM
Posted: 4 years ago
At 8/26/2012 12:32:57 AM, Frederick53 wrote:
I'm simply calling bullsh!t on the people who say that they'd quit their well paying jobs because of high income taxes.

It won't really make people quit their high paying jobs. This is nonsense.

It will though disincentivize people from working more than is necessary after an interpersonal limit is reached, because working harder to gain more income derives them less utility because of the high tax rates, maybe a threshold of $200,000 for some wealthy people.

And when you have less people working as long, you have less capital and less efficiency for businesses. This leads to less job growth, less investment, and less progress for society, and causing society as a whole to have weaker economic growth, less competitiveness, and lower innovation. Taxing businesses has a somewhat similar, though different effect.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan