Halftime in America

[jem]

Quote from Ricter:

So businesses are turning down sales today because their taxes are too high, and there are too many regulations? If we lowered their taxes, giving them more cash, and reduced regulation, letting them keep more cash, then they'd be able to begin filling all the orders they are currently rejecting?

If you understand the market place. You will see that people invest for return.

People will keep opening up sandwhich shops or burrito shops if they can get a 10% profit on their own money. they frequently forget about the value of sweat equity. Investors look for more.

Right now... if you have a good business and write a good plan investor money is looking for a 20% return. If you can show it you may get the money. I have a golf friend who recently raised millions for a medical tech company. Profits and taxes were carefully analyzed in spread sheets.

And I am part of a group which just raised a 15 million line of credit for buying distressed real estate. Again taxes were figured in.

As taxes go up... it gets harder to show a 20% return. So investment in tech companies, green companies and other companies may never happen.

Also as taxes go up, there are less investors willing to take on risk because the 20% return becomes less.

By extension we can see warren buffet was full of shit on this issue.

Warren Buffets business manager Charlie Munger says Ebitda is bullshit earnings. A joke for just about anyone. its all about return after taxes.

http://buyingvalue.com/2009/05/munger-on-ebitda/

 

[Maverick74]

Quote from Ricter:

So businesses are turning down sales today because their taxes are too high, and there are too many regulations? If we lowered their taxes, giving them more cash, and reduced regulation, letting them keep more cash, then they'd be able to begin filling all the orders they are currently rejecting?

Taxes and regulations increase costs. It transfers capital from productive resources (industry) to the government (unproductive).

Let me give you an analogy. Say you have a business and you make 100k a year in profits. Say you take 20k of your profits and invest in a poorly run mutual fund vs keeping the money in your business. Every year you continue to siphon off 20k away from what works (your business) to this poorly run mutual fund that is losing money every year. Over time, the amount of capital you end up with at retirement will be substantially less because you kept putting more and more money into your poor performing fund. That is what happens with taxes. When you pay a tax, it's an investment in the government. Not for you, but for the collective. That government is not providing a decent enough return for it's citizens. That capital would be more effective if it continued to stay in industry and create jobs vs going to a poorly run government.

 

[achilles28]

Quote from Maverick74:

In my opinion what makes the numbers messy is when you mix supply side with monetary policy and start drawing correlations from that which is what the left does. For example, if we expand the money supply and create a bubble and then a crash, of course the crash is going to skew the data from lower taxes and less regulation. The only way to truly measure the effect of supply side economics is to do so in an economy with no Fed intervention. The Fed creates volatility around the data that makes it hard to read for those who are Keynesian based. Absent of the Fed manipulating our money supply and interest rates, lower taxes and less regulation will indeed lead to more tax revenue and higher GDP.

You nailed it. All growth is supply-side. Demand-side or monetary-side is really a rejiggering of the money supply to inflate numbers and a mortgaging of future demand, payable now, in the present, via debt accumulation. Which must be paid through curtailed demand (savings), in the future. So ya, you're right. And what's problematic is most observers are totally ignorant to everything, which lends to misinterpretation by economist shills (Robert Riech), liars and misinformed amateurs. The Government and all it's attendant Corporations that live off the public trough will support fractional reserve banking until they die, because it's from that Keynesian precept all taxpayer money floweth into their disgusting little hands, through Government deficits, bailouts and wars. Which is why the "establishment" (Big Oil, Big Defense, Government Bureaucrats, Bankers) oppose Ron Paul. A gold standard would keep the Government within it's means, and thus, condemn all Corporate bloodsuckers that live off public largess to the graveyard. No fun for them. Better to support Romney, Gingrich and Obama. Anybody but Paul. As for the media, they're owned by their advertisers (who are Big Defense, Big Pharma, Wallstreet, Insurers etc). They also live off the 24 hour news cycle, which would abruptly come to an end when Paul ends the wars. Boohoo for them. There's not a whole lot of patriots left in this Country. Especially at the top.

 

[Maverick74]

Quote from Brass:

Everyone who knows anything about economics knows that tax cuts do not pay for themselves. The deficit will not be narrowed with tax cuts because tax cuts do not pay for themselves. They do not. This is a matter of historical and economic fact. There is nothing to debate. Again: tax cuts do not pay for themselves. They do not. Everything else is only so much fluff and fold.

Deficits are narrowed by more people working and more people paying taxes. Increased taxes and regulations removes labor, not adds it. This means there are fewer people in the workforce contributing to the government.

 

[achilles28]

Quote from Ricter:

So businesses are turning down sales today because their taxes are too high, and there are too many regulations? If we lowered their taxes, giving them more cash, and reduced regulation, letting them keep more cash, then they'd be able to begin filling all the orders they are currently rejecting?

No. You're mistaken about the process. I already explained it:

Entry barriers come down (taxes and regulation) > more competition enters the market > prices come down > wages stay the same > consumers buy more per dollar spent = living standards go up.

 

[Brass]

Quote from Maverick74:

Deficits are narrowed by more people working and more people paying taxes. Increased taxes and regulations removes labor, not adds it. This means there are fewer people in the workforce contributing to the government.

Yes, it all sounds very good. You may posit, you may hypothesize. You may dream, and dream big. But tax cuts do not pay for themselves. That is simply not how it works, best intentions notwithstanding.

http://www.elitetrader.com/vb/showt...8&highlight=jem+tax+cuts+revenues#post3428058

http://www.slate.com/articles/busin...x_cuts_ever_increase_government_revenues.html

Are you concerened about the deficit or are you not? If you are indeed concerned about the deficit, then you should carefully consider that tax cuts do not pay for themselves and that effective tax rates are lower than they have been in decades.

 

[Maverick74]

Quote from achilles28:

No. You're mistaken about the process. I already explained it:

Entry barriers come down (taxes and regulation) > more competition enters the market > prices come down > wages stay the same > consumers buy more per dollar spent = living standards go up.

Correct. When you look at India and China and other emerging economies, their standard of living is not going up because they are "making" more, but because they can "afford" more. If inflation rises more then wages then you can't increase your standard of living.

 

[CaptainObvious]

Interesting video, but we all know where the new playbook was written, now don't we. Corporate boardrooms first, then co-signed by congress.

 

[achilles28]

Quote from Brass:

Everyone who knows anything about economics knows that tax cuts do not pay for themselves. The deficit will not be narrowed with tax cuts because tax cuts do not pay for themselves. They do not. This is a matter of historical and economic fact. There is nothing to debate. If you are concerned about the deficit, then you cannot be concerned with lowering taxes, which are lower than they have been in decades. Again: tax cuts do not pay for themselves. They do not. Everything else is only so much fluff and fold.

America was built on low taxes. Think about it.

If America had an 80% effective tax rate since 1776, would we have a 15 Trillion economy, today?

Of course not. Clearly, a low tax rate "pays for itself", over the long haul, in terms of the growth. This is how a reduction in taxes leads to an increase in revenue, over the long-term = grow the base.

You don't understand the relationship between growth and taxation. Either that, or you don't accept it. Either way, you're wrong. Higher taxes lead to less growth/work/investment. Lower taxes lead to more growth/work/investment. The Laffer curves demonstrates that. It's an inextricable part of our human nature - self-serving.

 

[Brass]

Quote from achilles28:

...If America had an 80% effective tax rate since 1776, do you think we'd have a 15 Trillion economy, today?

You are comparing a Third World America of 236 years ago with modern day America and its present infrastructure? Really? And when was the last time that the US had an effective tax rate of 80%, and who's suggesting such a rate now?

Exaggerate much?

You can go on with your faith-based ideals, but history has amply shown that tax cuts do not pay for themselves. They do not. Are you concerned about the deficit or are you not? If you are, then you should remember that tax cuts do not pay for themselves, and that effective tax rates are lower now than they have been in decades.