Does anybody still believe...

Discussion in 'Et Cetera, Et Cetera' started by B_Hickboy, Sep 3, 2008.

  1. B_Hickboy

    B_Hickboy New Member

    Joined:
    Jul 13, 2005
    Messages:
    10,730
    Likes Received:
    5
    Location:
    That twinge in your intestines
    That when government levies huge new taxes on businesses and rich people that it doesn't affect anyone else? Guess what? The businesses increase the prices on their goods and services and who are the main consumers of goods and services in the US? The middle class, that's who. What should we call it? Maybe "Trickle Up Economics"? Just a thought. If there are any economists who belong to this site, please set me straight on this.
     
  2. Pecker

    Pecker Retired Moderator
    Gold Member

    Joined:
    Mar 5, 2002
    Messages:
    83,922
    Likes Received:
    34
    You are correct, my Liege.
     
  3. camper joe

    Gold Member

    Joined:
    Jun 2, 2006
    Messages:
    2,839
    Likes Received:
    14
    Gender:
    Male
    Location:
    North Carolina
    From my days of studying Economics, a business's role is to create a service/product, ie. a widget that consumers are willing to buy at a reasonable price and in turn make a profit for the business and its owners. Basic supply and demand. In creating this widget, all expenses incurred create liabilities, which are then figured into cost of production. Then normally a break even analysis is done and a selling price is created.

    Now the hard part is creating a widget that people want if not necessarily need.

    A very interest read is The Wealth of Nations written by Adam Smith.
     
    #3 camper joe, Sep 3, 2008
    Last edited: Sep 3, 2008
  4. SilverTrain

    Gold Member

    Joined:
    Aug 25, 2008
    Messages:
    4,582
    Albums:
    8
    Likes Received:
    404
    Gender:
    Male
    Location:
    USA
    Oil companies have been given huge tax breaks, subsidies, etc., the past eight years. And gas prices have gone way........up.

    How's that for trickle down economics?

    Sure, when big business is taxed more heavily, that's added costs for them. Theoretically, and often in practice, these costs will be passed along.

    But people have a choice what to purchase. If the lower economic echelons have less tax burden, they can choose what to purchase and what not to purchase. The laws of supply and demand will sort things out.

    But when big business is given huge tax breaks, the reduced costs are not always passed on to the consumers. See, for example, Exxon. Sometimes they just use the tax breaks to ring up record profits.

    The point of the debate is not that taxes don't effect the economy. But that when you're at war spending billions (trillions even), and you drastically lower taxes on the rich and big business, the infrastructure of the company is gutted. Trade deficits, budget deficits, weak dollar result. Recession.

    And then you have to decide if you're going to keep pandering to the god-help-us-we-can't-raise-taxes crowd, and let the country slide further into economic despair, and eventually cataclysmic decline. Or you can join the grown-ups and acknowledge that after the rich-get-richer-and-screw-everybody-else orgy of the past eight years, some taxation and budget-balancing is essential to put the country back on the right economic course.
     
  5. sargon20

    Gold Member

    Joined:
    Mar 14, 2006
    Messages:
    11,371
    Likes Received:
    2,102
    Gender:
    Male
    Location:
    Atlantis
    Isn't it also true if government was small and toothless that business would impose huge prices for products that actually cost a fraction of that, that business through uncompetitive practices drive all others out of the market thus increasing prices to the consumer.

    In the case of US gov't vs Microsoft, Microsoft couldn't even say how much it costs to produce a copy of Windows but what was obvious is the price was way way above the costs. Is that good for consumers?

    Now Bill Gates did the responsible thing and sought to return a good deal of his wealth back to the planet and not to his heirs as Sam Walton did and countless others. When wealth is concentrated at the top it's never a good thing. Just ask Marie Antoniette..when she had her head.

    At the same time business benefit GREATLY from the canvas that government provides for them to be successful. If there were no interstate roads how would goods make it to market? If the government provided no law enforcement or had no laws at all, how would business function? Contracts could not be enforced. All you need to do is visit a 3rd world country and see what a lack of government functions bring you.
     
  6. Notaguru2

    Gold Member

    Joined:
    May 20, 2008
    Messages:
    1,541
    Likes Received:
    0
    Gender:
    Male
    Location:
    Charleston, SC
    Either way, we lose. Our national debt is the highest of our existence on this planet. How do you propose we pay for these wars that are bankrupting us? Keep letting China buy up our debt? China alone owns $3T of our debt. What happens when they decide to cash their chips? I tell you what; our dollar evaporates, that's what.

    The issue with taxes is that it is an unfair system. Taxation needs overhauled and the only party willing to revamp it won't get more than 2% of all of the votes this year.

    Bottom line is; until the system changes, the middle class will always be screwed. Read my lips, GHWB still holds the record for the largest tax increase in US history.
     
  7. ManlyBanisters

    Gold Member

    Joined:
    Mar 19, 2007
    Messages:
    12,807
    Likes Received:
    8
    Yes - they choose what to buy - and when the price of American* goods go up they buy cheap Chinese shit.

    I know I do.

    * or 'home grown' from wherever you are
     
  8. Principessa

    Gold Member

    Joined:
    Nov 22, 2006
    Messages:
    19,494
    Likes Received:
    28
    Gender:
    Female
    Sounds about right to me. :cool:
     
  9. Phil Ayesho

    Gold Member

    Joined:
    Feb 26, 2008
    Messages:
    5,591
    Likes Received:
    879
    Gender:
    Male
    Location:
    San Diego
    you are so wrong its just funny.

    Taxes do not factor into corporate prices because taxes are NOT a cost of doing business. ONLY profits get taxed.

    What that means is that passing the cost of taxation on to the consumer simply gets them taxed MORE...because the only thing it could do is increase profits. ( since federal taxation is not deductible as a business expense- and since they must already be more than covering their costs to make a profit to even be taxed. )

    When corporations are taxed ( which they are and at a fairly high rate already) they are faced with a dilema...

    Profits are simply divided among the shareholders as dividends... not a lot of money per person unless you happen to be a HUGE shareholder.

    However, money they spend on their own companies... buying other companies, opening new outlets, increasing capacity, developing new products or services....
    That money becomes EXEMPT from taxation. ITs no longer profit.

    So corporate boards try and do a balancing act... between claiming just enough profit to keep their shareholders happy... money they will have to split with the IRS.... and pumping all their surplus income back into investing in the company itself... money the company gets to "keep".


    Therefore, increased corporate taxation actually drives companies to invest in themselves and growth, as a way to evade taxation.

    Lower taxation drives them to take the money out in the form of dividends and bonuses for board members. Making the board personally richer.

    That money does not contribute to growth or creating jobs because board members and major share holders do not make most of their money from dividends....
    They make most of their money from speculations based upon stock prices- from buying and selling.
    Because of this... total profits are not as important as company growth in determining stock prices. Boards will tend to opt on re-investment over profits to get even more money from stock prices than they can from dividends.

    And keep in mind that for MOST americans Stock market investing is gambling.

    But that most major players and board members have inside information that enables them to make huge amounts of money on stock manipulation.

    The most common is for them to encourage employees to exercise stock options, when the Board knows full well that the next quarter report will result in a drop in stock price.

    The employees buy in... and then the report comes out and the price drops...

    And the board "supports" their stock price by buying up stock.

    What you don't know is that the stock the employees bought is stock sold by the board months before- at a high price... and then the board buys back that stock at a lower price...

    The effect? The board just sucked millions of dollars out of their own workers pockets, and into their own... and they own even more stock.

    These kind of shenanigans are endemic.



    -
    Beyond that... the real issue is not corporate taxation... corporations are actually taxed pretty high... to drive investment in growth.


    The real issue is PERSONAL taxation of the wealthy.
    Eliminating capital gains tax, inheritance tax and enabling tax shetlers allows the super rich to evader nearly all taxation.

    This money is not being re-invested into the economy... its accruing wealth for the wealthy.

    The republicans want a return to the JP Morgans and Andrew Carnegies...
    The company store and indentured servitude.



    You can not have a genuinely free market when money buys influence and control over the laws governing that free market.
    All computer models of free markets, run long enough, result in ALL the money in the hands of 1 or 2 individuals.


    Regulated markets are what made America Great... its what's working for the Chinese.
     
    #9 Phil Ayesho, Sep 4, 2008
    Last edited: Sep 4, 2008
  10. B_Hickboy

    B_Hickboy New Member

    Joined:
    Jul 13, 2005
    Messages:
    10,730
    Likes Received:
    5
    Location:
    That twinge in your intestines
    Thank you for enlightening me. I'm glad I was able to provide you with a laugh.
     
Draft saved Draft deleted