Originally Posted By hopemax > Why take a chance hiring and expanding so your income can go from $240K to $260K if most of the additional income will go to taxes? < Because this isn't what would happen if the Bush tax cuts expired. The tax rate for income over $250,000 would be taxed an additional 4%. So for $10,000 that would be an extra $400. You really think businessmen would rather give up thousands of dollars to avoid paying hundreds in taxes?
Originally Posted By Mr X He doesn't think so. He's far too intelligent to think so. He's just quoting rhetoric (that's all they have left, these days).
Originally Posted By DouglasDubh It's not just 3% or 4% more. There's also been talking of reducing or eliminating deductions for those people, raising capital gains taxes, and raising payroll taxes.
Originally Posted By Mr X ***There's also been talking of reducing or eliminating deductions for those people, raising capital gains taxes, and raising payroll taxes.*** Source? Anyway, I have no problem with any of the above (the capital gains rate is low comparatively anyway, which is the reason why Warren Buffet pays less in percentage terms than his secretary does, a pathetic situation which he derides).
Originally Posted By SuperDry <<< It's not just 3% or 4% more. There's also been talking of reducing or eliminating deductions for those people, raising capital gains taxes, and raising payroll taxes. >>> You do have a point. There have been lots of proposals on how to raise taxes, with a variety of things being talked about. If all of them were to be implemented to any significant degree, there could be a large impact for some. But it's not an all-or-nothing proposal. It's not as if because a variety of things have been proposed, you must assume that all will be passed if any are passed, and therefore the only alternative is for none of them to pass. I find it hard to believe that if we raised income taxes back to where they were in the mid-to-late 90's, that it would have any measurable affect on business owners' willingness to hire or expand. At the upper end, that would be an increase from 35% to 39.6%. And, keep in mind that the tech boom of the 1990's happened within the context of the 39.6% rate, so it's hard to argue that that rate would stifle innovation, economic expansion, or prosperity.
Originally Posted By DouglasDubh <It's not as if because a variety of things have been proposed, you must assume that all will be passed if any are passed, and therefore the only alternative is for none of them to pass.> Well then, something has to give. The President has promised a lot of additional spending. He's also promised he won't raise taxes on anyone making less than $250K. And that he'll be fiscally responsible. The only way he can do all three is if he drastically raises taxes on those earning over the $250K mark. If he can't do that, he's either got to pare back spending, or raise taxes on everyone. I'd prefer the former.
Originally Posted By DouglasDubh And it's not hard to argue that an increase of 3 or 4% would stifle innovation, economic expansion, or prosperity. If someone only gets to keep 45% of that marginal dollar, rather than 50%, they may just decide the extra risk or work isn't worth it. It's called the law of diminishing returns. This is why tax increases rarely produce as much revenue as estimated, and why tax cuts rarely reduce revenue as much as estimated.
Originally Posted By SuperDry The results of having tax rates at their 1990's levels is not a hypothetical: we can look to the 1990's to see how business owners behaved in that environment.
Originally Posted By DouglasDubh Yes. We can see that, when they were first imposed, the rate of GDP growth slowed, and it only took off again after the GOP convinced President Clinton to reduce the capital gains tax.
Originally Posted By SuperDry So if the reduction in capital gains drove GDP growth even in the environment of the personal tax rates of the late 1990's, you'd be fine with raising the personal tax rates back to those levels, as long as capital gain taxes stay where they are?
Originally Posted By DouglasDubh There were a lot of factors that drove the growth in the late 90's, many of which are unlikely to come again, or even be allowed to come again, since part of that economy was a bubble. I think it's naive to say that raising the top rates will ensure a return to that type of growth, just like it would be overstating to say raising those rates would lead to lower growth. The economy is too complex for those simpler assumptions. But I do believe we'd be better off in the long run with less federal spending, and lower federal taxes.
Originally Posted By DVC_dad Raising taxes during a recession vs. during growth are two entirely different situations. You can't just say, "Well what about the 90's?"
