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Investment Analysis Clubs / Macro Economic Trends and Risks


Subject:  Re: If Date:  10/11/2012  5:10 PM
Author:  mmrmnhrm Number:  405820 of 536641

Hiring another employee would simply double the burden.

Who said anything about hiring more employees? Meh, whatever...

I'm looking at this as "It doesn't matter to the business what they pay their employees, only what their customers can afford." Now, as you properly point out, if someone is paying 80% in taxes there isn't a whole lot left over, but wages must rise to meet workers' needs, then prices come up since workers-turned-customers have more money, putting more money in company vaults, which in turn leads to expansion, dividends, and (according to supply-siders) raises/bonuses. NYC is a perfect example of this... everything is more expensive there: food, transit, housing, etc. But wages are higher as well. You get paid more for the same job in NYC than you do in, say, Billings, MT. If you drop taxes from a high level to a lower one, you only temporarily goose the consumers, as it doesn't take long before the bean counters tell the board "Hey, people are getting to keep twice as money they used to, so we can cut back on salaries without actually hurting their financial situation!" Wages begin to stagnate or even drop, until finally an unhappy equilibrium between "this job sucks, I quit" and "I'm disgruntled, but the alternatives aren't any better" is found.
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