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Author: rubberthinking Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 449321  
Subject: If Date: 10/11/2012 9:26 AM
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If taxes were higher would employment be more robust?

Of course it depends on which brackets paid more, but still if the top couple of brackets paid more would the bottom few brackets see more employment in that group of lower paying tax payers?

Reasonable questions.

If taxes in the lowest few brackets were lower would employment take off?

Probably, since employers in all truth pay those taxes if you think of how they cut a check......cutting employee taxes leaves some room for hiring and creates more demand in the economy.......

Dave
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Author: mmrmnhrm Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405781 of 449321
Subject: Re: If Date: 10/11/2012 10:40 AM
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My FA finger is itching.... reaching....

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Author: rubberthinking Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405785 of 449321
Subject: Re: If Date: 10/11/2012 11:06 AM
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mmrmnhrm,


I know this is a surprise to some, but macro trends have a lot to do with employment and taxation.....time for a board name change?

Dave

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Author: mmrmnhrm Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405812 of 449321
Subject: Re: If Date: 10/11/2012 3:06 PM
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The problem I have is that the questions are thrown out there and seem intended (to me, at least) to goad responses towards tax policy, which of course can only end in a political quagmire with barely four weeks to go before election day.

To your OP, you don't specify which taxes you're talking about. Personally, I don't think personal income taxes (which seems to be where you're headed) play any role whatsoever in a business' willingness to hire. Walmart doesn't care whether their employees are paying 1% or 80% on their income, they only care whether or not their customers have money to spend. Sure, they'd appreciate lower personal rates as it puts more money in customers' pockets, but it doesn't directly affect their cash flows.

Likewise, I've always felt the idea of corporate tax rates affecting willingness to reinvest to be something of a red herring as well. Businesses will whine and moan about paying anything at all (and let's be honest... if the idea of "corporate personhood" were taken its logical conclusion, they they should be paying personal income tax rates rather than corporate tax rates), but their decisions on whether to expand, contract, or just play wait-and-see really comes down to whether or not expansion will be ROI-positive, or if shrinking will improve margins in the remaining areas. If anything, higher taxes might encourage expansion, since sitting on a taxable cash pile rather than reinvesting or paying dividends will honk off shareholders.

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Author: desertdaveataol Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405818 of 449321
Subject: Re: If Date: 10/11/2012 4:38 PM
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Personally, I don't think personal income taxes (which seems to be where you're headed) play any role whatsoever in a business' willingness to hire. Walmart doesn't care whether their employees are paying 1% or 80% on their income, they only care whether or not their customers have money to spend.

Hummmmm... where to start...

OK, if we stipulate that the employer needs to pay employees enough to eat we have a baseline. The higher the personal income taxes the higher that baseline has to be in order for the employee to have enough left over after taxes to eat.

So in a place like NYC where employees pay personal income tax to the Federal, State & City government the employee's wages must be higher for the employee to eat.

Higher wages means greater expense which means higher prices. If (as in your example) Walmart employees are giving up 80% of their pay in taxes then Walmart must pay higher wages for the employee to be able to afford to eat after losing 80% to the taxman.

Hiring another employee would simply double the burden.

There's another aspect to this: the underground economy. If an employee is willing to work off the books both parties benefit financially.

Also, the customer who's lost 80% of his or her wages to taxes has that much less to spend which does effect their spending which does effect a businesses cash flow.

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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405819 of 449321
Subject: Re: If Date: 10/11/2012 4:59 PM
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To your OP, you don't specify which taxes you're talking about. Personally, I don't think personal income taxes (which seems to be where you're headed) play any role whatsoever in a business' willingness to hire. Walmart doesn't care whether their employees are paying 1% or 80% on their income, they only care whether or not their customers have money to spend. Sure, they'd appreciate lower personal rates as it puts more money in customers' pockets, but it doesn't directly affect their cash flows.

Well, there is plenty of empirical evidence that high personal income taxes reduce economic growth. Whether it reduces a business' willingness to hire is another story.

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Author: mmrmnhrm Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405820 of 449321
Subject: Re: If Date: 10/11/2012 5:10 PM
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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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Author: desertdaveataol Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405827 of 449321
Subject: Re: If Date: 10/11/2012 8:34 PM
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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!"

You have a strange way of looking at the world. :-)

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