achenator

Anybody have feelings on this? I've been told by my accountant to expect to pay another $12k in 2011. All this is gonna do is keep me from spending some $. I'm still gonna save the same, but i'll have to cut extraneous spending. I believe it's gonna affect people in the $250-$500k range the most.


Do you think now is the time to raise these taxes. To me most people in the $250-$1m per year are small business owners, doctors and other professionals. These are the people that hire other prople.

doopstr

No matter what Obama says, Bush's taxcut was great for middle class families. I get a $4k break every year because I have 4 kids. That will probably go away.

Fibonacci

Moog-Type-S

Letting the Bush tax cuts expire is like shooting yourself in the foot.

gatrhumpy

iTrader: (1)

^

hornyleprechaun

I've done that.. no big deal

Professor

If the wealthy ($250K and above) will be hit with some extra $K in taxes, they can always quit and work at Walmart are probably get an EIC. Please... when dollars fly out of your pocket for taxes, the last thing you think of is the "help" you could have been to others if you had that money.
Can you name any business person whose only criterion to hire is based on the marginal tax rate?

Dr. Colorado

Yep, I get socked in the nutz twice.

QFT

Not necessarily help. But, I do donate to charity. Dining out, shopping, etc. ideally stimulates the economy and facilitates employment for others. I still save the majority of my money but with these tax increases I am more inclined to stay at home for dinner, go to the movies instead of the club, take less vacations, etc.

Professor

Maybe so. But we are talking marginal rates. In otherwords I'm not sure average people alter their spending behavior because of tax rates. People are more likely to alter their behaviors because of inflation than other factors.

Dr. Colorado

I concur. Perhaps it's more psychological than fiscal? For example, low interest rates were an incentive for me to buy a home which involves a monthly mortgage $7K that far eclipses any individual purchase I might make on a regular basis.

Still, when I see the hard numbers from my CPA it's alarming on paper. A 4-5% income tax increase at my gross salary still makes me sick to my stomach.

When I see all the empty restaurants and hotels here, it's obvious that the economy is taking it's toll on tourism, and higher taxes have to factor into that to some extent.

Silver™

It may not be a sole criterion, but your personal financial situation as a small business owner certainly effects your business decisions (hiring, equipment purchases, investments, etc...).

Professor

I think it has little to no effect. The proof can be seen all the time when businesses decide to locate in high tax states like Cali and NY over low tax , right to work states like SC.

Silver™

We are talking about small businesses which develop in every corner of the country, although I think the number of small businesses that decide to locate in LA or NYC are driven by the fact that is where there largest customer(s) is located or they need employees with a specific skill set. Although I would guess those numbers to be small overall.

But I don't think you would disagree that, all things being equal, a company would locate where the business climate is most favorable.

There have been a lot of studies over the years that have shown that tax rates effect small businesses and their decisions as far as hiring, purchasing, expanding, etc...

We find that individual income taxes exert a statistically and quantitatively significant influence on the probability that an entrepreneur hires workers. Raising the entrepreneur's tax price' (one minus the marginal tax rate) by 10 percent raises the mean probability of hiring workers by about 12 percent. Further, conditional on hiring employees, taxes also influence the total wage payments to those workers.

http://www.nber.org/papers/w6578

Professor

Wow that's not much at all... you increase the marginal rate by a whopping 10% and it only reduces the probability of hiring by 12% (what other variables would reduce the probability to 0%?). It would be like moving to the Amazon and it only increases the chance of rain by 12%.

I'd like to see a chart with the marginal increases as compared to reduced hiring probability... I sure it's not a straight vertical line where at any marginal rate increase the result would be a 12% probability reduction. But I wonder if a 30% increase would bump up the probability reduction to say 18%. If the relationship is relatively inelastic to a certain equilibrium (i.e., increases at an increasing rate in the marginal rates results in increases at a decreasing rate in the hiring probability), it may make sense to tax more.

At any rate, we may be on the other side of the Laffer curve and are losing money due to the low rates.

AdamNJ

not according to arthur laffer during an appearance a few weeks ago on Glenn Beck.

Professor

^ I bet Beck didn't ask him at what rate would we be on the otherside of the curve. I'm starting to think there is no curve at all; "Reduce taxes to zero percent, or better yet, negative 15% and revenue will still rise for the country."

Brandon24pdx

Should be a net gain for the country, assuming they are allowed to sunset (a huge assumption right?) although some people will get stung.

My personal opinon is that the cuts were fiscally irresponsible to begin with and now there's a bit of a hangover to nurse.