[quote=AN][quote=CA renter]CAR, I’ve also worked for small, medium, large businesses. I’ve seen my pay freeze and cut, bonuses freeze. It’s only common sense that as a boss, you’ll squeeze your employees first before you take a hit on your take home pay. Taxes directly affect their take home pay. How much it affect their decision will depend on how close to the edge of that decision they are before the tax increase.
Anyways, like I told dumbrenter earlier, my anecdotal examples isn’t meant to prove that there’s a causation between increasing taxes and reducing wage, which would lead to decreasing demand and GDP. Maybe the majority of the businesses don’t do this. I don’t have data to prove one way or another. However, it’s meant to disprove SK’s statement that higher marginal tax is stimulative. There’s no data on the mass scale to prove that and I gave anecdotal example that disprove it. The data he did provide show no real clear correlation much less causation of increasing top rate is stimulative.[/quote]
This is not true at all. In almost every small/medium-sized company I’ve worked for, the boss took a pay cut before laying off or cutting wages of their workers during rough times. The wise employers know they have more resources to tough it out than their workers do, and in most small businesses, the employees are the ones who make the difference between a successful business and an unsuccessful business. They don’t toss their trusted, well-trained, well-liked (by customers and/or vendors) employees at the first sign of trouble because these employees are very difficult to replace. There are many examples of this, even in very large companies.
This is usually done if the period of weak demand is thought to be temporary, as they don’t want to lose these trustworthy, familiar employees and then have to hire and train new workers to replace them in the future. It instills a sense of loyalty, both between employees and employers, and it’s worked well for many businesses over the years.
Like SK said, there are very few business owners who have a “target profit.” I’ve never met one in all my life.
