[quote=SK in CV]I would suggest that your friends with businesses don’t run their businesses as most are run. Most businesses are run for the highest net possible, and they don’t have employees that they don’t need. If their net income isn’t already significantly more than $250K a year, then this conversation is moot, since we’re discussing only the top tax rate. I’d love to see a very precise description of how a very small increase in the top tax rate would cause a company to drop an employee. With actual numbers. I’ve asked this question quite a few times in other circles, I’ve never got a response.[/quote]
I personally don’t know the moms and pops’s business friends’ finances, so I don’t know if they’re over $250k or not. So, I can’t say one way or the other. However, they have one employee to help them out so that one of the spouses don’t have to work all 10+ hours everyday. If you squeeze them enough, they’ll let go of the employee and have the spouse who are not working 100% cover the work done by the worker. Said worker are also part time worker.
I don’t think a very small increase in the top tax rate would cause a company to drop an employee. Even in my friends’ case. However, my point is that there is a tipping point (which is different for everyone), and if you raise the tax enough that causes them to cross over that tipping point, they’ll start to let one or more employee go. I was specifically responding to this statement by you:
[quote=SK in CV]There is evidence, however, that the higher than current marginal rates on businesses (we’re talking small businesses here, NOT big corporations) are stimulutive, and I’ve outlined the reasons for that. That argument is very specific to businesses, not a claim that higher tax rates are always stimulative.[/quote]You didn’t say a small increase in the top tax rate. You just said higher than current marginal rates. I was assuming you’re talking about 50-60% tax rate you were referring to a few posts back. Also, I gave you instances for it’s not stimulative as you’ve claimed. If anything, it’s the opposite of stimulative. I can’t understand the logic of why it would be stimulative. Maybe you can explain that to me. If their sales/revenue stays constant, how can decreasing their net profit be stimulative?
Now, with my friend who have 150+ employees, yes, they’re well over $250k. If you squeeze their net pay, they’ll gladly find profit in other ways. Such as letting their American employees go and increase their work force for factories in cheaper countries. They’re already doing that by expanding their factories to lower cost countries. They’re not going to just reduce their living standard/saving to absorb the extra tax burden. Again, I don’t know their tipping point, but I do know that’s what they’re currently doing and they’ll gladly accelerate the transition if their net profit decreases.
