Same as it ever was...

[Professor S]

President Barack Obama announced an agreement with congressional Republicans Monday night to extend the Bush-era tax cuts to all Americans for two years — including wealthier families — but it still faced serious opposition from many in the Democratic Party.

The deal also includes a payroll tax cut for workers in 2011 — trimming the Social Security tax rate by 2 percentage points and saving $1,400 for a family earning $70,000. Republicans would agree to renew jobless benefits for an additional 13 months without paying for them, which the GOP views as a significant concession.

Read more: http://www.politico.com/news/stories/1210/46042.html#ixzz17QknZeUU

So more spending to go along with tax cuts... good lord no one ever learns, do they? The worst part is the jobless aid could simply be taken directly from money that has already been appropriated but not spent. And only for two years. How do companies financially plan for only two years out? They're going to start making adjustments NOW if they can, if they haven't done so already, and this only delays the pain to dividends and capital gains.

This isn't governance... its pure politics on both sides and shows exactly why there is so much distrust for government.

EDIT: Sorry, the bill would be about $800 Billion, unpaid. Far more than the unspent moneys from stimulus.

[Typhoid]

While I have no real say on this, I will just say I hate the way (American) government works.

The Republicans will (most likely) 100% shoot down everything Obama proposes, because they don't want him to succeed. So when nothing happens, they can say "Well, what did Obama even accomplish in his presidency? Vote Republican", despite the fact it's the Republicans who are shooting everything down, and slowing the progress of your country in any type of financial or stable way for the masses of people.

They've even come out and said one of their main concerns is to make sure Obama doesn't have a second term. Sorry - but shouldn't one of your main concerns be "Making life better for the people you're representing"? You know, more money, more jobs, more homes, better/safer schools. Worry about things like that, instead of worrying about a black democrat possibly serving a second term.

On the other hand, American Democrats are spineless pansies who seemingly just think "woe is me, what other Democrat can I blame for this failing" the whole time Republicans bully them into giving up something they're proposing. Requisition yourself some balls, American Democrats. Stop trying to take the really, really high road, and instead just take the normal road. The road that lets you act like competent adults who aren't just pretending to attempt to lead a country.

[Jason1]

The fact that we are extending Bush tax cuts for multi-millionaires is utterly ridiculous. TRICKLE DOWN ECONOMICS DON'T WORK. The rich fat cat execs wont hire more people because they get a tax cut. They will just pocket their money because they are all greedy. Republicans dont want to extend unemployment benefits for people that really need it, but are completely willing to extend tax cuts for all their rich buddies, even though this will add to the debt waaaaaay more than an extension of unemployment benefits will.

It basically works like this. Lets say you own a company that makes widgets. You have orders to make 10,000 widgets this year, and you have just enough employees to get this done. Suddenly, you get a order for 5,000 more widgets. So you hire more employees to keep up with demand. Now, lets say you get the tax cuts you were hoping for. Will you suddenly hire more people just because you received a tax break? NO, you wont, because demand is the same. Likewise, if you dont receive the tax cuts, will you start laying people off? Again, the answer is no...you still have that demand for the extra widgets and your still making money the more widgets you sell. This stuff is really pretty simple here people...

[TheGame]

Jason, I definently agree with your post. It's more complicated than the model you laid out, but it's common sense either way you look at it.

Rich people hoarde money, they don't spend it. That's how they're rich. lol

Give the tax cuts to the people to spend money more, then there will be more demand for products, more jobs will be created to help move the products in question, and in the end, the rich/greedy folks come up too.

That's why pretty much every time the budget was balanced in history, it took some type of tax increase to the rich. Because their Tax rates don't matter.. As long as the demand is there, even if the big corperations are failing they can either increase the prices, or someone else can step in and sell the product in question for cheaper. Even Reagan had to do it. And even when he cut taxes for the rich, the tax rates after the cuts were more than twice as high as they are now. And people wonder why the economy is going to hell.

And rich people managed to convince (with money I'm sure) both parties and the masses that cutting rich people's taxes will help.

[Professor S]

It basically works like this. Lets say you own a company that makes widgets. You have orders to make 10,000 widgets this year, and you have just enough employees to get this done. Suddenly, you get a order for 5,000 more widgets. So you hire more employees to keep up with demand. Now, lets say you get the tax cuts you were hoping for. Will you suddenly hire more people just because you received a tax break? NO, you wont, because demand is the same. Likewise, if you don't receive the tax cuts, will you start laying people off? Again, the answer is no...you still have that demand for the extra widgets and your still making money the more widgets you sell. This stuff is really pretty simple here people...

Your analysis is a little simplistic. Lets take your example, looking beyond what we define as taxes and to what the total cost of doing business actually is:

You are a company that makes 10,000 widgets a year and have 12 employees. You get an order for 5,000 more widgets than normal so you hire more employees, right? Not so fast.

You are a single proprietor. You make 14% profit of each widget you make. If you sell 5,000 more widgets it will take you into a higher tax bracket and that reduces your margin. Moreover, you need to increase staff by 15% to meet the new demand, but if I hire a 13th employee I will need to either pay a fine to the government for not offering health-care insurance or purchase it for them on top of disability insurance, unemployment insurance, social security, etc. To top it all off, to even do any of this I will need to bet on my own business by taking out a loan to expand my production capacity to meet this added demand.

In our country, our current tax policies and regulation punish success, or let me correct that: they punish new success and maintain those who are established. For every new job a small company offers, or pay increase they make, we make it harder for them to do business, and then we wonder why our recovery is slow and jobless rates stay high while we only offer two years of tax certainty for them to depend on for their budgets.

Overall, we have to get away from these silly games we play on both sides. Democrats and Republicans use taxes as a means to play with the emotions of their constituents. Democrats love class warfare, and Republicans play the role of the stingy uncle (meanwhile increasing spending yet again).

What we need to ask is this:

What is the purpose of taxation?

If it is generate revenue for the government, then our direction is simple , even if the task is not. Throughout the 20th century and the first part of the 21st, our tax revenue has been about 17%-18% of our GDP... REGARDLESS OF TAX RATES. Whether the top tax rate is 90% or 35%, it makes no difference. So if revenue generation is the purpose of taxation, tax policy should be whatever helps increase GDP. What that is, is a discussion for another day.

If instead, the purpose of taxation is to enact social justice and redistribute wealth, or to reward those who helped you gain power, well then we should have those arguments on those terms.

Which are we engaging in now? Look at our policy. Look at our debt. I'll give you three guesses, and the first two don't count.

[Professor S]

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[Professor S]

CORRECTION: According the Hauser's Law, tax rates maintain at about 19.5% of GDP regardless of great changes in tax rates:

http://en.wikipedia.org/wiki/Hauser%27s_Law

http://upload.wikimedia.org/wikipedia/en/7/75/U.S._Federal_Tax_Receipts_as_a_Percentage_of_GDP_1945%E2%80%932015.jpg

Note: The highest percent revenue generation (~20% of GDP) were in years 1945 and 1999. In 1945 the highest tax rate was 94%. In 1999 the highest tax rate was 39.6%, half the rate it was in 1945, yet they performed identically.

Remove your personal feelings. Abandon idealism. Lets start from scratch and figure this out for real, and stop playing the game both parties want us to play. Perhaps the best tax policy is Clinton's, and if that is the case, lets make it PERMANENT. I'm not opposed to the rich paying a few percent more, but it is this back and forth that prevents any business from making plans. Stability is needed, and nothing our government has done in the last two years has provided it.