Where is the US economy headed?

@revelette,

You are so naive, Rev. Don't you realize (as Romney pointed out) that corporations are people, too?
They have to find Gucci shoes that look and feel good. They struggle to find the appropriate wine every single night. And the quality of service from servants at their houses? Why, we all know that that illegals - in addition to being cheaper - are grateful to work.

1 Reply

@realjohnboy,

realjohnboy wrote:

You are so naive, Rev. Don't you realize (as Romney pointed out) that corporations are people, too?
They have to find Gucci shoes that look and feel good. They struggle to find the appropriate wine every single night. And the quality of service from servants at their houses? Why, we all know that that illegals - in addition to being cheaper - are grateful to work.

Cute, but wildly inaccurate & deceptive. I run an engineering & consulting company. We are a bit more profitable than the average, but otherwise our numbers are typical. Here's some interesting data for our fiscal year that ended June 30;
==> Salary & benefits costs consumed 80.5 % of net revenue
==> Purchased materials & services consumed 9 % of net revenue
==> Pretax profits were 10.5% of net revenue
==> Federal & State corporate taxes consumed 40% of profits, or 4.2% of net revenue.

The point here is that 80.5 %of our net revenue went to our employees; 9% went to other companies for their services; 4.2% for taxes, and 6.3% to the stockholders equity.

1 Reply

@revelette,

Right, I understand.

So, remove the tax code and increase taxes on investors, etc. That levels the playing field and collects taxes on those who benefit from the changes. It just makes more sense to me....

1 Reply

@georgeob1,

Wow.. they are lucky they aren't taxed as people..

Otherwise they would have had to pay 7.65% of their net.

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@maporsche,

Yes indeed so instead of sitting on three trillions dollars as they are doing now why not 20 trillions dollars?

Surely you would do everything possible not to have all that tax free profit given to the stock holders in the form of normal income.

The more tax free funds you keep on hand the more your stock will be worth and the holders will pay zero taxes until they sell the stock and then at capital grain rates.

Nice why of granting the wealthy even more tax loops holds and causing the national debt to bloom even more.

Maybe I should post the titles of some basic economic books for you guys to read.

1 Reply

@BillRM,

Easy solution Bill....change the capital gains rates.

I'm not suggesting that we take in less taxes as a result of business income...just that you tax it at a different point and that point is either going to come from new employees or investors. I don't see a problem there.

And if businesses want to sit on their trillions and do nothing with it...well, great...it means that we won't have to bail them out in the future. And if they decide to post them as profits or dividends then we'll collect the taxes at the point where the investors make money.

1 Reply

@maporsche,

Quote:

And if businesses want to sit on their trillions and do nothing with it...well, great...it means that we won't have to bail them out in the future

Sitting on trillions of trillions of dollars IE withdrawing that amount from the cash flow of the society is not great as it would act as one hell of a brake on the whole economic by causing one hell of a liquidity crisis.

Footnote we already facing such a problem but the actions you wish to do would make it far worst.

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@parados,

parados wrote:

Wow.. they are lucky they aren't taxed as people..

Otherwise they would have had to pay 7.65% of their net.

Your comment makes no sense.

In fact I included payroll taxes in the benefit calculations: they amounted to 5.0% of net revenue.. Using what I suspect is your approach (including payroll taxes in the tax category) , our totals were as follows (% of net revenue);
==> Employee salary & benefits -- 75.5%
==> Purchased materials & services -- 9.0%
==> Federal & State taxes -- 9.2%
==> Stockholders equity (net profit) -- 6.3%

The clear point is that Romney was right - corporations are merely collections of people, and people are the beneficiaries of the corporation's activities. In our case the company is 50% owned by a collection of managers and 50% by all the employees in the form of an ESOP (stockholder trust).

2 Replies

@georgeob1,

Fair enough, George. I would just as soon not get into nitpicking your company's income statement (avoiding putting everyone to sleep). I would note though that ESOP's and the employee-owners get some very favorable tax treatment.
I like them in circumstances perhaps like yours because they tend to prevent brain-drain.

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Did anyone here sign Moveon.org and Russ Feingold's petition to force GE's CEO Jeffrey Immelt to resign as the administration's jobs czar?

http://pol.moveon.org/immelt_must_go/

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@georgeob1,

The funny thing is.. your corporation was able to write off the FICA taxes when they only paid half of it.
People aren't allowed to do that if they only pay half of it.

1 Reply

@parados,

Idiot. The other half is paid by employees - a deduction from pay.

The OCD is appears to be getting worse. Seek treatment.

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@parados,

parados wrote:

Wow.. they are lucky they aren't taxed as people..

Otherwise they would have had to pay 7.65% of their net.

Actually, no. A corporation's equivalent to an individual's income is its profit, not its revenue. So if George's company pays 40% of its profits in taxes, this means the US and the state of California treat his corporation like an individual in the highest income tax bracket. This seems perfectly appropriate to me.

1 Reply

@Thomas,

No, because a business can write off expenses that a person can't.

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Consumer debt contraction has slowed to nearly flat in 2011. The $11.4T is the lowest since March '07 when it was $11.3T.

http://1.bp.blogspot.com/-MkYfRFLupL8/TkkyzoYojAI/AAAAAAAAKo0/_ba-EaHNzGs/s320/NYFedQ2TotalDebt.JPG

1 Reply

@JPB,

Obamanomics has stalled the US economy.

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It also looks like retail sales have more than recovered so it looks like consumers are back spending at their pre-recession levels. I keep hearing that we have to spend our way out of recession. It looks like the consumers are doing that but business contractions are keeping the recovery in slow motion.

oops - the right side of the graph gets chopped off. Full graph here http://cr4re.com/charts/chart-images/RetailSalesJuly2011.jpg

1 Reply

@parados,

parados wrote:

No, because a business can write off expenses that a person can't.

A comment that amply illustrates your lack of understanding of the reality behind the details that so obsessively fascinate you.

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@JPB,

Consumers are currently spending money to stock up in preparation for the Obama depression.

1 Reply

@H2O MAN,

Quote:

Consumers are currently spending money to stock up in preparation for the Obama depression.

You mean the depression that the GOP had been trying to force the nation into long before he Obama took office?

With the last example of their actions being the harming the credit rating of the nation.

I assume you are also aware of the fact that it was the GOP in power when the last great depression occur.

1 Reply

Where is the US economy headed?

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