Sure our tax rates were the highest in world except no one paid that high of a tax rate. I’ve owned several businesses and still own a couple. We’ve always paid significantly less that what the rate says on paper because we have one of the most gameable tax codes there is.
As a business owner, tax rates have had zero influence on any business decisions I’ve made with respect to hiring and growth or wages paid to my employees. It may come as a surprise but since operational costs come from the pretax (taxes aren’t determined on revenue but on profit) monies so there’s no significant impact on the amount of tax paid.
Like I said, we agree to disagree, which I’m ok with. But there’s no disputing that the numbers are what they are, and you’ve not disputed them. There’s no real difference between the percentage changes in the economic indicators for the 5-6 years prior to the tax cuts and the year after the tax cuts through the end of 2019. I maintain that if the percentage changes increased significantly there might be an argument favoring the tax cuts being the cause of those changes but with them being pretty much within the standard deviation it’s hard to state that the trend would not have arrived at a similar point regardless.
There’s simply no measurable evidence that I’ve seen that supports your belief.
Originally Posted by NoirMan
This explains a lot. You've been able to game the tax system to the extent that operating expenses don't make a significant difference in the amount of tax you pay?
I've been confused as to why wealthy Democrats support tax proposals like Biden's 43.4% rate on capital gains, which would reduce government revenues. Or why they would support extortionary tax rates advocated by Bernie Sanders and Elizabeth Warren that would decimate the private sector and kill jobs. Well, it's because only the little people pay taxes. James Simons, founder of Renaissance Capital and one of the largest Democratic donors, appears to recognize most of his income through a tax free Roth IRA. The incredibly wealthy couple, John and Teresa Heinze Kerry, got most of their income from tax free municipal bonds. And how about the Wall Street private equity managers who got the Democratic controlled House Ways and Means Committee to continue the preferred tax treatment of carried interest.
Then I have friends who "game the system" by continually growing their businesses and borrowing more money. The interest and depreciation expense mean they pay very little tax. About half of them go broke.
I'm not so lucky. I pay taxes out the ass. I was looking at project recently that would have made about $40,000 a year, pre-tax to my share. I couldn't do it because the business would have to pay a 30% foreign tax. Then I'd have to pay a 37% GILTI tax on top of that. And finally an additional 40.8% tax on the dividends to be able to pocket the money. That's insane! Why would I risk the money? The total tax rate is close to 100%. Now yes, I could game the system, and cut the rate to around 50% by making an election to be taxed as a corporation instead of an individual. But then I'd pay a big tax if we ever sold out. And the compliance headache would be huge. As it is I spend about 20% of my time working on tax compliance, and have someone helping me who spends about 50% of her time on it. How the fuck are you supposed to make any money when you're spending all your time on taxes?
Fuck the politicians. And double fuck the ones on the House Ways and Means Committee and the Senate Finance Committee who write the tax laws.
