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View Diary: CNBC confirms it: Higher taxes don't discourage spending by wealthy (13 comments)

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  •  Higher taxes also discourage high risk (4+ / 0-)
    Recommended by:
    basquebob, niaman, Aquarius40, elwior

    financial products because the reward for success is relatively lower after tax.  It also makes having employees in the US or paying them more relatively less expensive because of the tax deduction for wages and benefits.

    “The future depends entirely on what each of us does every day.” Gloria Steinem

    by ahumbleopinion on Wed Mar 27, 2013 at 01:31:41 PM PDT

    [ Parent ]

    •  small business is very risky. (0+ / 0-)

      properly understood, your point is veering on right wing talking points.

      •  I'm not talking about small business and it has (0+ / 0-)

        nothing to do with left or right wing, just the mechanics of financial analysis.

        I'm talking about the analysis that corporations and banks make when assessing projects.  The lower taxes are, the bigger the potential reward - meaning that more risky projects have the potential to payout.  If the after tax return is lower, then they will not undertake the most risky projects, because the potential payout is lower.

        Since wages and benefits are tax deductible, the government essentially subsidizes hiring.  The higher taxes are, the bigger the subsidy.  The lower taxes are, the more costly, on a net basis, employees are.

        Financial analysis is done on an after tax basis, and taxes impact the decisions in ways that are not always obvious.

        “The future depends entirely on what each of us does every day.” Gloria Steinem

        by ahumbleopinion on Wed Mar 27, 2013 at 03:45:53 PM PDT

        [ Parent ]

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