California Governor, Without Republicans To Obstruct Him, Creates Budget Surplus
By
ibx, in Speakers Corner
Recommended Posts
Either the person takes a $25-$30k pay cut, or the person get terminated. That's how it goes.
The costs either get passed to consumers OR get taken out on employees. Or, companies go out of business if they do neither.
Re: tax deductability - I could doante $150k this year and have it tax deductible. Problem: I don't HAVE $150k to donate. So deductibility is a bullshit argument for a benefit of INCREASING your red column. And if I have to pay an extra $10k in taxes, that's $10k less that can go to wages. Who gives a shit about "deductibility." If the pay pot is smaller, it is smaller.
Here's a job creation policy: make it easier to hire people. I know, I know. We'd rather punish business owners than hire employees.
My wife is hotter than your wife.
jcd11235 0
BIGUNYa know, I'm not even really sure how to address this, but I'll try...
You do realize that all of that goes into calculating P1 and P2, right? Sorry I didn't go into the details regarding how those are calculated, but that process isn't relevant to the conversation.
BIGUN 1,053
jcd11235***Ya know, I'm not even really sure how to address this, but I'll try...
You do realize that all of that goes into calculating P1 and P2, right? Sorry I didn't go into the details regarding how those are calculated, but that process isn't relevant to the conversation.
Except that your calculation was incorrect and began with... "In general, if it is profitable to hire someone at 1% tax rate, it is also profitable to hire that person at a 99% tax rate."
jcd11235 0
lawrocketYou miss the point. If I have $75k per year to hire somebody, I make $90k per year with that person, and the person now becomes an $85k per year cost but I only have $70k to pay the person, that person becomes a liability.
Either your descriptors or your arithmetic is incorrect. Or both. If you have $75k per year to pay wages and associated costs of a new employee, and that employee adds an extra $90k per year to your revenue, then you're adding $15k per year to your pre-tax bottom line. As long as your effective income tax rate is less than 1, hiring that employee (at $75k per year, all in) is a profitable decision.
lawrocketRe: tax deductability - I could doante $150k this year and have it tax deductible.
Nice red herring. Labor expense is not a donation. Businesses hire employees because those employees increase revenue by an amount greater than the expense associated with those employees.
lawrocketSo deductibility is a bullshit argument for a benefit of INCREASING your red column.
Agreed, but I didn't claim otherwise.
jcd11235 0
BIGUNExcept that your calculation was incorrect and began with... "In general, if it is profitable to hire someone at 1% tax rate, it is also profitable to hire that person at a 99% tax rate."
That's still true.
Let P be your pretax profit or loss. If r is your effective income tax rate, then your profit after taxes is P - r*P. If (P - 0.01*P) > 0, then (P - 0.99*P) > 0.
kelpdiver
There was a full economic cycle during his 8 years. Started in the dotbomb and 9/11, then saw considerable growth for years, and then a spectacular crash coupled with an incredible liquidity failure, which destroyed jobs across two major segments (housing and financials).
The graphical version.
Blues,
Dave
(drink Mountain Dew)
Stumpy 256
Iago.....blah blah blah..... you know you have to let a guy go on Friday for no reason other than business economics you have no business being in this conversation.
Peace, out.
Errr, well yes. If Money in < Money out, then you need to change something. Tax is just one piece of a giant puzzle.
If you can't make the hard decisions when running a business, you probably shouldn't be doing it. No-one LIKES firing people, but that's how it has to be.
jcd11235
Either your descriptors or your arithmetic is incorrect. Or both. If you have $75k per year to pay wages and associated costs of a new employee, and that employee adds an extra $90k per year to your revenue, then you're adding $15k per year to your pre-tax bottom line. As long as your effective income tax rate is less than 1, hiring that employee (at $75k per year, all in) is a profitable decision.
Sounds like a nice ivory tower argument. In reality, that 90k figure is an estimate. And the cost of an incremental employee hire isn't fixed.
BIGUN 1,053
kallend 1,623
KennedyQuoteFunny how those who equate taxes with robbery get so upset when the IRS scrutinizes their organizations.
Not funny to me.
Would you be ok if the IRS had targeted politically left organizations and refused to decide tax status, effectively denying them benefits?
They did, but the GOP keeps remarkably quiet about that.
The only sure way to survive a canopy collision is not to have one.
jcd11235 0
BIGUNJust to get back on track.. if there is a surplus and resulting tax cuts to the middle class; they will have more disposable income and therefore buy more goods & services. When people buy more goods & services, it will result in more taxes; rather than high taxes being paid and thus; stimulate the economy even more. It's about moving money around and getting the government to live on a balanced budget. Period.
A balanced budget from one year to the next is overrated. While it would certainly be nice to have a balanced budget, on average, over longer periods, such as over a decade, over shorter periods, small surpluses or deficits aren't a big deal, and allow the opportunity for more stable tax rates. If there's a surplus for 2-3 years, that's money that can help cover increased expenditures (or decreased revenues) in other years.
kallend 1,623
jcd11235***Just to get back on track.. if there is a surplus and resulting tax cuts to the middle class; they will have more disposable income and therefore buy more goods & services. When people buy more goods & services, it will result in more taxes; rather than high taxes being paid and thus; stimulate the economy even more. It's about moving money around and getting the government to live on a balanced budget. Period.
A balanced budget from one year to the next is overrated. While it would certainly be nice to have a balanced budget, on average, over longer periods, such as over a decade, over shorter periods, small surpluses or deficits aren't a big deal, and allow the opportunity for more stable tax rates. If there's a surplus for 2-3 years, that's money that can help cover increased expenditures (or decreased revenues) in other years.
Very good in theory, but in practice no government has been able to resist the temptation to blow a surplus on, for example, unnecessary wars,.
The only sure way to survive a canopy collision is not to have one.
jcd11235 0
IagoAnd over-educated-grad-student-with-no-real-life-experience above can create all the 'equations' he wants with p1 and p2 and r and whatever else. None of it matters because it IS NOT a simple equation.
Yes, it actually is that simple. Calculating P is far more complex, and that process will vary from business to business. The important property of P is that it is not a function of r.
jcd11235 0
kallendVery good in theory, but in practice no government has been able to resist the temptation to blow a surplus on, for example, unnecessary wars,.
Yes. Good fiscal policy is a small, but important, aspect of good governance. Responsible policy in other aspects of government is also necessary.
Skydiving gave me a reason to live
I'm not afraid of what I'll miss when I die...I'm afraid of what I'll miss as I live
I think about $11 trillion of the debt is actually money owed to Medicare and Social Security. The decades-long Congressional spending spree has been paid for, in large part, with money "borrowed" from Medicare and Social Security. It's gotta be paid back.
It's been the quintessential worst of both worlds. No reserves left for Medicare and Social Security (their "trust funds" are not really trust funds) mean that those moneys must be replenished while more money must be paid to it. That money must come from the general fund, meaning that giving two or three trillion per year to SS and Medicare means that all other spending must be slashed in the future and taxes must be raised significantly (we're talking more than doubled).
It is the inevitable result of the qualities that make governmental practices unsustainable: (1) the offering of market-level services at below-market prices (cost shifting); (2) a pay-as-you-go system funded by those not using the service; (3) funds intended for programs diverted (borrowed) for use in other programs (taking money from Medicare and Social Security has even been used to create "balanced budgets."
Think we've had problems balancing the budget? Let's see what happens in ten years...
My wife is hotter than your wife.
ibx
California only has a surplus because of insanely high taxes and a state legislature which has yet to increase spending to match the revenue returned by the tax increases and recovery from the recession.
1. Brown's 30% increase on the highest marginal state income tax rate in the country raised it to 13.3%. Even people poor enough to qualify for government moderate income housing assistance are paying 9.3% plus the separate 1.0% State Disability Insurance surcharge for a 10.3% total.
http://en.wikipedia.org/wiki/State_income_tax
2. California has the highest minimum state sales tax in the country of 7.5% (6.5% + the 1% uniform local tax, with some cities and counties adding another 2.5% for a 10% total).
http://en.wikipedia.org/wiki/Sales_and_use_taxes_in_California
3. California has extremely high property values (6 of the top 10 most expensive cities in the country are in SIlicon Valley) which means at the base 1% rate a modest 1500 square foot 3/2 ranch built in 1950 can land a $15,000 annual tax bill for people whose tax basis hasn't been limited by Proposition 13.
http://www.huffingtonpost.com/2012/12/02/the-most-expensive-cities_n_2220188.html#slide=1825107
4. California has high corporate taxes. One-man S-corps (like skydiving instructors) pay 2.5% with an $800/year minimum . C-corps pay at least 8.84%.
https://www.ftb.ca.gov/businesses/faq/717.shtml
https://www.ftb.ca.gov/businesses/faq/704.shtml
***Borrow and spend has been the Republican SOP for at least the last three Republican administrations.
Ya know, I'm not even really sure how to address this, but I'll try... Let's use the example of - You need a job. Now, let's say you're not in sales (cause the further you are away from the revenue stream; the harder it is to justify the new hire). on top of what you & I negotiate in the way of wages; I have to pay a "burden" to the government. That's what it's called - burden. Burden is defined as the costs associated with the burden rate which are hidden costs that are not readily apparent. Since total labor costs, including the burden rate, may be as much as 50% higher than payroll costs alone.. that's just for payroll taxes, worker's compensation, health insurance, etc (Statutory Taxes). Then, add in "Voluntary" which you need to attract and retain good employees...
Statutory Payroll Tax Deductions - Payroll taxes must be withheld from an employee's paycheck. This is required by law. Employers must hand these withholdings over to various tax agencies. Payroll tax deductions include the following:
Federal income tax withholding (based on withholding tables in Publication 15)
Social Security tax withholding (6.2% up to the annual maximum)
Medicare tax withholding (1.45%)
State income tax withholding
Various local tax withholdings (such as city, county, or school district taxes, state disability or unemployment insurance).
Voluntary Payroll Deductions - Voluntary payroll deductions are withheld from an employee's paycheck only if the employee has agreed to the deduction. Voluntary deductions pay for various benefits which the employee has chosen to participate in. Voluntary payroll deductions include the following:
Health insurance premiums (medical, dental, and eyecare)
Life insurance premiums
Retirement plan contributions (such as a 401k plan)
Employee stock purchase plans (ESPP and ESOP plans)
Chances are real good that if I'm facing static, additional or higher taxes in my forecast model; you're not going to get hired. However, if there is a surplus, which results in tax cuts, which results in more spending on my organization's goods & services; then you've got a shot.
Unfortunately, you failed the interview, so we must part ways. Sorry, we wish you the best of luck in your future endeavors.
Share this post
Link to post
Share on other sites