The Tea Party - how frightening is this movement?

[HappySqurriel]

ManusJustus said:

HappySqurriel said:

You increase taxes on high income individuals (mostly small business owners) or corporations and one of their initial reactions will be to cut costs to maintain their current income level; this will translate into layoffs and a reduction in spending across the board. The reduced revenues these companies receive due to lower employment and other companies cutting back may result in further cost cutting. When this is done there is a massive surplus in labour which results in lower income increases, and people getting hired for lower wages with fewer benefits.

By the time the employment rate returns to normal employeers are earning about as much as they ever did (after taxes) but the employees are earning less and have fewer benefits.

Thats not how the real world works.

Labor that businesses hire is entirely dependent on a cost-benefit analysis on how much that labor costs verse how much money that labor produces.  If you tax rich people more, they will still hire the same amount of people because the optimum value of profit to cost of labor stays the same.  They aren't going to cut labor and cut profits in the process (reducing their ability to meet demand), and if cutting labor increases profits then they are going to do that anyway.

How much the rich are taxed has absolutely no bearing on their business decisions.

In what world do you live in? Is the sky purple where you are?

Taxes are a cost on businesses, and like all costs companies will do everything in their power to pass on the increased cost of taxes; or to recover the loss by cutting costs elsewhere. Corporations are never run as lean as they can be, and often they have staff on hand which represent a net-cost currently under the assumption that they will bring in increased profit down the road (new grads); at the same time corporations have an obligation to do everything in their power to meet their short term forecasts, and if they have to cut new grad and intern hires (for example) because taxes were increased to meet their profit forecasts they will.

 

On top of that, speaking from someone who has survived several rounds of layoffs in a company, you would be surprised by how much work really doesn't need to be done; and how much additional work (often free overtime) when people are afraid that they will be in the next round of layoffs.