Reflections of a GOP operative who left the cult - Page 3 - Non-Sports

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Posted by crazystengel on 9/8/2011 3:44:00 AM (view original):
swamp and padna are quick with the "nothing to see here, move along" analysis, but some in the media are picking up on this article, and they're a little more impressed with it than our resident cons here.

James Fallows at The Atlantic wrote about it twice recently:

http://www.theatlantic.com/politics/archive/2011/09/a-harsh-case-against-obama-and-his-opponents/244512/

http://www.theatlantic.com/politics/archive/2011/09/people-dont-realize-how-fragile-democracy-really-is/244559/

Matt Taibbi at Rolling Stone also weighed in:

http://www.rollingstone.com/politics/blogs/taibblog/how-the-apocalyptic-gop-is-dragging-us-into-a-civil-war-20110907?link=mostpopular5

I'd really like to see this piece get as much attention as possible. This is what the "low-information" voters should be reading.

I've seen it in the LA TImes and other places too. Like I mentioned earlier, there are elements of it I agree with. But most of it it is is bunch of assertions - opinions. It insults the people who disagree with the basic principles. So what if he worked in the Republican party and had a change of heart. People changing their viewpoints about things goes back a long time - on both sides. You're quick to point at me and ascribe a "help businesses at all costs" mantra - which is not necessarily accurate while at the same time offering nothing in the way of an alternative. I'm perfectly willing to discuss issues rationally and have offered that many times. Such as in the "what is a fair share" thread. What I don't see is a reasonable, thought out, defendable response.

What is government's role in short and long-term job creation?

How does the tax issue affect job creation?

I'm pretty easily transparent with how I view things and welcome discussion; I've been very clear that I am conservative. I've also been clear that I do not march lock-step to whatever people with opposing viewpoints believe my "marching orders" (which don't exist) are.

What do you think about these questions?

9/8/2011 7:12 AM

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MikeT23

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Posted by contrarian23 on 9/8/2011 7:03:00 AM (view original):
Posted by MikeT23 on 9/6/2011 7:36:00 PM (view original):
Sarcasm will get you nowhere if you want to have a serious discussion.

Businesses are in business to turn a profit.    Agreed?

So, when someone or something affects the bottom line, what would a smart business do?    I'll answer because, if you don't see it, I can't help you anyway. Find another way to get the profit margin back up.   Agreed?

Does taxation affect the bottom line?   Yes. Agreed?

So, with this info, what do you think a higher taxation rate would do?   I'll give you a few options.
1. Send jobs overseas.
2. Increase cost to the consumer.
3. Lower wages/benefits to employees.

If you said "All of the above", you have correctly passed the test.
If you said "all of the above" then you have failed economics 101.

1.) If companies could charge higher prices, they would already be doing so (no company would leave profits on the table). Since increasing corporate tax rates has no impact whatsoever on what consumers are willing to pay, corporations paying higher taxes would not be able to increase revenue (or profits) by raising prices.

2.) If companies could reduce their wages/benefits, they would already be doing so (no company would leave profits on the table). Since increasing corporate tax rates has no impact whatsoever on what wages workers will accept in order to take a job, corporations paying higher taxes will not be able to reduce costs (or increase profits) by lowering wages or benefits.

No need to repeat the argument re: sending job overseas. It works exactly the same way.

In fact, there is no theoretical relationship, and more damningly no empirical relationship, between corporate tax rates and any of the things described in Mike23's post.

As a small business owner, I'll tell you why you're wrong.

1. You have to remain competitive in the market and foster goodwill with your customer base. In times of need, a company can charge more. Some do, most don't. Would you like to know why? Because, at some point, the customer/consumer will have other options. And most will remember that you stuck it to them in the past.

2. You have to keep your employees happy. As you may know, there are a lot of unemployed people running around right now. Many of them are qualified for jobs. A business owner could hire them at a cheaper rate and fire all employees unwilling to take a pay cut. Would you like to know why they don't? Because, at some point, your employees will have other opportunities. And most will remember how you treated them when you had other, cheaper options.

Not sure if you've every been in the business world but, if you're reading your theories from a book, I suggest finding a job and getting some experience.

9/8/2011 8:59 AM

MikeT23

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This annoys me.

Let's apply the "charge higher prices" theory to real-life. Milk seems to sell well in your Mom and Pop. Jack it up a buck. Doesn't sell so well. Reduce it by $.50 next week. Sells better. Add a quarter next week. Sells fine. Add another dime the following week. Holding steady. Add a nickel next week. Sells fall off a bit. Cut it back a nickel.

How many times have you seen that happen at your grocery store?

9/8/2011 9:47 AM

MikeT23

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Now let's apply "reduce wages". 10 people are hired at $10 per hour. Three more apply and will take $9. They are hired and three others are fired. Two more apply and will take $8(they have families to feed, you know). They're hired and 2 of the $10 are cut loose. All five of the less than $10 quit because they find a job that pays $9/50. Five are hired at $10 again.

Does this happen? Ever?

9/8/2011 9:50 AM

contrarian23

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Mike, we can compare resumes some time - I work as a senior executive in a large multinational company right now, and have so for many years. In addition, I run a small business of my own. I also have significant experience with a leading management consulting firm and have worked directly in the financial markets. Nothing I'm discussing is "theory from books." It's all real world experience, from working with companies of all sizes, all over the globe.

Your own examples prove exactly the point. You charge prices based on what the consumer will pay. Period. What your corporate tax rate is has nothing to do with it. If consumers are willing to pay $3.99 per gallon, then no matter what your tax rate is, that's what their willing to pay. You can try charging $4.50 when your tax rate goes up. Good luck with that.

Exact same argument with regard to wages. The market determines the price - not your tax rate.

No relationship between corporate tax rates and any of the things you've described.

9/8/2011 10:34 AM

rcrusso

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Appears we have another candidate for Mike to block. When will you guys learn that there is no future to disagreeing with Mike.

9/8/2011 10:51 AM

MikeT23

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I'm sure we can compare resumes. Or dick sizes. Or bench press max. It's the internet. You can be whatever you want to be.

However, there are profit margins that need to be maintained. I'm pretty sure corporate taxes affect that bottom line. When taxes cut too deeply into that line, changes are made. Reducing labor/wages is one way to change it. Increasing charges are another. If those two things are not options, the business may just close it down.

So, senior executive of a large mulitnational company, would you agree that taxation affects profit margin?

9/8/2011 10:51 AM

MikeT23

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BTW, one failure in your initial post is that increased corporate tax affects all businesses and not just one. So the competition will be paying higher taxes and, therefore, have the same gun held to their head. They would also have these options.

1. Send jobs overseas.
2. Increase cost to the consumer.
3. Lower wages/benefits to employees.

9/8/2011 10:55 AM

MikeT23

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I guess I could go on but I think it's complete folly to even insinuate that businesses have no recourse against higher taxes. I guess, at large multinational companies, they just bite the profit bullet when the government says "Gimme".

9/8/2011 11:01 AM

contrarian23

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Never said businesses have no recourse. I just argued against your definition of what those recourses are.

The folly in your reasoning is that "profit margins have to maintained." No. Profit margins have to be maximized. And I promise you if you're working for a publicly traded company and you try to "maintain" your profit margins versus maximize them, you'll have a short career. You can (and should) be fired for failing in your fiduciary responsibility to shareholders.

If you can increase profits by increasing prices, or by cutting wages and benefits, then you will do so. What your corporate tax rate is has nothing to do with the issue.

You can't even decide what your opinion is. In some posts you argue that tax rates will lead to these outcomes; but earlier you also said businesses can't/won't do these things because they need to foster loyalty among consumers and employees. So which is it?

It's also cute that you first imply that I have "no experience," then when I beg to differ you imply that I'm flaunting ***** size. But when the core logic of your argument breaks down, ad hominems are all that you have left.

9/8/2011 11:12 AM

MikeT23

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My opinion is pretty set in stone. Declining profit leads to action of some sort. Increasing tax burden will decrease profit. What part of this are you disputing?

As for ad hominems, I'm simply pointing out that throwing out a resume is silly. You could be Bill Gates or you could be an unemployed 19 year old living off welfare. No way for anyone to know. So claiming to be a senior exec at a large multinational company carries no weight. Your argument is your argument. And it's a failure.

9/8/2011 11:23 AM

contrarian23

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Increasing tax burden will decrease profit: Yes.

Declining profit leads to action of some sort. Maybe. Companies should always be trying to increase (not "maintain") profits, so this may or may not be true.

The key point of dispute is WHAT actions will be taken. I have pointed out that economic incentives to maximize prices and minimize costs exists regardless of what tax rates are. And that therefore marginal tax rates have nothing to do with whether companies will or won't try to do those things. You have yet to provide an argument why this is not true.

Want to know the best, fastest, and most efficient action companies can take when govts increase tax rates? I'll give you 2, both of which (unlike your examples) ARE directly attributable to tax rates.

1.) Finance a PR campaign to convince people that increased taxes are bad for them, through higher prices, lost jobs, etc.

2.) Bankroll the campaign of a politician who will oppose those taxes.

Both are very cost effective, especially when you have a media that does much of the work for you.

9/8/2011 11:32 AM

MikeT23

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I actually think we agree to a point.

I agree that companies will attempt to maximize profits while maintaining a content customer base/labor situation. However, when an outside force begins to affect said profits, the company will react. While the optimal solution is to increase sales, therefore allowing a lower profit per unit in order to maintain profit margin, there are limits on demand. So, when the demand limit is near peak and profits are still declining, the business is likely to act.

And we're back to where we started. Outsource, increase charges, lower expenses.

9/8/2011 11:38 AM

contrarian23

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So now you're saying in response to increased taxes companies will LOWER prices (to increase sales, but with lower profit per unit)? So far you've said companies (a) will raise prices because they have to, (b) won't raise prices because it will annoy consumers, and (c) now you're saying they'll lower prices in order to increase sales.

And you're back to "maintaining" profit margins again.

Remind me not to hire you to run sales or marketing. You can stick with PR.

9/8/2011 11:43 AM

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