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From the Horse’s Mouth Dept.; Carl Davidson (KD); Facebook; October 9, 2017.
You can learn more about BCR’s leftster management here. “Leftster” is the combination of leftist and gangster, inspired by the left-originated “bankster.”
Carl Davidson (KD): “FROM THE HORSE’S MOUTH DEPT. Or you don’t have to be a Keynesian or a Marxist to know what’s wrong with ‘trickle down’ and ‘supply side’ economics.”
KD’s post is in reference to an opinion piece in “The New York Times” entitled “Why Corporate Tax Cuts Won’t Create Jobs.” Throughout his piece, author Marcus Ryu (MR) treats “tax cuts” and “tax-RATE cuts” as synonymous; they are not.
Though not to the same scale as MR, I too participated in a successful software startup.
Before I proceed with my two cents, please read the subject piece’s final paragraphs:
“By 2027, when they are fully phased in, four out of every five dollars in proposed tax cuts will flow to the top 1 percent, an egregious wealth transfer to those who least need it.
“I am an entrepreneur and a businessman, but I am also a citizen. I believe tax cuts that deepen our already severe inequality in income and wealth are not in the long-term interests of any citizens, not even the very wealthy. Extreme inequality is corroding our civil society, poisoning our politics, and undermining our effectiveness as a nation. This is an extremely hard problem to solve, but when you’re in a deep ditch, the first thing to do is stop digging.”
MR believes in using taxes to redistribute wealth. I do not. From a conservative’s point of view, the sole purpose of taxes is to pay for government, aka society’s overhead. Though overhead is not inherently good or bad, you’ll find all businesses – both profit and nonprofit - attempt to minimize overhead consistent with business goals. For example, while all businesses must expend resources on accounting, they want to spend the minimum required to meet business and legal requirements. The same should be true for government.
As for MR being a “job creator,” he offered no proof. Were the “more than 2,000 professionals” previously unemployed? If not, did the previous employers replace those employees MR lured away? When a customer buys a Guidewire product, does that product result in a fewer or a greater number of employees?
Throughout his piece, MR asserts businesses don’t do this or that because of this or that “tax cut.” For example, MR wrote, “I have never heard someone say, ‘I would have started a company, but tax rates were too high’ or ‘I wouldn’t have started this company, but then George W. Bush cut tax rates, so I did.’” That’s probably true, but it’s also deceitful.
I don’t know about Guidewire, but most start-ups don’t start out pretax profitable. As long as you’re losing money and thus have no income tax liability, you’re not going to care about income tax rates. Once you become pretax profitable, however, it’s a different story. To the extent possible, all businesses work to minimize their tax liability, whether it’s the entrepreneur burning the midnight oil or a large company’s tax department.
MR wrote, “While I can imagine tax regimes that would create disincentives for entrepreneurship, we don’t have that situation today in America, where tax rates on capital gains (the primary way that founders of successful start-ups make money) are already far lower than rates on ordinary income.” Not exactly. The tax rates for short-term (asset is held for one year or less) capital gains are the same as those for ordinary income. For long-term (asset is held for more than one year) capital gains, the tax rate is 0% for the lowest two tax brackets (10% & 15%), 15% for the next four (25%, 28%, 33%, & 35%), and 20% for the top bracket (39.6%).
MR didn’t mention five states (as of March 2017) employ a gross receipts tax (GRT). Unlike an income tax, a business pays the same GRT whether the business is profitable or not.
In Peace, Friendship, Community, Cooperation, and Solidarity. <g>
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