bbundy

A friend of mine and co-worker previously an engineering manager working in an advanced technology group at Dell. He said he went to work one day and found out he was no longer working for Dell. Dell transferred the technology group to Foxconn. Benefits were hacked apart and he was laid off. Prior to Dell He also had the opportunity to work with libertarian tea party queen Carly at HP.

Good luck to you when all the vulture capitalists in the industry start seeing that spending good money on product development that may or may not show a profit doesn’t look good for next month’s profit numbers. And using massive capital and slave labor is good for both profit and creating a barrier for possibly more ethical competitors to compete. No worries about screwing the company into the ground. On the way there they will collect enough wealth even more if they can get there tax rate to zero and just have all the working people pay for government, they will just buy up the next profitable business that comes along and repeat. Claim to be a job creator because they bought a business that had employees.

The way it is going down currently in America Private equity is not behaving like job creator. It is destroying America in a very cannibalistic way. Everything I see from the republican side including Ron Paul in terms of economic recovery plans will accelerate this process dramatically in the short term.

Bob

Scrappy Jack

iTrader: (2)

I know this is theory, but can you cite a specific example in the past few decades where a tax was reduced or eliminated and the cost of produced goods dropped?


Can you expound on this? For example, I'm thinking of a hypothetical fossil-fuel oriented company that owns land at the top of a mountain. They begin development and processing and determine that the costs of proper disposal outweigh the benefits of dumping toxic refuse into a river that runs downhill, through a National Park, and then in to a town.


This doesn't make any sense to me. Can you clarify? For example, are you talking about a failing private company that is bought out by private equity who then fails to successfully execute a turnaround play and it ends up going bankrupt after all?

The main time I could imagine corporations not paying any income tax in a given year is if they have booked major tax loss carry forwards or net operating losses - which would be similar for an individual.


For more on Private Equity and net job loss/creation, I would suggest you consider this paper. Basically, they tracked job loss and creation at acquired firms versus a control set which was not involved in PE deals.

jared8783

iTrader: (2)

bbundy

from what i understand Ron Paul wants to return closer to how the founding fathers wanted them?

are you saying you don't want this?
are you saying this is not what you want?

the untested theory thing just confused me cuz from what i understand Ron Paul wants to get back closer the the founding fathers ideals

mgeoffriau

iTrader: (7)

Sure. Shopped for a Rolls while you were vacationing in Sydney recently?

http://www.theaustralian.com.au/news...-1225822578104

Or purchased an iPod while driving through Saskatchewan?

http://www.tuaw.com/2004/12/22/canad...er-tax-ruling/

It's a little messier because you chose an example involving something that specifically isn't private property: the river. It's exactly for that reason, the lack of private property rights that encourages the abuse. I'll give you 2 answers:

1. The stricter anarcho-capitalist would argue that if the root cause is the common ownership of the property in question (the river), then we should fix that problem by making it private property. A private owner of a lake or river would certainly defend his property rights if someone were polluting it. This solution works better with things like small lakes or parks, and would obviously be much more difficult to implement with things like long rivers or ocean routes.

2. A better compromise, in my opinion, would be for the courts to recognize the real legal common ownership of things like public lakes or rivers, and as such, also recognize the right of the actual owners (that is, the people, not government bureaucrats) to bring class-action lawsuits against polluters. The record of the court rulings in cases like these is pretty horrid.

1slowna

iTrader: (1)

Im going to the army surplus store and stocking up before the nominees come to FL. You think they would cut me off if i were to speak for Romney hmmmm NO. Ron Paul dosent need military members to show up with support, he gets mroe donations from military members then all the other canidates combined in cluding Obama, and Romney gets mroe donation from lobbiest then all the other canidates combined INCLUDING Obama. If you want another term from obama but with a white republican face then vote Romney.

FRT_Fun

iTrader: (19)

Now that it's not hipster trendy to vote for a black president I doubt Obamarama will make it another round. It would suck to get Romney :/

jared8783

iTrader: (2)

SC governor and three SC senators have officially endorsed paul

bbundy

Private equity firms are in business to make money they could care less if the companies they buy out make money. The private equity firm gets paid in the form of management fees. If the company makes money it all goes out in management fees so it doesn’t have a profit if the company loses money it still pays the management fees by running up company debt to creditors. Either way the company won’t pay income tax. A well-funded and reasonably managed private equity firm will make money whether the companies it buys out turn around and make money or not. I think Bain was well under 50% in companies not going bankrupt. Essentially half the time private equity is just a way to turn a company’s debt to creditor’s private income.

To compound this everything a private equity firm makes is considered a result capital investment, it’s all taxed at 15% when its paid out to the private partners. A little less than the part time janitor making minimum wage pays to the federal government in the form of payroll tax and about half what the total potion of income going to the federal government is for someone upper middle class earning money by working and they are both likely to be laid off when a private equity firm buys out the company they work for and ships the job to China or India. It is also a fraction of the tax that someone with real talent rather than just having a pile of money will pay as a private Entrepreneur starting a business and hiring people if he pays himself a salary or forbid makes a profit

Every one of the Republican candidates including Ron Paul want to make tax on this form of income 0% and most all of them have plans that will increase taxes for at least I think the bottom 80% at least. Talk about class warfare we are talking annihilation. I think it’s something like 99% of the capital gains tax collected that is subject to the 15% tax rate is from the top 1% of income earners. The economic recovery plan of these guys is highly focused on helping the super wealthy own everything.

Bob

bbundy

In some respects your right. On a few issues Paul is the only candidate I agree with, on others not so much. I don’t recognize Paul as the authority on interpreting what the founding fathers envisioned or that his Ideas are the best path for insuring domestic tranquility or promoting the general welfare as the founding fathers envisioned. A static rigid form of government adhering to the Ideals of the current trend of libertarianism is not the form of government the founding fathers established.

Bob

Braineack

iTrader: (62)

we all know the founder fathers were fascists.

Scrappy Jack

iTrader: (2)

I do not think this is an accurate description of the private equity business model on a couple of fronts. While the PE managers will charge their fees, there are generally financial incentives for the acquired company to do well - unless it is worth more in liquidation than as an ongoing enterprise. That is, they may get paid if the company fails despite their efforts otherwise, but they would get paid more if the company succeeded (and got sold off or taken public).

I do not think your scenario of an acquired firm paying no income taxes is accurate. The acquired company itself will still pay income taxes unless they have enough write-offs to have no taxable income.

I do think the carried interest taxation is a reasonable topic for debate. I think you are muddling the taxation of the company and the taxation of the private equity managers, though.

mgeoffriau

iTrader: (7)

A short but helpful post from Greg Mankiw.

Five Observations about Progressivity

JasonC SBB

bbundy you are regurgitating a 3rd grade cartoon representation of VC's, capitalists, and the free market. VC's have been around forever, and they aren't taking over everything. Businesses tend to grow ever larger and fewer in industries with real economies of scale, but not in other industries in which there aren't economies of scale (e.g. restaurants, machine shops). However, the government itself creates artificial economies of scale when it creates more and more regulations, the majority of which are disproportionately costlier for smaller firms. One example is accounting rules standards such as Sarbanes Oxley which was a knee jerk reaction to Enron, which already broke numerous laws, most importantly fraud. S-O is merely a gravy train for accounting firms.

Technology, the internet, and the spread of knowledge has made many industries more fragmented and has allowed small firms to flourish side by side with giant ones. In the early 80s there were only a few big name electronics manufacturers and very few small ones. Sony, Motorola, RCA, etc. Today, there are thousands. Just look at all the brand names you've never heard of of computer accessories. A few become very large such as Vizio, which started out tiny, in L.A.

Also, if a company is worth more than its pieces being sold off, a predatory VC wouldn't buy it and chop it up. If it was, then it is *better* for society overall for it to be chopped up and sold. Its pieces can be purchased by better, more efficient competitors. In the end the industry it was in will have better cheaper products for its customers.

This is how the free market makes us wealthy:
The competition forces companies to make their products cheaper and better by being more economically efficient. Even workers have to compete and be more efficient. Productivity goes up and all customers and consumers win. We all consume many, many more items than we are good at producing. This is division of labor and specialization. It means for every hour of our labor we can buy more and more varied things. Our labor becomes more valuable. It is why we as a society are wealthier today than 30 years ago.

bbundy

The figures cited are still wrong. My employer considers all payroll taxes to be part of my compensation when they give me a compensation statement, Whereas this only considers half of the of the actual payroll taxes paid out of my compensation paid to the federal government by me because only half of them show up on my personal tax return.

Add another 7.65 % to all incomes below ~100k tapering down to inconsequential as you approach the ~99%. Upper middle class is getting screwed.

The numbers seem messed up because the CBO report also reports as you go deep into the top 1% most of the income is from capital and only 3% from capital for the bottom 95%. The high income earners that do pay high taxes are typically celebrities and sports heroes not investors or members of wealth dynasties. Warren Buffet, Mitt, the Waltons, etc are all in the teens.

Bob

Scrappy Jack

iTrader: (2)

One of the things bbundy is talking about is the taxation of the compensation of a small minority of investment managers that are not taxed in the usual way. I am not 100% clear on the operations, but a large portion of their income in a given year might be taxed as a long-term capital gain via the carried interest rule. That means they would pay 15% income tax if their taxable income was over $34,500 single / $69,000 married.

Theoretically, there would be no FICA taxes applied on the carried interest, either.

mgeoffriau

iTrader: (7)

From this link in that article:

mgeoffriau

iTrader: (7)

Moreover:

Braineack

iTrader: (62)

well it's obvious the 99.9-99.9% is paying more than their fair shair.

bbundy

I think the preferential treatment of income from capital over income from work is drastically distorting the Idea of free market. It's doing a real good job of wealth transfer though. And along with that, lots of that wealth is spent on government trying to buy even more preferential treatment and to spread more propaganda. Heck I think they even bought enough of the suprime court to get their way with the citezens united ruling.

Bob

bbundy

Numbers are still wrong by 7.65% on the lower end of that list.

Bob