Paul Won Iowa
#81
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
#82
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You're confusing the person who writes the check with the person who actually pays the cost. Corporations don't pay taxes, the cost is merely passed on to individuals. All that corporate taxes do is provide government an indirect way to pick winners and losers and control prices.
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.
Abstract:
Private equity critics claim that leveraged buyouts bring huge job losses. To investigate this claim, we construct and analyze a new dataset that covers U.S. private equity transactions from 1980 to 2005. We track 3,200 target firms and their 150,000 establishments before and after acquisition, comparing outcomes to controls similar in terms of industry, size, age, and prior growth.
Relative to controls, employment at target establishments declines 3 percent over two years post buyout and 6 percent over five years. The job losses are concentrated among public-to-private buyouts, and transactions involving firms in the service and retail sectors.
But target firms also create more new jobs at new establishments, and they acquire and divest establishments more rapidly. When we consider these additional adjustment margins, net relative job losses at target firms are less than 1 percent of initial employment. In contrast, the sum of gross job creation and destruction at target firms exceeds that of controls by 13 percent of employment over two years.
In short, private equity buyouts catalyze the creative destruction process in the labor market, with only a modest net impact on employment. The creative destruction response mainly involves a more rapid reallocation of jobs across establishments within target firms.
Private equity critics claim that leveraged buyouts bring huge job losses. To investigate this claim, we construct and analyze a new dataset that covers U.S. private equity transactions from 1980 to 2005. We track 3,200 target firms and their 150,000 establishments before and after acquisition, comparing outcomes to controls similar in terms of industry, size, age, and prior growth.
Relative to controls, employment at target establishments declines 3 percent over two years post buyout and 6 percent over five years. The job losses are concentrated among public-to-private buyouts, and transactions involving firms in the service and retail sectors.
But target firms also create more new jobs at new establishments, and they acquire and divest establishments more rapidly. When we consider these additional adjustment margins, net relative job losses at target firms are less than 1 percent of initial employment. In contrast, the sum of gross job creation and destruction at target firms exceeds that of controls by 13 percent of employment over two years.
In short, private equity buyouts catalyze the creative destruction process in the labor market, with only a modest net impact on employment. The creative destruction response mainly involves a more rapid reallocation of jobs across establishments within target firms.
Last edited by Scrappy Jack; 01-17-2012 at 01:20 PM. Reason: Edited formatting to make it easier to read
#83
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
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
#84
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/
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.
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.
#85
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.
#88
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.
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
#89
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
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
Bob
#91
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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.
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.
#92
A short but helpful post from Greg Mankiw.
Five Observations about Progressivity
Five Observations about Progressivity
There has been a lot of discussion recently about tax progressivity. A few observations on the topic:
1. The U.S. personal income tax is generally progressive, and substantially so. Click here to see the numbers. The average tax rate for tax returns with over $1 million in income is 25 percent. The average tax rate for returns with income between $50,000 and $75,000 is 7 percent.
2. It is arguably better to use an average tax rate that is all-inclusive. That is, we should include not only personal income taxes but also payroll and corporate income taxes. CBO analysts regularly do that. They find a substantially progressive tax system, as I have pointed out before.
3. If we added transfer payments (which are essentially negative taxes), we would find an even more progressive fiscal system. Those data are harder to come by, as data on transfers are rarely integrated with data on taxes.
4. It make little sense to aggregate payroll taxes with personal income taxes and ignore corporate income taxes. A corollary: Paul Krugman should be more careful when reproducing graphs from partisan think tanks.
5. All of these calculations are static. They ignore the general-equilibrium effects that arise as the true burden of taxation is shifted by behavioral responses. In essence, these calculations are made under the implicit assumption that factors of production are supplied inelastically, so the tax stays where legislators put it. Of course, that assumption is implausible, especially in the long run. True general-equilibrium tax incidence is very hard, and as far as I know, reliable estimates on it are not readily available.
1. The U.S. personal income tax is generally progressive, and substantially so. Click here to see the numbers. The average tax rate for tax returns with over $1 million in income is 25 percent. The average tax rate for returns with income between $50,000 and $75,000 is 7 percent.
2. It is arguably better to use an average tax rate that is all-inclusive. That is, we should include not only personal income taxes but also payroll and corporate income taxes. CBO analysts regularly do that. They find a substantially progressive tax system, as I have pointed out before.
3. If we added transfer payments (which are essentially negative taxes), we would find an even more progressive fiscal system. Those data are harder to come by, as data on transfers are rarely integrated with data on taxes.
4. It make little sense to aggregate payroll taxes with personal income taxes and ignore corporate income taxes. A corollary: Paul Krugman should be more careful when reproducing graphs from partisan think tanks.
5. All of these calculations are static. They ignore the general-equilibrium effects that arise as the true burden of taxation is shifted by behavioral responses. In essence, these calculations are made under the implicit assumption that factors of production are supplied inelastically, so the tax stays where legislators put it. Of course, that assumption is implausible, especially in the long run. True general-equilibrium tax incidence is very hard, and as far as I know, reliable estimates on it are not readily available.
Last edited by mgeoffriau; 01-19-2012 at 01:16 PM.
#93
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.
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.
#94
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
#95
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Theoretically, there would be no FICA taxes applied on the carried interest, either.
#96
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.
Theoretically, there would be no FICA taxes applied on the carried interest, either.
Although taxpayers earning between $2 million and $5 million pay an average tax rate of 26 percent, while those earning more than $10 million pay an average of 22 percent. We can speculate that one of the reasons for this is that much of their overall income comes from capital gains, which is taxed at 15 percent (only 20 percent of the total AGI for these $10 million-plus taxpayers is from salaries). However, even with this "preferential" tax rate on capital gains, the data clearly shows that their overall average tax rate is at least twice that of the nation as a whole.
#97
Moreover:
From a recent CBO report, here are effective tax rates (total taxes divided by total income) for 2005, the most recent year available:
Lowest quintile: 4.3 percent
Second quintile: 9.9 percent
Middle quintile: 14.2 percent
Fourth quintile: 17.4 percent
Percentiles 81-90: 20.3 percent
Percentiles 91-95: 22.4 percent
Percentiles 96-99: 25.7 percent
Percentiles 99.0-99.5: 29.7 percent
Percentiles 99.5-99.9: 31.2 percent
Percentiles 99.9-99.99: 32.1 percent
Top 0.01 Percentile: 31.5 percent
N.B.: These figures include all federal taxes, not just income taxes.
Lowest quintile: 4.3 percent
Second quintile: 9.9 percent
Middle quintile: 14.2 percent
Fourth quintile: 17.4 percent
Percentiles 81-90: 20.3 percent
Percentiles 91-95: 22.4 percent
Percentiles 96-99: 25.7 percent
Percentiles 99.0-99.5: 29.7 percent
Percentiles 99.5-99.9: 31.2 percent
Percentiles 99.9-99.99: 32.1 percent
Top 0.01 Percentile: 31.5 percent
N.B.: These figures include all federal taxes, not just income taxes.
#99
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.
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.
Bob