If you eliminate capital gains.

What do you classify as "job growth investment"?

 

Now I've avoid this like the plague do to the assumptions of many..

Stock Market Investments are very important. Especially if it's an IPO or even issuance to raise capital. Both are used for funding to either expand or meet requirements (in the case of banks).

It's also asinine to say stock investments mean little to GDP when 70% of the US GDP comes from the service sector including Stock Brokers, Investment firms, Banks, Hedge Funds and Mutual Funds. Now if you want to claim that 6% of the US economy (Financial Sector) in 2009 and which will be more the 10% by 2016 means nothing.. not even a job go ahead. But remember these are the same group that take those investments and invest it in the broader market.

 

OK, what's your point, we leave the gold standard, what are you saying? We have currency in such vast amounts that we have worthless paper and that's the way it will be. There isn't enough gold to back our currency.

So, to point, if we keep taxes low, they have, for teh last 100 years led to destruction of our economic system. Raise them and things heal. CG tax isn't that important but should be raised if onlu symbolically, not to mention it will lead to market stability.

 

A company reinvesting their profits in machinery, land, buildings, etc to grow their business. Business expansion at the ground level vs investing is a company's concept or just cash reserves.

By the time a company is at IPO status, they are usually big enough to have cash reserves and access to cheap credit. Struggling upstarts don't get IPO's just because.

 

Yea, I think they call that a recession. It doesn't matter if it sits in the coffers of a market trader, Boeing or a bank account, stagnated money is how we have economic inactivity, lower GDP's and thus, recessions.

 

I haven't seen your data supporting your 70% claim, but the point is that big companies who get the lion's share of most investor dollars already have access to expansion cash, so absent the investors they would still be growing as they wish.

Go expand a small business and main street sees it.

 

Service Sector

I hate to inform you but big companies don't have access to expansion cash in the manner you think. Name any of the Fortune 500 you want and you will find that these companies actually borrow through the Corporate Bond market daily to either expand or keep doors open.Prime example... Netflix. Again you can name any Fortune 500 you want and you will find that while they have cash on "hand" it doesn't mean that cash is useable to expand. As that cash is set aside to make payroll or even pay off bonds to keep their credit ratings.

I owned a small business and I can tell you about a total of 15 people (including myself, 14 if not) were directly hired by me. A fortune 500 company hires in hundreds and thousands in a year. The recent lay offs are due to a slack in the economy not due to nobody wants to expand but because capital (money) dried up and it's still hard to borrow due to Europe. But you would know this if you weren't repeating talking points.

 

You're not actually completely right. There are more than a few companies on the F500 who don't use debt at all. Their free cash flow is more than sufficient to finance expansion. Examples include Apple, Amazon...and until very recently, google. Some companies are actually only issuing bonds because interest rates are so incredibly cheap. They use the bonds to better optimize their capital strucutre. Too much equity financing can hurt some of the companies ratios.

If you consider accounts payable "debt" then "technically" you are right though. I do generally agree with your point. Companies usually don't just have capital lying around. They need to raise it in capital markets....which the stockmarket (and secondary markets) is extremely vital to. This is something a lot of the people in this thread don't seem understand.

 

Apple and Amazon will be issuing bonds soon, but all issue commercial paper (which is a "bond"). Apple and Amazon usually pay this off before the end of the quarter so it doesn't make the release.

Yes, I consider accounts payable as debt as it has to be paid. Nobody will do business with you if you don't pay them.

 

I still think its important to make the distinction that a few companies have the cash on hand for significant capital investments.

 

low taxes didn't lead to the destruction of the economic system.
The constant expansion of government and the debt based spending used to garner the votes that supported its expansion led to it.

You cannot establish a cause and effect relationship between lowering taxes and destruction of an economy. Association is not causation.

 

OK, so what's your point? 79% is based upon svs over industrial, et al; I don't see your point to cap gains tax increase or reduction.

They do whatever is cheaper, bonds, big lending institutions or many have cash on hand that can fluctuate of course, but w/o stock market investors they can still do well.

A very general statement trying to associate Boeing with Netflix with Walmart with GM. Ridiculous. GM is in teh dumper, or they were and I have to believe Walmart is flying high and doesn't need investor cash to keep the doors open or to expand.

I don't see a correlation between your company and a Fortune 500 company.

Right, economy is still stagnate due to the rich hanging on to most of the money and not having to recirculate profits due to low taxation. Hence there is less demand and layoffs ensue.

Riiiiight, those GD Europeans, good thing the US isn't repsonsible for the Great Republican Depression or the Great Republican Recession.

Oh, like: SHOW ME A MAJOR FEDERAL TAX CUT THAT BENEFITTED THE COUNTRY. Yea, I keep asking, you keep running. Shut me up and show me one and then show me a few. I won't stay up late.

 

How about repetitive events? A few years before the Great Republican Depression, Harding and Coolidge cut the top marginal income brkt from 73% to 25%. During the so-called Roaring 20's, the top .1% held as much worth as the bottom 40%. I didn't say top 1%, I said top .1%. This shift of wealth causes a stagnation in cash flow, the rich have no reason to reinvest their profits and actually get scared and pull back as anyone would, unemployment grows and the economy recesses.

This carried thru Hoover's term until his last year when he increased the top brkt from 25% to 63% and the following year growth (GDP) increased and unemployment decreased. These gains continued and exacerbated as FDR raised taxes.

It's not rocket science, greed is human nature, profiteers won't always reinvest unless they are forced to; high taxes force this. Fair, not fair - don't care; raise taxes and profiteers will reinvest profits and the economy will respond favorably.

Then we have the corpo-fascist Ronnie era. FR cut taxes from 70% to 28%, about like Harding and Coolidge did. He was able to deficit spend unlike the 20's when absent war we just didn't do that as a matter of policy. So that kept his wealth-shifting afloat and made it look like he was creating jobs, altho his job growth was 2M per year vs Carter's 2.6M per year, so he was still behind the curve, all at a cost of jacking the debt from 940B to 2.6T in 8 years.

Fast forward to the Great Republican Recession and we have the same kind of stuff; chop taxes, shift wealth and recess the economy. Deficit spending has made it survivable, but no tax increase and unemp is stuck @ 9%.

So there are 3 examples of tax cutting blowing things up, we can look to Clinton, FDR and Eisenhower for raising/maintaining high taxes and keeping the economy great. Do you dispute those? So it's not a partisan thing, necessarily, just predominntly. Aside from partisanship, tax cuts are poison, as in large ones. Show me major fed tax cuts that you consider a success.

 

You don't see my point? That's your failure not mine. Simply put when 79% of economy comes from Service instead of Manufacturing you become reliant on capital gains or loses. Be it a big business or the local mom and pop shop. Financial sector needs capital gains as without capital gains there is no money to be loaned out since the US is not a saving country (Producer) but a spending country (Consumer).

Of course, Companies looking for lending will find the cheapest way to do it, if they don't they are reckless. But it doesn't change the fact they need daily funding.

No, this is false because even the most novice of investors understand when they buy a stock they are buying from someone else (or institution). The sale of these stocks go to buy other stocks (IPOs), bonds, paper or swaps. I dare anybody in Government to call for a hike on capital gains tax of 5% across the board by 1/1/12 and watch what happens. Money markets will seize up overnight. Companies will go bankrupt because they can't borrow overnight.

Not a general statement, a fact which you would know if you ever worked in the bond market, the stock market, or even had a (*)(*)(*)(*) clue about finance.

None of these companies you mention are flying high. They borrow all the time. Wal Mart reached it's peak value in 2000 at $69 a share. Wal-Mart has been flat for the last 2 years even while it has been expanding overseas.

I really hope you don't advise people in stock tips.

Of course you don't. When you have to go to the market to borrow money against them, you'll learn real quick the correlation.

Like I said get off the talking point or you might just get dumber. Save your Keynesian bs elsewhere. US Government has spent well over the amount companies and rich have set aside and it still hasn't fixed the economy.

*shakes head* you still believe there is a difference between the 2 parties. You are too far gone to actually understand the world, economics or even basic math.

Excuse me.. you never asked me. Look at the JFK tax cuts. See if you understand that one before you type something again.

 

You have not demonstrated causation.
Seems to me there are a few more variables in play besides tax rates.
Studies of n=a few, utilizing only one of many available variables, have zero applicability.

 

it's not the job of the citizens to pay a disadvantaged tax rate so that publicly traded companies can have access to capital.

 

Just what I expect from a neo-con; show me 100% irrefutable evidence or it didn't happen. Let me give ya a little science lesson for free.

The scientific model:

- Find something to be tested
- Develop a hypothesis or hypotheses
- Test these hypotheses by use of an independent variable to
- Make observations
- Retest
- Make observations
- Repeat as necc
- Draw a conclusion

So this is how testing things thru the scientific method is developed and tested. Political science is a bastard science, you don’t have the luxury of retesting it, you take what you have and draw the best conclusion you can based upon what evidence you have. Also, you can eliminate and test 1 independent variable to find your dependent variable, so you do what you can and economics is a division of political science. And in science or otherwise, what you look for in testing and observations is repeatability.

With that, we have constant repeatability with tax increases/cuts. You can live in your demand for a perfect test, but it just isn’t going to happen in this world. Are there other variables? Absolutely, like war, OPEC in the entire 70’s, natural disasters, terrorism, etc. But thru all of that, the constant that appears is that when taxes are higher, we live thru this and get by, as taxes are low, esp ultra low, they go to hell.

So instead of playing defense attorney and trying to pick hole sin my arguments, SHOW ME A TIME WHEN TAXES WERE LOW AND THAT LED TO OVERALL BETTERMENT FOR THE USA. Really, just post your 3 words and nod your head, you really never do more. I realize the type, run around chanting, “Tax cuts my friends” w/o knowing what it means or does. You don’t seek the truth, you just want to push an ideology. So you can naysay all you want, my evidence illustrates a repeatability of tax cutting horror, tax increasing healing.

 

You do realize publically traded companies are owned by citizens, right? These corporations drive the economy through capital investments by citizens, which in turn creates jobs and wealth.

 

individuals who are citizens yes, but not "the citizens" as a whole

individuals can create jobs and wealth.
The deck does not need to be stacked for the established.

 

I see, the top 10% hold 81% of all stocks and you want to make it as the little guy hold the lion's share. Brilliant.

 

Are you saying that the Great Depression was caused by the wealthy having so much money (due to lower tax rates) that they got 'scared' and stopped investing because they had 'no reason to'?

Have you ever heard of greed?

Why did the rich banking CEO's take all those chances in the late 2000's if they were so rich that they 'had no reason to' invest?

I don't care how rich you are...almost always the rich just want to be richer.

If they didn't, why would they ever take chances on the stock market or starting businesses or anything else? Why not just put in banks accounts and bonds and live off the interest?

Warren Buffett is staggeringly rich - he certainly does not need any more money...but does he just sit on his money and live off the interest? No chance - and neither do any billionaires that I know of. Why? Because they want more money and power...it is human nature...like it or not.

I have NEVER heard ANY 'respected' economist (whether I respect them or not) site your reason as the cause of the Great Depression.

I will give you credit for original thinking - but I think your idea is not the cause of the Great Depression.

http://en.wikipedia.org/wiki/Great_Depression#Causes

 

How many of the "little guys" are employed by those corporations? How many of the "little guys" contracted by these corporations? Also, could I see your source for the 10% holding 81%? I'd like to see how they count pensions, 401ks, and endowments.

 

Ever hear of fear? Yea, the other side of fear, these are what drives the economy and market ands when the gov backs out, they run amuck with wild swings that always seem to end in disaster. As soon as the cycle swings to the bears, the rich often back out and if taxes are low, we enter recession. Look at the 1950's under Truman/Eisenhower, taxes were very high and the recessions there. which occur under a normal economic cycle, were very short and shallow, recovery quick. If taxes are high, the profiteers must stay in to some degree for a writeoff.

BTW, late 2000's, taxes were higher, you made my point.

Yes, but as the bears come in, investors sense fear and pull out, if taxes were higher they would have to stay in at least in part for fear of high taxation. If they incurred losses they could pull back.

Yep, it's a game and he donates money to charities to be humane and for a writeoff.

These economists are still unsure of how stagflation happened, just as doctors are unsure how to cure some cancers or even treat them, AIDS is a mystery as for cure, so let's be real, economists are limited just as most professionals.

I don't think it was the sole cause, but it certainly conbtributed to the contraction of investment when the fear part set in, if taxes were higher, investors must pay taxes on profits so they tend to reinvest rather than pull and pay huge.

http://en.wikipedia.org/wiki/Great_Depression#Causes

Bernanke claims it was the money supply contraction. Just as fascist Ronnie/Fed Chair Volkers contracted the money supply years after the GD in 1981, both led to huge unemployment. There's your economist, do you agree?

Aside from your economists, who are still at odds as to why the GD ocurred, stagflation and many other economic anomolies, explain why all the bad economic events seem to happen under low taxation.

- Great Depression: 25% top marg brkt

- Reagan debt slam: 70% to 28% tax cutting

- GWB 4.9T mess: 35% top brkt

These were at least ok economies and the debt was going vertical until these policies happened. Again, taxes are not partisan or at least haven't been for the last 100+ years, so this isn't a partisan argument, altho the 3 stooges above are Republicans, GHWB slightly raised taxes and Kennedy cut them and Eisenhower left them at 91% top brkt all 8 years.

Tell me why all the good happens under high taxes and often high gov spending and why all teh bad seems to happen under low taxation. I realize there are tons of other events that factor into a recession as well as normal business cycles, but it seems when taxes are low the economy flips upside down easily and when taxes are high recovery seems to come easily or at least easier.

 

I see, never got a job from a poor guy, hence we should cut taxes and continue to set poverty rates. Nice guy you are, real humanitarian.

As I said, quit acting as tho stocks are for the little guy when the top 10% hold 81% of them. Care to answer that or more rhetoric about how gracious the corporations are?