Prosperity Lost

[Fieldmouse]

A MINORITY VIEW
BY WALTER E. WILLIAMS
RELEASE: WEDNESDAY, MARCH 18, 2009 AND THEREAFTER

Prosperity Lost

Ask the average person which is the correct answer to the following question: Which president gave the biggest tax cuts for the rich -- Reagan or Bush? I would bet the rent money that you would not get the correct response, which is: Presidents have no taxing authority. Article I, Section 8 of the U.S. Constitution says: "The Congress shall have power to lay and collect taxes, duties, imposts and excises." I know that many politicians and news media people read my column. How do we characterize them if they continue to speak of presidents cutting or raising taxes?
Another tax question: If there's an imposition of a property tax on your land, who pays the tax? I guarantee you that land does not pay taxes; only people pay taxes. That means a tax on your land is a tax on you. You say, "Williams, that's pretty elementary, isn't it?" But what do you say to a politician or news media people who propose increasing corporate taxes as means to get rich corporations to pay their rightful share of government? They should be told that they speak nonsense because corporations, like land, do not pay taxes; only people pay taxes.
If a tax is levied on a corporation, and if it is to survive, it must raise the price of its product, or lower dividends or lay off workers. In each case, it is people, not some legal fiction called a corporation, who bear the burden of any tax levied on the corporation. An important subject area in economics called tax incidence says that the entity upon whom a tax is levied does not necessarily bear the burden of the tax. Some of the tax burden can be shifted to another party. That's precisely what corporations do and as such they are merely government tax collectors.
Here's another tax question: Which worker receives the higher pay: a worker on a road construction project moving dirt with a shovel or a worker moving dirt atop a giant earthmover? If you said the guy on the earthmover, go to the head of the class. But why? It's not because he's unionized or that employers just love earthmover operators. It's because having more capital (tools) makes him more productive and therefore earn higher wages.
It's not rocket science to conclude that whatever lowers the cost of capital formation enables workers to have more capital to work with and enjoy higher wages. Policies that raise the cost of capital formation such as capital gains taxes, low depreciation allowances and high corporate income taxes, and thereby reducing capital formation, serves neither the interests of workers, investors nor consumers.
Taxes also reduce transactions. I need my computer repaired. You and I agree that the job is worth $200. Suppose there's the imposition of a 30 percent income tax on you. That means you would net only $140 and might refuse the job. You might suggest that if I were willing to pay you $285 you would do the job because at that price your after-tax earnings will be $200 -- what doing the job is worth to you. There's a problem. The repair job was worth $200 to me, not $285. So it's my turn to say the heck with it, or would we and society be better off if you and I agreed to the repair job but did not tell anybody? I'd say yes, but we'd be criminals.
You might wonder how congressmen can get away with taxes and other measures that reduce our prosperity potential. Part of the answer is the anti-business climate promoted in academia and the news media. The more important reason is that prosperity foregone is invisible. In other words, we can never tell how much richer we would have been without today's level of congressional interference in our lives and therefore don't fight it as much as we should.
Walter E. Williams is a professor of economics at George Mason University. To find out more about Walter E. Williams and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.
COPYRIGHT 2009 CREATORS SYNDICATE, INC.

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[RainmakerIII]

FM, you should stop reading that Walter Williams republican crap. If his theory were true then we would never have economic or employment problem in our country. Of course it is not true, corps and big buisiness has been skating forever, yet they run their buisness and employeesin the ground. Now how could giving them more money through tax make you think that they will do any different? We already know that trickle down does not ever happen. The profits are pushed to the top, and employment is sent to other countries for cheaper yet, and money is shipped out and washed through off shore offices. You need to wake up smell what your shovelin.

[Fieldmouse]

We already know that trickle down does not ever happen.

Why is Obama trying trickle down government? What are you spending your $250 this year on? Did that amount put you into the next tax bracket?

You don't even know what trickle down is. That is a false statement. If you give me a tax break instead of upping my tax rate back up to 40% and higher, how does that help me open up my knew manufacturing business? Please explain? Here is another thing. After I open up my doors, who get's paid first? Me as the business owner? If you said yes, your very dumb. The first ones who will get paid, will be my workers. I need to pay them in order for them to show up the next day. Then who is next? If you said me, your still dumb. It would be my creditors. I have to pay those bills in order to keep my lights on, my machines operating, materials supplies coming in theback door and product going out the front door. Then, ifthe miricale of economics works and should I manage to squeak a profit, I get paid last. Did you know the odds are completely against me in getting paid? Around 25% fail the first year. Only 30% survive after 10 years. That's not because the owners are rolling in the cash. It's because the debt has gotten to big. However, the workers still got paid didn't they? So when your saying trickle down doesn't work, you don't know what it means. It's really trickle up and yes the odds are against the person receiving the tax break not the worker.

[Sharpknife]

ORIGINAL: Fieldmouse

Why is Obama trying trickle down government? What are you spending your $250 this year on? Did that amount put you into the next tax bracket?

You don't even know what trickle down is. That is a false statement. If you give me a tax break instead of upping my tax rate back up to 40% and higher, how does that help me open up my knew manufacturing business? Please explain? Here is another thing. After I open up my doors, who get's paid first? Me as the business owner? If you said yes, your very dumb. The first ones who will get paid, will be my workers. I need to pay them in order for them to show up the next day. Then who is next? If you said me, your still dumb. It would be my creditors. I have to pay those bills in order to keep my lights on, my machines operating, materials supplies coming in theback door and product going out the front door. Then, ifthe miricale of economics works and should I manage to squeak a profit, I get paid last. Did you know the odds are completely against me in getting paid? Around 25% fail the first year. Only 30% survive after 10 years. That's not because the owners are rolling in the cash. It's because the debt has gotten to big. However, the workers still got paid didn't they? So when your saying trickle down doesn't work, you don't know what it means. It's really trickle up and yes the odds are against the person receiving the tax break not the worker.

Anyone who is in an upper bracket that can"™t find a way to keep $250.00 from changing their bracket is a fool! ( BTW, when did we get a 40% bracket?)
Your analogy of who gets paid first is also incorrect and the proof is Merrill Lynch and AIG. Both have paid themselves (in the form of bonuses and dividends) and still have TONS of outstanding debt.
25% of small businesses fail because 24.5% of them are idiots with no business sense or they had a bad plan to begin with. The failure statistics do not change dramatically regardless of who controls the Congress. One also has to look at what TYPES of businesses fail over time to get a sense of the real impact to the nation.

[Fieldmouse]

Anyone who is in an upper bracket that can"™t find a way to keep $250.00 from changing their bracket is a fool!

I'm not sure but RM may fit that bill.

( BTW, when did we get a 40% bracket?)

Obama is planning on it and not even stopping there. However, riddle me this, if Bush's tax cuts for everyone were what caused this mess, why not end them tomorrow so it's fixed on Monday?

Your analogy of who gets paid first is also incorrect and the proof is Merrill Lynch and AIG. Both have paid themselves (in the form of bonuses and dividends) and still have TONS of outstanding debt.

Are they start ups? No they're not. So only a fool would try and fit them to my analogy. However, would you like and example that fits directly with Merrill Lynch and AIG?

25% of small businesses fail because 24.5% of them are idiots with no business sense or they had a bad plan to begin with. The failure statistics do not change dramatically regardless of who controls the Congress. One also has to look at what TYPES of businesses fail over time to get a sense of the real impact to the nation.

Only a fool would go after something in the analogy that doesn't pertain to the arguement at hand. The argument at hand was the false notion that RM tried to claim trickle down economics doesn't work. I effectively showed using a start up business that the notion of trickle down economics isn't the case at all. It's really trickle up economics because the worker gets paid first.

[Sharpknife]

ORIGINAL: Fieldmouse

I'm not sure but RM may fit that bill.

So why are you worried about RM? He's a big boy, let him take care of himself.

( BTW, when did we get a 40% bracket?)

Obama is planning on it and not even stopping there. However, riddle me this, if Bush's tax cuts for everyone were what caused this mess, why not end them tomorrow so it's fixed on Monday?
[/quote] All I've seen is that he wants to let t Bush's cuts lapse, which would not result in a 40% bracket. Are you really so nieve to think what ever the solution is, it will be able in one night to fix something that took years to create?
[quote]Your analogy of who gets paid first is also incorrect and the proof is Merrill Lynch and AIG. Both have paid themselves (in the form of bonuses and dividends) and still have TONS of outstanding debt.

Are they start ups? No they're not. So only a fool would try and fit them to my analogy. However, would you like and example that fits directly with Merrill Lynch and AIG?

Only a fool would go after something in the analogy that doesn't pertain to the argument at hand. The argument at hand was the false notion that RM tried to claim trickle down economics doesn't work. I effectively showed using a start up business that the notion of trickle down economics isn't the case at all. It's really trickle up economics because the worker gets paid first.

And I have just as effectively shown where it doesn't. Forget AIG and Merrill Lynch, my analogy is the same using start up capital as well.
No, this is where you are confused. The argument at hand is the one that you made regarding who gets paid first. I personally agree with RM, though there are countless economists that will argue the merits or lack there of regarding trickle down economics.

[Fieldmouse]

[blockquote]quote:

ORIGINAL: Fieldmouse


[blockquote]quote:


Anyone who is in an upper bracket that can"™t find a way to keep $250.00 from changing their bracket is a fool![/blockquote]I'm not sure but RM may fit that bill.
[/blockquote]
So why are you worried about RM? He's a big boy, let him take care of himself.

Well, I guess we can put you into the toadie catagory. Your about the only person who feels RM can take care of himself. He certainly can't back his stuff up.

All I've seen is that he wants to let t Bush's cuts lapse, which would not result in a 40% bracket. Are you really so nieve to think what ever the solution is, it will be able in one night to fix something that took years to create?

Well your wrong about years in that it's taken 8 decades to get to the mess we're in. Instead of correcting it, Obama is making it worst. Government isn't the solution. FYI, if we continue down this path of Obama's policy, Government will be 80% of GDP. Is that a good thing in your eyes? Are you a fan of Russia style government?

And I have just as effectively shown where it doesn't. Forget AIG and Merrill Lynch, my analogy is the same using start up capital as well.

You gave no analogy. Please give me one that we can discuss. What you discussed was why business fail and in fact, it fits my analogy. Even if a business fails the first year, the workers collected paychecks while the owner collected debt.

No, this is where you are confused. The argument at hand is the one that you made regarding who gets paid first. I personally agree with RM, though there are countless economists that will argue the merits or lack there of regarding trickle down economics.

I'm not asking about "other" econimist. I'm asking you and RM for an analogy and so far you haven't put forth anything that backs up why you would call trickle down economics when it's really trickle up economics. I however demonstrated the fact that obama was practicing trickle down government by giving RM $250 trhis year. He's giving you $13/week. How are you spending that? What are your plans for the $8 next year? Starting a business maybe?

[flyinfeathers]

ORIGINAL: RainmakerIII

FM, you should stop reading that Walter Williams republican crap. If his theory were true then we would never have economic or employment problem in our country. Of course it is not true, corps and big buisiness has been skating forever, yet they run their buisness and employeesin the ground. Now how could giving them more money through tax make you think that they will do any different? We already know that trickle down does not ever happen. The profits are pushed to the top, and employment is sent to other countries for cheaper yet, and money is shipped out and washed through off shore offices. You need to wake up smell what your shovelin.

Rainmaker please enlighten us all on how business and corporations should be ran. Tell me how you will get your capital, pay your bills, pay your employees and make your profits. I have a degree in Economics and Finance and currentlyI am anOperations Director for a well known company. I look at P & L statements almost daily. (P=Profit, L=Loss) The article that Feildmouse posted is dead on. When we have tax increases or even more current, minimum wage increases coming up, we have to raise the price of our product to maintain profitablity in order to pay our employees as well as our bills. When we raise our prices in order to stay in business, sometimes our sales drop, therefore we cut our labor. Meaning unemployed people. Our money isn't getting sent to some overseas account. We offer competitive wages and benefits. Tell me how I am running my employees in to the ground.

Do you ever buy anything at Walmart or another type of discount store? By purchasing products from these places you are experiencing trickle down. They use their leverage to negotiate lower prices and in turn pass the savings on to the consumer.They could be greedy and kept the price high but they don't. In essence they have passed on the savings to you.....hence trickle down. Trickle up is when you spend that savings at the store and the process begins all over again. Trickle down and trickle up are both part of the same business cycle. You have been brainwashed to think trickle down is BAD. It is a normal process and needed the same as trickle up. One without the other will not ever work. There has to be a balance.

So, tell me genius, how to run a business since I apparently have been doing it wrong for the last 25 years.

[DougMD]

Walter Williams is a smart man. Dems love to bash businesses, as though increased taxes have no impact on the small guy. But those businesses employ the small guy, and are owned by the small guy. Drive up their costs, and the small guy gets burned. But here's the filthy secret: Dems don't care about helping the small guy. They care only about bringing DOWNthe successful and having power over the people. I'd say once again read Atlas Shrugged to see what's going on, but heck, just read the newspapers and you will see what is happening now, and what will happen when the successful refuse to work for nothing when it's all taxed away.

One other thing, the idea that "profits can pushed to the top" is simply idiotic. Profits go to shareholders, who are you and me. If the board of directors decides to pay lavish salaries to executives, so be it for private businesses, since they make money by a willing exchange of money by consumers for goods. If the execs are overpaid, the company suffers and the BOD puts the execs out of a job. Now I do agree, however, that when taxpayer money is used as a bonus for execs who ran a company into the ground to the point where it would be bankrupt and the bonus recipients would be out a job but for the bailout, that's simply not right.