Political Forums  

Go Back   Political Forums > Economy

We appreciate your help

in keeping this site going.
Reply
 
Thread Tools Display Modes
  #21  
Old 08-21-2012, 01:31 PM
whell's Avatar
whell whell is offline
Senior Member
 
Join Date: Aug 2010
Location: Metro Detroit
Posts: 13,016
Quote:
Originally Posted by merrylander View Post
Starting with the Lewis Powell memo to the Chamber of Commerce corporations have gradually taken over the government. Oh there are still a handfull of Congressmen and Senators who are not for sale. Given this sstate of affairs it seems rather pointless to say the government is anti business when it is business.
Under the current set up, IMHO, the interests and objectives of politicians and business are quite different, though both are ultimately in the game for self-interest and self enrichment.
Reply With Quote
  #22  
Old 08-21-2012, 01:31 PM
d-ray657's Avatar
d-ray657 d-ray657 is offline
Loyal Opposition
 
Join Date: Oct 2009
Location: Johnson County, Kansas
Posts: 14,401
Quote:
Originally Posted by whell View Post
At least here in MI the practice has been "managed" to a great extent. A community must petition the state legislature to creat the zone, and if approved, favorable tax treatment is bestowed by local and state government. A zone is only created if it is deemed in the best intetest of many stakeholders, public and private. In this manner, the issue you've cited is not avoided, but reduced or controlled.

However, I'm still wondering why an "across the board" reduction in taxes - yes, for business and capital gains taxes - would or would not have a similar positive impact.
Wouldn't one answer be that, as you mentioned, the tax abatements are carefully targeted to areas where there otherwise would not be investment. It is presumed that there are plenty of areas where the infrastructure and other market conditions make investment a reasonable business proposition without a subsidy. Bottom line is that we really can't afford to subsidize business across the board, any more than we already do with the investment in infrastructure, police and fire protection, and education.

Regards,

D-Ray
__________________
Then I'll get on my knees and pray,
We won't get fooled again; Don't get fooled again
Reply With Quote
  #23  
Old 08-21-2012, 01:33 PM
d-ray657's Avatar
d-ray657 d-ray657 is offline
Loyal Opposition
 
Join Date: Oct 2009
Location: Johnson County, Kansas
Posts: 14,401
Quote:
Originally Posted by whell View Post
Beyond the philosophical objections, what have been the results of the legislation?

Yes, I saw that poke. I was honored.
It hasn't been implemented yet. It's brand spanking new.

Regards,

D-Ray
__________________
Then I'll get on my knees and pray,
We won't get fooled again; Don't get fooled again
Reply With Quote
  #24  
Old 08-21-2012, 02:24 PM
BlueStreak's Avatar
BlueStreak BlueStreak is offline
Area Man
 
Join Date: Oct 2009
Location: The Swamp
Posts: 27,407
Quote:
Originally Posted by ebacon View Post
Republican and Democrat stereotypes aside, it is still bad practice for a city to lower their community standards in order to attract business. The unavoidable problem is that once someone does it then others have to do it to compete. That's when the dominoes start to fall.
I can see it now;

"Welcome to Pig Knuckle, Arkansas!

Pop. 1,312

Motto;

Pride is NOT an issue,
we'll do anything for a Buck!"

Dave
__________________
"When the lie is so big and the fog so thick, the Republican trick can play out again....."-------Frank Zappa
Reply With Quote
  #25  
Old 08-21-2012, 04:25 PM
whell's Avatar
whell whell is offline
Senior Member
 
Join Date: Aug 2010
Location: Metro Detroit
Posts: 13,016
Quote:
Originally Posted by d-ray657 View Post
Wouldn't one answer be that, as you mentioned, the tax abatements are carefully targeted to areas where there otherwise would not be investment. It is presumed that there are plenty of areas where the infrastructure and other market conditions make investment a reasonable business proposition without a subsidy. Bottom line is that we really can't afford to subsidize business across the board, any more than we already do with the investment in infrastructure, police and fire protection, and education.

Regards,

D-Ray
How is it a subsidy, rather than reducing the cost of capital and the cost of engaging in business activity? And if that reduction in cost results in an increase in GDP and in increase in employment (and a resulting increase in payroll tax revenue) doesn't that make the exercise pay for itself?

On the contrary, of what economic value - and what economic benefits are generated - value are all of the empty or half empty buildings, all of the idle production equipment, and all of the idle workers? The "For Lease" signs represent an economic cost all by themselves.
Reply With Quote
  #26  
Old 08-21-2012, 04:34 PM
d-ray657's Avatar
d-ray657 d-ray657 is offline
Loyal Opposition
 
Join Date: Oct 2009
Location: Johnson County, Kansas
Posts: 14,401
Quote:
Originally Posted by whell View Post
How is it a subsidy, rather than reducing the cost of capital and the cost of engaging in business activity? And if that reduction in cost results in an increase in GDP and in increase in employment (and a resulting increase in payroll tax revenue) doesn't that make the exercise pay for itself?

On the contrary, of what economic value - and what economic benefits are generated - value are all of the empty or half empty buildings, all of the idle production equipment, and all of the idle workers? The "For Lease" signs represent an economic cost all by themselves.
Would you be open to a stipulation that the decreased taxes are only available to those who can document new investment in productive activity? Our experience of the past few years have been that despite the protection of these "job creators" from any increased tax burden, they have been sitting on piles of money. I don't have any reason to believe that a further reduction in taxes would result in putting the additional capital to work instead of simply adding to the pile.

Regards,

D-Ray
__________________
Then I'll get on my knees and pray,
We won't get fooled again; Don't get fooled again
Reply With Quote
  #27  
Old 08-21-2012, 05:19 PM
whell's Avatar
whell whell is offline
Senior Member
 
Join Date: Aug 2010
Location: Metro Detroit
Posts: 13,016
Quote:
Originally Posted by d-ray657 View Post
Would you be open to a stipulation that the decreased taxes are only available to those who can document new investment in productive activity? Our experience of the past few years have been that despite the protection of these "job creators" from any increased tax burden, they have been sitting on piles of money. I don't have any reason to believe that a further reduction in taxes would result in putting the additional capital to work instead of simply adding to the pile.

Regards,

D-Ray
Except that's not the case exclusively.

A reduction in capital gains would also benefit the nation's increasing population of retirees. Many of them have retirement nest eggs invested in mutual funds, conservative stocks, bonds and money market funds. Some of these create capital gains tax liability for them. Reducing that would give these folks more disposable income resulting in greater purchasing power and likely additional spending (stimulative).

I am by no means rich, but we have been able to squirrel away some savings, much of which is invested in mutual funds. I pay capital gains taxes any year that these investments produce a positive ROI. Speaking selfishly, it would reduce my taxes, increase our savings and help out our rainy day fund.

Assuming for the moment that there's an economic benefit to cities and states to lower taxes and create economic activity, there's also the other side of the equation that goes something like this: those buildings with the For Sale and For Lease signs right now are generating no tax revenue for the cities and states where those buildings sit. If, for example, the capital gains rate was reduced from 15% to 10%, and such a change resulted in an increase in business activity, wouldn't the revenue generated - even though its 5% less than would have otherwise been collected - be better than the $0.00 in revenue that is collected currently?

Or, if the MI business tax was reduced from the current 4.95% to (for example) 4.95%, and this attracted investment and business activity to the state that did not previously exist, wouldn't the benefits outpace the cost? Sure, you'd ultimately need to generate enough activity to make the benefits worth the cost to the business tax, but in the meantime, the state is also collecting increased revenue from sales tax, income tax, and (possibly) property tax due to the increased activity.
Reply With Quote
  #28  
Old 08-21-2012, 06:25 PM
d-ray657's Avatar
d-ray657 d-ray657 is offline
Loyal Opposition
 
Join Date: Oct 2009
Location: Johnson County, Kansas
Posts: 14,401
A couple of things. If we tax capital gains as any other income, those retirees would probably be paying a rate lower than the current capital gains rate.

Second, the example you have been giving of vacant buildings and for lease signs - if you are talking about economically depressed areas where there is a need for a subsidy to attract investment - I think we have been in agreement that a subsidy is probably warranted. That does not, however, justify an across the board tax cut for the purpose for the purpose of stimulating investment where there is considerable evidence that such investment is not taking place despite significant cash reserves.

Regards,

D-Ray
__________________
Then I'll get on my knees and pray,
We won't get fooled again; Don't get fooled again
Reply With Quote
  #29  
Old 08-21-2012, 06:26 PM
noonereal noonereal is offline
Abby Normal
 
Join Date: May 2009
Posts: 11,245
Quote:
Originally Posted by BlueStreak View Post
This has happened across the country, Noone. For a time we even had states building industrial buildings at taxpayer expense and offering to let businesses use them rent free, on top of tax incentives----to no avail. It was a complete waste of huge sums of money.
What you speak of is true of course. This is a big part of the political system we have. Businesses are granted sweetheart deals and kick backs fly right back.

However I have seldom heard of enterprise zones reverting back to non enterprise zones. This is what I requested a link to learn about.

Out here in NJ, the same urban enterprise zones enjoy the same sales tax break which really only benefit the new construction on the outskirts of the city. They never drive new business to the really blighted parts of town.

Last edited by noonereal; 08-21-2012 at 07:42 PM.
Reply With Quote
  #30  
Old 08-21-2012, 06:28 PM
noonereal noonereal is offline
Abby Normal
 
Join Date: May 2009
Posts: 11,245
Quote:
Originally Posted by whell View Post
A reduction in capital gains would also benefit .

really?
Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump


All times are GMT -5. The time now is 03:55 PM.



Powered by vBulletin® Version 3.8.6
Copyright ©2000 - 2024, Jelsoft Enterprises Ltd.