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I feel like the anti-tax advocates tend to compare apples and oranges. "Let's look at the real world with politicians, vs. an idealized world that is tax-free,

by three14 18y ago

I feel like the anti-tax advocates tend to compare apples and oranges. "Let's look at the real world with politicians, vs. an idealized world that is tax-free," and lo! the idealized tax-free world is better. In real life, cutting taxes means all kinds of things. For instance, low taxes means more corporate profits, and in many corporations, rational behavior for the people at the top is to take that profit as salary and bonuses. Real corporations aren't supernatural investment machines. They're just groups of people. If the people at the top can't manipulate their own salaries, or their interests are aligned with the long term interests of the company, then you might get good outcomes, but in general you have the same guarantee that you do with the government - none.

DanielBMarkham 18y ago
I'm sorry. I don't follow you here. They're just groups of people. If the people at the top can't manipulate their own salaries, or their interests are aligned with the long term interests of the company, then you might get good outcomes So, assuming for a moment that no taxes just affects corporations, if corporate executives can't manipulate their salaries that's good, because why? Because the extra money would go to shareholders instead of just one schmuck? How much money do you think the average CEO of a company with less than 50 employees makes? I'll give you a hint: these guys aren't riding around in $50 Million jets. And at that level, for every buck you pull out of the biz for your salary, that's one less dollar to fund the money machine. A lot of the startup essays and books talk about that, it's basic startup economics. When young and growing, take as little away from the business as possible. If I have 100,000 CEOs with an average extra $5K to spend next year, doesn't that stimulate the economy? And that's assuming they took the money out. In reality, for those companies to be where they are, most all of any extra money is going towards growth: jobs, products, marketing, media, etc. Let's not forget that for them to have any extra corporate money at all, they have to have earned it. It's not like it appears by magic. That means they already know how to make money given the right resources. It's their money really, not ours. Why not let the engine run a little faster? Wouldn't that create more jobs in more diverse industries? Jobs that were based on sound, proven business models? What kind of job is based on a one-time government expenditure? Sounds like a job where it goes away once the money runs out. The other guy, the guy that got the job at the growing company, he's hooked into an already-increasing slot that's proven to work during a recession: it only gets better with time.
- three14 18y ago
  Sorry, I wasn't responding directly to your specific suggestion. I agree that a tax stimulus to small companies is at least somewhat more likely to be useful than a stimulus to large companies. A general tax cut, the kind that's more likely to be politically successful, would certainly channel a lot of money into large corporations as well as small corporations. It's not PC to say this on HN, but I think that startups are also a mixed bag. Exit events are probably as bad for the economy as bonuses at large companies. If you would assume that a company is worth the expected present discounted value of all future earnings, I bet many companies are bought for much more than their value, and the money is then used with the same lack of efficiency as huge bonuses at a big corporation.

by three14 18y ago

DanielBMarkham 18y ago

I'm sorry. I don't follow you here. They're just groups of people. If the people at the top can't manipulate their own salaries, or their interests are aligned with the long term interests of the company, then you might get good outcomes So, assuming for a moment that no taxes just affects corporations, if corporate executives can't manipulate their salaries that's good, because why? Because the extra money would go to shareholders instead of just one schmuck? How much money do you think the average CEO of a company with less than 50 employees makes? I'll give you a hint: these guys aren't riding around in $50 Million jets. And at that level, for every buck you pull out of the biz for your salary, that's one less dollar to fund the money machine. A lot of the startup essays and books talk about that, it's basic startup economics. When young and growing, take as little away from the business as possible. If I have 100,000 CEOs with an average extra $5K to spend next year, doesn't that stimulate the economy? And that's assuming they took the money out. In reality, for those companies to be where they are, most all of any extra money is going towards growth: jobs, products, marketing, media, etc. Let's not forget that for them to have any extra corporate money at all, they have to have earned it. It's not like it appears by magic. That means they already know how to make money given the right resources. It's their money really, not ours. Why not let the engine run a little faster? Wouldn't that create more jobs in more diverse industries? Jobs that were based on sound, proven business models? What kind of job is based on a one-time government expenditure? Sounds like a job where it goes away once the money runs out. The other guy, the guy that got the job at the growing company, he's hooked into an already-increasing slot that's proven to work during a recession: it only gets better with time.

three14 18y ago
Sorry, I wasn't responding directly to your specific suggestion. I agree that a tax stimulus to small companies is at least somewhat more likely to be useful than a stimulus to large companies. A general tax cut, the kind that's more likely to be politically successful, would certainly channel a lot of money into large corporations as well as small corporations. It's not PC to say this on HN, but I think that startups are also a mixed bag. Exit events are probably as bad for the economy as bonuses at large companies. If you would assume that a company is worth the expected present discounted value of all future earnings, I bet many companies are bought for much more than their value, and the money is then used with the same lack of efficiency as huge bonuses at a big corporation.