3 ms·

1) Is a-sort-of strawman. Gov't regulations are required for all markets to function absent fraud & violence. So, obviously at that level of abstraction, yes it

by 001sky 14y ago

1) Is a-sort-of strawman. Gov't regulations are required for all markets to function absent fraud & violence. So, obviously at that level of abstraction, yes its a truism. There would be no legal business entity period, for example, without a government law outlining the legality of a "legal business entity"...etc. 2) The avoidance of C-corps has to do with double taxation and high-marginal rates on the second level of taxation. So, again, this analysis is flawed. The absence of C-corps is evidence that the tax rate/s in fact makes them un-economic and thus illogical to bring into existence. 3) Small businesses are hurt by both excesses of credit (which lead to asset bubbles and COGS inflation) as well as localized shortages of credit. There is currently not an aggregate credit shortage (corporate balance sheets are stuffed with cash). Seperation of retail from investment banking would help with the localized issues around credit to small businesses (because it would eliminate cross-product subsidies, and more rational pricing structures for debt). 4) This would actually support a public heathcare system in its entirety. Which is legitimately, not an idea either side has addressed. But its also arguably a feedback loop on the tax issue: if it goes away somebody has to pay for it. This is likely to show-up in the tax bill if the service is nationalized, for example. These are all good points to raise, but would just propose to have a little more background added for color. Politicians and voters are almost always out-informed on these issues by special interests. But because the latter elects the former, they only need to communicate at levels of "Mininimum Viable" product. Which is a great innefficiency :/

hack_edu 14y ago
Please, please suppress the urge to state that an argument is a strawman. All it does is make you sound like a high schooler practicing for the debate team. Just point out the flaws in the argument and move on.
- 001sky 14y ago
  I kind of agree, generally, but in this case I think its worth pointing out. Consider for example: In general, there actually aren't a lot of federal regulations that affect small businesses. Which is on its face a sort of bizarre comment. It is "in general" the job of Congress to regulate interstate commerce / communications / banking etc. So, positing that this is "in general" irrelevant is indicative of much more than a localized flaw in his argument, becaue all of a sudden his 2nd point is about taxes and legal structure, and his 3rd point is about credit (see above: congress set taxes and regulates banks). A strawman shorthand for a specific type of fundamental mis-characterization: Asserting up a hopeless argument/position (that nobody believes) to reject it out of hand (for implausibility). Here, the initial flaw has cascading relevance to the next several points made, so its not just a pedantic or rhetorical gesture to highlight it.
wycats 14y ago
2) The avoidance of C-corps has to do with double taxation and high-marginal rates on the second level of taxation. So, again, this analysis is flawed. The absence of C-corps is evidence that the tax rate/s in fact makes them un-economic and thus illogical to bring into existence. Exactly right. A good tax system would provide limited tax advantages (or maybe even added costs) to filing as a pass-thru entity, allowing companies to use the appropriate tax structure, and help make policy appropriately targeted for businesses vs. individuals. Obama's business tax blueprint explicitly addresses this: (iii) Distorting the form of businesses. Business may be organized under a variety of different forms, including C-corporations, S-corporations, partnerships, and sole-proprietorships. These organizational forms offer varying legal, regulatory, and tax treatments. The primary difference in tax treatment between C-corporations, on the one hand, and S-corporations, partnerships, and sole-proprietorships, on the other, is applicability of the corporate income tax. C-corporations are subject to the corporate tax, while pass-through entities are not. The combined effect of this varying tax treatment has contributed to a lower effective tax rate for pass-through entities relative to C-corporations. The effective marginal tax rate on new investment by C-corporations is now 32.3 percent, while the effective marginal tax rate on new investment by passthrough businesses 26.4 percent. ... The ability of large pass-through entities to take advantage of preferential tax treatment has placed businesses organizing as C-corporations at a disadvantage. By allowing large pass-through entities preferential treatment, the tax code distorts choices of organizational form, which can lead to losses in economic efficiency; business managers should make choices about organizational form based on criteria other than tax treatment. ... Reduce the corporate tax rate from 35 percent to 28 percent. This reduction in the rate would put the United States in line with other advanced countries, help encourage greater investment in the United States, and reduce the tax-related economic distortions discussed above. As a person who has just spent a bunch of time deciding on my form of business, I consider the S-Corp option to, in fact, be distortive (and costly, from a time and accounting cost perspective). I am glad that this discussion is happening in policy circles, and that Obama explicitly addresses it in his blueprint, even though it is not really part of the public discussion.
- tomjen3 14y ago

by 001sky 14y ago

hack_edu 14y ago

Please, please suppress the urge to state that an argument is a strawman. All it does is make you sound like a high schooler practicing for the debate team. Just point out the flaws in the argument and move on.

001sky 14y ago
I kind of agree, generally, but in this case I think its worth pointing out. Consider for example: In general, there actually aren't a lot of federal regulations that affect small businesses. Which is on its face a sort of bizarre comment. It is "in general" the job of Congress to regulate interstate commerce / communications / banking etc. So, positing that this is "in general" irrelevant is indicative of much more than a localized flaw in his argument, becaue all of a sudden his 2nd point is about taxes and legal structure, and his 3rd point is about credit (see above: congress set taxes and regulates banks). A strawman shorthand for a specific type of fundamental mis-characterization: Asserting up a hopeless argument/position (that nobody believes) to reject it out of hand (for implausibility). Here, the initial flaw has cascading relevance to the next several points made, so its not just a pedantic or rhetorical gesture to highlight it.

wycats 14y ago

2) The avoidance of C-corps has to do with double taxation and high-marginal rates on the second level of taxation. So, again, this analysis is flawed. The absence of C-corps is evidence that the tax rate/s in fact makes them un-economic and thus illogical to bring into existence. Exactly right. A good tax system would provide limited tax advantages (or maybe even added costs) to filing as a pass-thru entity, allowing companies to use the appropriate tax structure, and help make policy appropriately targeted for businesses vs. individuals. Obama's business tax blueprint explicitly addresses this: (iii) Distorting the form of businesses. Business may be organized under a variety of different forms, including C-corporations, S-corporations, partnerships, and sole-proprietorships. These organizational forms offer varying legal, regulatory, and tax treatments. The primary difference in tax treatment between C-corporations, on the one hand, and S-corporations, partnerships, and sole-proprietorships, on the other, is applicability of the corporate income tax. C-corporations are subject to the corporate tax, while pass-through entities are not. The combined effect of this varying tax treatment has contributed to a lower effective tax rate for pass-through entities relative to C-corporations. The effective marginal tax rate on new investment by C-corporations is now 32.3 percent, while the effective marginal tax rate on new investment by passthrough businesses 26.4 percent. ... The ability of large pass-through entities to take advantage of preferential tax treatment has placed businesses organizing as C-corporations at a disadvantage. By allowing large pass-through entities preferential treatment, the tax code distorts choices of organizational form, which can lead to losses in economic efficiency; business managers should make choices about organizational form based on criteria other than tax treatment. ... Reduce the corporate tax rate from 35 percent to 28 percent. This reduction in the rate would put the United States in line with other advanced countries, help encourage greater investment in the United States, and reduce the tax-related economic distortions discussed above. As a person who has just spent a bunch of time deciding on my form of business, I consider the S-Corp option to, in fact, be distortive (and costly, from a time and accounting cost perspective). I am glad that this discussion is happening in policy circles, and that Obama explicitly addresses it in his blueprint, even though it is not really part of the public discussion.

tomjen3 14y ago