Great article. Some people just don't understand the effect of higher taxes. All they believe is the "rich" should pay more "just because".

Glad to see you back here.

It does not hurt that June is usually the last month before the real heat of summer hits.

But as for Fiscal years, most Retailers go from Feb to Jan.  Which is counter productive in your analysis.  But actually makes sense for them.  January is the slow month of the year when they do not concentrate on sales, and instead can get the financials ready for the Government.  Of course it means that they only get to keep their profits from Christmas a few months, but then retailers work on money float anyway.

I would love to see colgene argue with you about how tax cuts for the rich is unfair. yet you are creating employment because of a successful business and some tax breaks.

 

Colleen and I figure we have income through the middle of may, that is not ours, but belongs to the tax man. The rest of the year we get to spend what is ours. This of course is not literal.

 

NOW on a personal note, I would like to thank you for the raise in status. elie

NOW on a personal note, I would like to thank you for the raise in status. elie

POWER to the People!

I would love to see colgene argue with you about how tax cuts for the rich is unfair. yet you are creating employment because of a successful business and some tax breaks.

The Clueless Old Liberal would just argue that it is proper for the government to take all of that money away and only allow any of it be saved via tax breaks for creating the right kinds of jobs, or for doing the right kinds of capital (or is that word capitol?) upgrades or other things that the government and society want to have done.

What the Clueless One would never admit to is that he and others like him prefer the government to play Robin Hood and work through social engineering with the government deciding for society what is in the best interests of everyone.

He's been debated until most of us are blue in the face (or red faced, whatever you prefer), and he continues to ignore the fact the government spends too much money and wastes far too much on things that are only needed by the companies that were successful in lobbying their hired stooges to get some pork tossed back at them. Lobbying works well because for a few pennies on the dollar spent wining and dining the stooges and their hired hands, you get back many dollars in set asides, special contracts, grants, special tax breaks and more.

If we cut most of this crap out, then we'd be much farther along the path to cutting the deficits and having a balanced budget. As usual though, it's always some other states stooges and their pork that is the problem, rather than the pork of all states hired stooges. Cut it all, spread the pain, and really make a dent without hurting the people that are doing what society should want without even being mandated to do it, and then we'd really be getting somewhere.

It's utter bullshit that the companies that are directly responsible for the health of our economy are somehow forced to be a battery for waste and fraud. Taxing both the earnings of all the employees, stockholders, etc., of companies, and then taxing the companies themselves amounts to double taxation, and worse, it robs capital from businesses that we DEMAND to be constantly expanding and reinforcing the economy.

Something needs to be done, desperately, about our lack of representation in the Congress. Businesses are either going to be batteries for the economy, or for a corrupt federal government bribing voters into complacency with "services". In reality it is like tzarist Russia, fooling the people into the false belief that they are too poor and helpless to do without their benevolent overseers.

And here I thought all of those corporate taxes were just passed on to the consumer in higher prices. No?

And here I thought all of those corporate taxes were just passed on to the consumer in higher prices. No?

And here I thought all of those corporate taxes were just passed on to the consumer in higher prices. No?

No. Because I compete in a market where my competitors aren't based just in the United States.  We're not a restraunt. We're a software company.  If we raised the price on say WindowBlinds to $24.95 we would lose more sales than the increased revenue per unit would generate.  Moreover, we're dealing with product prices that have definitively price points.  We can't just raise the price on say a $9.95 product to say $10.16.  The next price point after $9.95 is $14.95 and that's too much of a jump and would dramatically affect sales.

If the tax rate were more reasonable, like say 25%, it wouldn't be such a hit.  But when over a third of it is going out, it creates a strong disincentive.  The net result is that we do less work this month. I take some vacation and just take it easy. Which, while good for me, is not good for the economy.

"And here I thought all of those corporate taxes were just passed on to the consumer in higher prices. No?"

Where that hurts is in virtual monopolies, like the oil industry. When people say they are going to punitively tax the profit on a whole industry, then it would effect the price point on the whole industry, and therefore prices, as a whole, would rise.

The government CAN impose punitive tarrifs on nations to balance the situation Draginol describes, but the problem with that is the other governments have a tendency to do the same. Then not only have you hurt profits, you've hurt sales outside the US, since companies in those countries can sell cheaper there than you. As if it isn't bad enough that they pay nothing and offer little in the way of benefits.

So, in the end, the best thing for the government to do is create as littl overhead as possible for American business. No matter what they seem to do, though, they end up raising costs and cutting into capital. That's the nature of government, to steal what they feel they are owed as our babysitters.

Contrary to myth, corporations pay a lot in taxes. Our corporate tax rate is 39%. So we're talking well over a third going to the federal government.

I was wondering, is this 39% like the 33% bracket on the income tax, which applies to only income over $150,000 and therefore takes a third of nobody's income? Not for the same reasons, but kind of. Congressional Research Service says the effective corporate tax rate averages 26.3 percent of total profits. Depends on how many depreciation allowances and stuff you can take.

So what is the effect on "behavior"? Well, in my case, since I know my activities this month will quickly be taken away, I just don't do much.

On the flip side, your activities next month won't be taxed for an entire year, so you should work much harder then. From a tax perspective, ideally you would "shift" your burden by spending all of June on vacation and working double time all of July. Of course this wouldn't be very efficient, but it's only a distortion and not a dead loss.

I take your basic point, though, you are right at the margin where you are rich enough to choose how much to work and not rich enough to write your own tax loopholes. You are the guy all those tax cuts ought to be aimed at for more economic growth.

I notice the "tax the rich" advocates don't even come close to touching this thread. Thanks again for giving us a perspective from a real person instead of the typical "data from the CBO" bs.

Actually, I also paid one month's worth of salary for taxes this year...of course, that is one month of my salary on an income that taxes my wife's salary as well.  I suppose if two people's middle class income equals the salary of one of them, I should be happy, right?  I mean, I still managed to keep the lights on and the car paid off.

I'm unable to take a light month this June, though, I'll work at least 200 hours this month.  That's really not a heavy schedule from what I have worked in the past.  When I was teaching, of course, I got this month off, but it wasn't a paid month -- a 9 month contract is spread out over 12 months for teachers so that we can get a check during the time we aren't paid for.

But, seriously, man, you make video games and gidgets for Windows.  You aren't really providing a vital service.  So take your write off, then, I don't blame you.  The person happy about the taxes they pay would be hard to find.  But next time you drive on a road, or something of that nature, you might be happy to have them.  There are countries who have lower taxes, of course, but I hear their roads aren't as good.

Cheers.

The more I look at this the less rational it looks. You might feel richer in July when you get that 240-hour paycheck with no taxes taken out, but you're not really, because you have a 100-hour tax bill coming due in 12 months. The only difference is you can earn interest for a year before the tax bill comes due. So what's the real benefit of working in July instead of June?

First scenario -- Work hard in June:
Work 240 hours
Taxed: 100 hours
Remain: 140 hours
In June 2007, this will be worth (assuming 10% interest rate):
154 hours

Second scenario -- Work in July instead:
Work 240 hours
Taxed: 0 hours
Remain: 240 hours
In July 2007, this will be worth (assuming 10% interest rate):
264 hours
Taxed: 100 hours
Remain: 164 hours

So the difference between working in June and working in July is 10 hours' pay. In other words the effective tax rate in July is 42%, and in June it's 46%. If that's enough to make you shut down for a month, then I'm surprised you bother coming to work at all.