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Taxing businesses

Posted: Dec 13, 2012

An article on NPR talking about how added tax on some small businesses could lead them to hire more people or buy new equipment.

It also talks about the flip side, how for some small businesses, the tax would make it harder for them to expand.

"For some 97 percent of small business owners, that higher rate is irrelevant. They make less than $250,000 a year.

And for those whose income works out to be just over that threshold, one way out of paying that higher tax rate could be to hire one more person — or finally replace that 10-year-old car. These investments would pull net income back under that quarter million dollar mark, out of range of that higher rate.

"I think if you're a person who hates paying taxes, hiring another employee for thirty or forty thousand a year is a great way to stay below the new so-called marginal rate," said Mike Roach, who has owned Paloma Clothing in Portland, Ore., for 37 years."

;

This kind of stuff made my eyes cross in economics - classes long ago. Imagine trying to figure

[ In Reply To ..]
out the overall costs and benefits of a situation like that and trying to apply them at an optimal amount, to an optimal group, over time. They do, though. Constantly. Economics is like tossing a rock in a pond. Lots of things happen, above, at, and below the surface.

Predicting human behavior - RC

[ In Reply To ..]
It's almost more psychology than economics, isn't it?

I think half the time, people react in a way they've been told everyone else is going to react in situations like this, whether it's practical in their particular situation or not.

such an interesting point - sm

[ In Reply To ..]
It's so great to read a thoughtful analysis of real-life economics rather than the usual buzz words and scare tactics.

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