Jobs and taxes come only from profits. Which will a business cut first when taxes increase?

Liberals demand higher corporate taxation and taxes on the rich. Do they understand how corporate officers will be fired by shareholders if they choose lower profits? All taxes are passed on, shareholders earn less. Customers pay more. Workers have to work harder for less. All jobs come from profits. Do liberals want more unemployment when corporations cut back on workforce to pay corporate taxation? Do liberals demand lower returns for IRA's and 401K's so people will suffer when they retire? Perhaps they just hate poor families who suffer most from paying corporate taxes when they buy needed items? How can liberals justify calling conservatives mean, selfish, ignorant or uncaring? How can liberals accuse conservatives of wanting to starve children or the elderly?


@ StephenG - Please feel free to pick any of the above questions to answer? I'll wait.

Update 2:

@ Rick - There are multiple "trillions" sitting off shore in Swiss bank accounts and other shelters waiting for a better time or place to invest. A 35% top marginal tax rate on corporations gives places like Canada with a 20% top marginal corporate tax rate a 15% head start on undercutting American prices. The more we tax the more money will be sheltered. QE1 and QE2 have inflated the currency vis-a-vis the real value of other currencies, and we have an enormous financial head start given to foreign corporations

Update 3:

@ lovelydoll - You say "Under political uncertainty, corporations will hold cash reserves. This doesn't benefit anyone. We have been seeing a lot of that recently" The solution I see, is to eliminate the uncertainty such as deregulate, or decrease tax rates permanently, or scrap obamacare. I hope you weren't suggesting going after the cash reserves; which constitute an enormous potential energy for economic growth?

15 Answers

  • 8 years ago
    Best Answer

    Liberals probably just don't get upper management philosophies and corporate philosophies?

    A company is a non-human thing, the people employed there are exactly that, employees. A company can choose, if it's board of directors want it, to be charitable in some ways, but a company and it's board cannot and will not exist if there is no profit. Some small "mom and pop" companies maybe can afford to be charitable, but when it becomes a losing venture, all bets are off.

    A company, rather than a person, can't up and look for another job, it exists to make a profit. It exists within itself and there is no other means for it to work. The PEOPLE who work there can feel badly and have all the compassion in the world, but the company is there to make money, period. Therefore, if profit is not realized, cuts have to be made in order to make profit. Cuts may come in non-human ways initially, but the payroll is something that will be looked at and must be looked at when cutting has to happen. Sad, but true.

    I have known a few CEOS who have offered to take a pay cut in my day, in order to keep the company afloat. They are few and far between. I have known corporations to start charging people more for benefits, stop overtime, have wage freezes, and many things in my day. But, eventually, when business is down, layoffs will occur.

    I used to be a Director of Human Resources before "retiring" to become a full time mom. I must say that layoffs are among the hardest thing I've ever had to do in my lifetime. I happened to wear a black dress one day and was referred to as the "grim reaper" by people in the cafeteria. It was known that if I were to call you and summon you to my office, you were about ready to go after awhile. Not fun. I did my best and helped those people to find other jobs with my contacts, if I could, but the company was not condoning that, I did that on my own time.

    Yet, the company I am referring to still exists. They made it through that rough patch and have expanded like crazy since then. I heard they did well on the stock market this week, though others were faltering. So, they made the right choice for them. They re-grouped, cut costs, and they now exist to employ hundreds of thousands of people. So, I commend them for what they had to do.

    Remember that most companies are trying to save themselves when they make cuts in staff, we have no choice (other than electing the right people!!!) about paying the taxes we have to pay, therefore if taxes go up and then profits are so low that the company is in danger of going out of business, it just has to be done.

  • 8 years ago

    increasing corporate taxes is out of the question. US already has a REALLY high corporate tax rate compared to the rest of the world.

    I don't get the question though... Which will a business cut first? out of which options? you never gave us the options to choose from.

    I like your reasoning though. But you also have to account for other variables such as political uncertainty. Under political uncertainty, corporations will hold cash reserves. This doesn't benefit anyone. We have been seeing a lot of that recently.

    Also an increase in taxes will make corporations choose countries with lower taxation.

  • sanity
    Lv 7
    8 years ago

    It is not patronizing to say, well, that you are working class and will never understand taxation or taxes on profits. Your general idea is that increase in taxes will translate into higher consumer costs, and that is wrong!

    Taxes are levied on companies only when companies make profits. And that is the more you earn, the more the taxes are levied. Taxes do not and will not affect the product prices. The market forces determine prices. If an American company is not efficient and sell a product at higher prices than the competitors, for example the Japanese or Chinese manufacturers, consumers will buy from the Japanese or Chinese manufacturers. It is as simple as that. *And the American company has to adjust its prices to competitive levels to survive the competition.

    More taxes do not translate into unemployment. As long as the company can make profits and when there is rising demand for its products, the company will continue to increase capacity for the products, because every product sold will translate into profits. Imagine selling something that you earn a dollar for each product sold. If you are capable of selling more, 1 million sold is $1 million profit. 1 billion sold is $1 billion profit. Which company would not want such a situation?

    Taxation is not a factor in contributing to a product's cost. Because taxation comes only when the product is a profitable product meaning the sale of each (and everyone of it) generates positive income for the company. Assuming that the product is breakeven, meaning the price sold is equal to the cost of producing it, then there is no profit, and there will not be any taxation for the company not making profit.

    EDIT: Grocery stores' prices are not caused by taxation. If you follow the US currency vs other currencies, let's say Renminbi or Singdollar, or other major currencies, then you would have discovered that the US currency has declined over the last 5 years by as much as 35%. That would mean that through this length of time, cost of imports would have risen by as much, if not more, and would be seen as "inflationary" (rising costs). There are other factors, too, that affect consumer costs, like money supply (inflationary effect of increasing money supply, for example), etc, but I would not like to delve into those.

  • 8 years ago

    Wrong. Jobs come from cash flow not profits. Management can decide to re-invest cash flow into the business and pay zero tax or take cash out of the company (profit) and pay tax. If the tax rate is low, there is an incentive to take profit out of the business rather than re-invest and that kills jobs.

    Incidentally, if the shareholders take profits out a business in Canada, they pay a combined tax rate of about 44% (corporate and personal). It makes more sense to spend the money on R&D or new equipment. These increase the value of the business are deductible from taxable income.

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  • 8 years ago

    Actually, small business hires the vast majority of US workers, and small businesses are going to be getting quite a few tax breaks--in addition to the breaks they got in last year's bill.

    Huge corporations are not hurting, especially since due to the tax code full of loopholes, they pay an effective tax rate that is lower than half a dozen other industrialized nations (Japan, Germany, etc.); some pay no tax at all, and some actually get a refund.

  • Jared
    Lv 7
    8 years ago

    when will conservatives understand that high unemployment is good for a free market fact it's essential.

    So let's take out all regulations (which is what they want). In this case, it's actually simple economics:

    High unemployment means the capitalists have a large pool of workers to choose from. That is, the supply is very high, thus wages can be very low (simple supply and demand). Lower wages, leads to cheaper products. This is how a capitalistic economy is supposed to work.

    So if you want your capitalist economy to work like a well-oiled machine, then you are absolutely right to be against all regulations (since they all stand in the way of the above supply and demand argument, by artificially raising the cost of wages). But don't act like you're against unemployment.

    If you accept the capitalistic economy then you must accept that there will always be unemployment and the higher the better (well for the people who have jobs anyway). As more people become unemployed, more people will starve to death, thus placing a smaller burden on the rest of the population.


    In fact, the only reason anyone cares about high unemployment, is because unemployment COSTS the rest of us money (by way of welfare and unemployment benefits).

    If we did away with that altogether, then the people with jobs wouldn't care about unemployment and the unemployed would die, so there's no problem (it takes care of itself).

    My point in all of this, is when you say you want to do away with regulations, and welfare, and other "entitlement" programs, this is what you are probably even believe a lot of it (except you'll say that a normal person can get a job and so if you cannot, then you deserve to die I would ask how that's different from anything I have said)?

    But do realize, you are saying, if you cannot get a job, you deserve to starve to death. I don't see any other way to phrase it.

    (and I'm sure you'll take out disabled people, etc., but it still leaves the above statement for able-bodied, "lazy", people)


    I love how Julius came out and said it: "I cut jobs"'s not that I'm trying to make fun or anything, because he is exactly right. A businessman (or woman) must cut jobs to increase profits, so the idea that businesses are going to hire to somehow try and make larger profits makes no sense. As Bubbles stated, the only incentive for a business to hire is to keep up with demand. Lower taxes on the rich does not increase demand, so how could that possibly cause more hiring?

  • Rick
    Lv 4
    8 years ago

    I wish they made the tax code much easier to cope with. It should remain untaxed if the money is in the system...whether one stock or the other....and is adding to the economic growth of America. Increasing taxes on productive dollars is downright stupid!

    On the other hand, money that just sits around and does nothing...well, that's money that I wouldn't mind being taxed. I'm not hoping investors decide to enter the market with a lack of prudence, but I'm hoping that money isn't just sitting in some fat-cats bank.

    I disagree with the Euro-like thinking of American liberals ie tax and spend and delay any real leadership...till your country and/or institution is on the brink.

    Taxes have to be smart, not punitive to the economic growth of America. You have too many questions, though, chief...haha

  • Anonymous
    8 years ago

    Business taxes USED to come only from profits. Obama and the left has changed it to that now they come from any business activity. Profitable or not.

    That way, to avoid taxes, a business avoids activity.

    Hiring is a business activity.

  • You may want to pay attention.

    Both Republicans and Liberals raise taxes and both lower taxes; the difference between the two is not in the tactic but how it is applied.

    Republicans raise taxes on the middle and lower classes to lower taxes on the rich. You can check it yourself on fact, Ronald Reagan holds the record for the highest federal taxes on the middle and lower classes in American history. Republicans do this because, as you have shown, they believe that the rich are job creators. The theory is that if you give the rich the money, they will use it to do what they do best--make more money. They will do this by creating new businesses and expanding old ones, and since they need people to run those businesses there comes a whole bunch of new jobs. The middle and lower classes may be paying more in taxes, but with all the new jobs they won't care.

    Nice theory on paper, but it does not work in real world application; you'll see why soon. Now let's try the Democrat model of raising taxes on the rich to give tax cuts to the middle and lower classes. You can also check this on In fact, President Obama and the previous Democrat Congress lowered federal taxes on the middle and lower classes to the lowest they have been in the last 50 years (1960-2010), when then-President John F. Kennedy (another Democrat) had them lower.

    But in this model, the middle class gets most of the money. Then the middle class does what it does best with money--buy products. You see, the middle and lower classes do not want money for money's sake. They want money only so they can buy the things they need and want; so they have a vested interest in re-investing that money into the economy. As you yourself pointed out, corporations have a vested interest in not spending any money because that cuts into profits and thus makes them less attractive to investors. Giving money to the rich like Republicans do ends with the rich holding all the money because they want to make the profit that attracts investors. As you pointed out, they will refuse to hire because hiring means loss of money through wages. Republicans just destroyed jobs by giving the money to the rich, who are actually job destroyers and not job creators. You yourself proved it.

    But back to the Democrat idea. The middle class was given the money, and they used it to buy products of the rich. The rich still get the money just as they did under the Republican plan, but instead of just being given money they received that money through sales (i.e. those profits you just bumped up as the greatest thing ever). Now they have the money to create jobs, but more importantly they have the customer demand that forces them to create jobs even if they do not want to pay those wages.

    You see, corporations understand that customers want a human face and good service. This they cannot get from an automated computer. When Republicans gave the tax cuts to the rich and refused money to their customers (the middle class), there was no increase in demand. So corporations intead used that money to automate jobs out of existence; there was no customer base to demand good service. Jobs were lost. But when Democrats give money to the customer base (the middle class), demand for good service requires that corporations hire human employees to provide good service.

    Jobs were created because the middle class forced the rich to create those jobs. But the rich make money also. So unlike the Republican model where the rich got richer and the poor got poorer, that is until finally the lack of sales also made the rich poorer...the Democrat model made the middle and lower classes richer, but also made the rich richer as well.

  • I agree that the cost of goods will go up first.

    But from reading YA tonight, it appears that some think business owes their success to their employees and couldn't possibly manage without them. Most businesses are small businesses, and when things get tight, family comes first.

    @sanity Have you been to the grocery store lately?

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