Wednesday, August 03, 2011

Matt Damon: Idiot

Will "How 'Bout Them Apples" Hunting doesn't think anybody started a business with their "Bush tax cuts". Well, let me tell you Sparky, I know of hundreds of examples where people started or expanded their businesses with their "Bush tax cuts" and there are very likely tens of thousands of businesses that started or expanded with their Bush tax cuts.

Let's have a little economics lesson. Businesses need "capital" to get going and expand. Capital can be actual cash or it can be other assets that are sold or otherwise leveraged by the business to get going or expand. The most significant component of the Bush tax cuts were the reduction in capital gains taxes and dividends, both of which triggered a 95% increase the value of stocks. Stock portfolios are commonly sold or borrowed against to fund new businesses and a near doubling of such assets provided fledgling businesses that much more capital to start or expand. Furthermore, people who received dividends had more money in their pockets and thus more firepower to support business ventures. Finally, the reduction of marginal income tax rates that was the centerpiece of the Bush tax cuts provided a powerful incentive for people to start businesses. Any contemplated business plan became instantly more financially compelling when the Bush tax cuts passed and the opportunity calculus of risk and reward shifted for thousands of people mulling starting a business.

Clearly Jason Bourne views as ridiculous the notion of people sitting around doing nothing until a check shows up in the mail from George W. Bush to which they reply, "Great, I think I'll start a business." And it is ridiculous, but only people who have a facile understanding of economics and entrepreneurship start out there. That's not the way that the world works. Tens of thousands of people had vaster resources at their disposal and significantly altered incentives due to the Bush tax cuts. And we know it worked because LLC (limited liability company) formation skyrocketed during the years following the Bush tax cuts. LLCs are the preferred incorporation vehicle for small business.

On one final note, Tom Ripley also saw fit to pontificate on education, saying that teaches make a shitty salary. Well Tom, my kid's kindergarten teacher makes $125,000 for 190 days of work not including health benefits and a pension with a net present value over $1.4 million. Is that shitty?

Keep talking dumbass.

1 Comments:

Blogger Richard said...

As I recall, Don Luskin took note of Daniel Clifton's studies showing conclusively that both the 2003 and 1996 reductions in the tax rate on Cap Gains and Dividends actually generated more revenues to the Treasury from those taxes than CBO and JCT had predicted without the rate cuts.

Its also true that every time tax rates on capital are reduced both GDP growth and employment growth accelerate, and when those tax rates are raised employment and GDP are reduced.

12:16 AM  

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