With regard to the Urban/Brookings study, I don’t know how they did their study, but it was for an individual. I am both the individual and the employer. Businesses pay 7.65% in Social Security and Medicare taxes. This is money that is not available for salaries, capital investment, etc.

I’d love for someone to show me tax decreases Obama is proposing for people earning between $250,000 and $600,000 that offset the increases outlined in the “Fire the Developer” post and that would then make the Urban/Brookings study make sense. The links I have in that post are pretty clear that the increases are for people making above $250k. I’m not seeing decreases.

In this article, Obama as much as admits that his tax increases will hurt the economy. If they are indeed neutral, why delay them?

Wei, I appreciate your enthusiasm, but I don’t hear Obama saying that he will create a padded landing for entrepreneurs. Nobody is going to give us anything – and we really shouldn’t expect it.

http://www.washingtonpost.com/wp-dyn/content/story/2008/06/09/ST2008060900950.html

…but Angus, if you really make over $600k a year, you’re my hero. However, there are many who do make that much who aren’t as generous as you are. While I loathe taxes as much as the next guy, I do think the money under the right leadership will actually do some good rather than be wasted on government coffee or pens.

What the entrepreneurs are trying to do in Atlanta is create a safe haven for us to explore our ideas and hopefully land on a padded mat when we fail – imagine if taxes could make that a reality across the entire country instead of just one city. I know it’s idealistic but that’s why Obama is the better choice for the rest of us who don’t make the high 6 or 7 figure salaries.

It’s actually fascinating.

Not false, but your response is subterfuge. Interest rate alone isn’t relevant without considering amount of debt. I’d rather pay 99% interest on 0.1% of GDP than 2.7% on 36.9% (or 65.5%) of GDP. Neither is the “crippling” part false; it is a matter of opinion.

Per Wikipedia US debt was between 36.9% and 65.5% in 2007: http://en.wikipedia.org/wiki/United_States_public_debt
Debt has certainly grown since then.

As of April 2008, the total U.S. federal debt was approximately $9.5 trillion, or about $31,600 per U.S. resident. I believe most credit card debt counselors would say that a person in the USA with average income who owes $31k in credit card bills would be crippled with debt. Are you saying that $31k debt/person is not a concern?

At 2.7% interest that requires the average person to pay $853.20 in taxes just to cover the interest expense. And for high earners like Angus, a lot more of his taxes than $850/year are going to go towards paying that interest. But $850/year doesn’t say anything of paying down the debt it is just to maintain it. And if our credit rating as a country falters, which is not a risk we should just ignore, that interest rate will go up significantly over 2.7%.

@lance re: False statement re:requirement for taxes.

Again not a “false statement”, a matter of opinion. I predicated my opinion on the need to reduce the national debt and on potential increase in either or both interest rate and/or expenditures both of which are likely (especially if McCain takes us to war with Iran.)

Frankly I think it’s very clear that Obama will reduce expenditures significantly more than McCain: http://www.youtube.com/watch?v=7o84PE871BE (that which Jeff Haynie found “scary” but I find to be a long needed change in policy.)

So you will get no argument from me on the need to reduce spending, I respectfully think that is it not being realistic to think that we’ll not need to raise taxes, if not to reduce the national debt but because all politicians find an easier time increasing expenditures than reducing them.

I also find it disingenuous when people talk of McCain and Republicans as being the fiscally responsible party yet won’t consider 1.) How The Republicans spent like drunken sailors from 2001-07, and 2.) How Republican supporters will never acknowledge the tax burden that the war in Iraq has placed on the American people. Most disingenuous is that the cost of the Iraq war is considered an “extraordinary expense” and never quoted when the official budget numbers are quoted yet the war has been going on for five plus years with no real end in sight assuming John McCain is elected.

@Paul Freet:

So your argument is “Yeah things are bad, but other people have it worse?” Frankly, that’s not the ideal I think we should strive for.

“An Obama tax plan means a small business will have less cash to spend on expansion in 2009. Simple math. They will have less money to spend on people, new products and marketing. Making it difficult to grow their business. Regardless of what happens with the overall economy.”

Categorically unproven. First, how could Obama increase taxes for 2009 when tax law is set in prior years and he doesn’t take office until Jan 21 2009? Second, you are assuming he will get drastic increases passed quickly, which I believe is very unlikely. I’ll be glad to bet you a steak dinner at Morton’s downtown that you won’t see any FICA increases until at 2011 if at all during an Obama presidency; do I have a bet?

“Even if I accept the proposition that higher tax rates somehow grow the economy faster than the current rates that might be great for GE/IBM/Microsoft, who can borrow against their balance sheet for growth, but bad for small business who fund expansion out of cash flow.”

You are mischaracterizing my argument and boiling it down to a black-and-white, cause-and-effect issue where that was not my argument. I did not say “higher tax rates grow the economy faster.” I said that while an Obama presidency may increase taxes moderately, I see strong yet unrelated evidence to believe that an Obama presidency will do significantly more to spur positive economic development, especially for startups. I see little evidence in McCain’s positions that will do much of anything positive to spur more business for startups and small business. IOW, I was looking at the balance of Obama’s planned policies vs. the balance of McCain’s and see a lot more to like for startups and small business in the Obama plan.

And why do you continue to champion the misnomer that Obama=higher taxes=bad-for-startups when Obama’s stated position is “I will eliminate capital gains taxes for the small businesses and the startups that will create the high-wage, high-tech jobs of tomorrow?” Why do you not acknowledge and incorporate into your evaluation?

Finally, and this is to address Angus concerned with FICA over $102k why not simply reduce your salary to $102k and pay yourself dividends for the rest since Obama claims to eliminate capital cans taxes for small businesses supporting high tech? How many small businesses pay a employees who are not shareholder over $100k/year?

Seems more inadequate tax planning to me than a problem with Obama’s policies. Or what am I missing?

The issue is that macro economic effects are being compared to microeconomic effects. An Obama tax plan means a small business will have less cash to spend on expansion in 2009. Simple math. They will have less money to spend on people, new products and marketing. Making it difficult to grow their business. Regardless of what happens with the overall economy.

Even if I accept the proposition that higher tax rates somehow grow the economy faster than the current rates, that might be great for GE/IBM/Microsoft, who can borrow against their balance sheet for growth, but bad for small business who fund expansion out of cash flow.

False statement.

National debt as a percentage of GDP currently stands at 2.7%. When President Clinton took office national debt as a percentage of GDP was at 4.7%.

“Why is it that otherwise brilliant business people don’t see how there will be no choice for either administration but to raise taxes.”

False statement.

There is the choice to reduce outlays, which is exactly what a brilliant business person with limited access to capital would do.

@angus: Let’s look at it realistically. Let’s say Obama’s plan becomes reality, exactly as prescribed in his “one option.” Now how soon do you think that will pass and when do you think it will be effective? What’s the likelihood it will affect you within 2-4 years? Probably longer as to get it passed he’ll probably have to delay it.

Now let’s look at it selfishly for you, and for the rest of the great Ga. Tech startup community. What’s the likelihood Obama will spend that $15 billion/year investment in alternate energy, and how soon? Probably likely because it is politically easier for them to spend than raise taxes and with Democrats controlling everything it will probably go through first year. Now what’s the likelihood Ga. Tech area startups *won’t* get at least 1% of that $15 billion, or $150 million. Given your positioning in the Atlanta startup market, my guess is you would easily be able to increase your net income by well over $20k, or 0.01% of the investment that Ga. Tech startups will capture starting in the 2nd year of an Obama presidency even before you are hit with an $18k FICA increase in year 3 or 4.

But because (I’m assuming) you have cognitive dissonance related to supporting a Democrat you’d rather do what’s ideological rather than what in your real best financial interest and (IMO) in the best interest of the country at large.

And taking a completely different tack, which by no means should imply I’m abandoning my prior argument I will ask you “Would you rather have your taxes raised by someone who admits he is going to or someone who lies telling you he is not?” (”Lie” may be too strong; maybe “Isn’t competent enough to realize he will have to?”) Why is it that otherwise brilliant business people don’t see how there will be no choice for either administration but to raise taxes given the current state of the union? Interest on our national debt alone is crippling.

What’s more, with John McCain planning to continue of during his administration a multiple trillions of dollars government investment strategy that only destroys value, not create it (bombs don’t create value, anywhere) how is it you can believe their platitudes that they won’t raise taxes? McCain WILL raise taxes, but by the time he does so we’ll be so far in the hole we may never be able to dig ourselves out after which we may find ourselves say “Yes Sir Comrade Li” and “Yes Sir Comrade Wang” (ref: http://is.gd/2gyp) very frequently.

Yes, I’m being extreme again, but to make a point. After all, the Chinese essentially owns the USA for all practical purposes just like the credit card companies own those with high balances. Why? In large part because of our collective hubris and because we’ve become such a nation of internal bickers that we are not paying attention to our real competitors on the outside. When that happens in a startup company it fails; why do you think it would be any different for a country?