Q&A: How can a tax increase on business cost jobs with wages and salaries are tax deductible?

Question by Matthew D Rises: How can a tax increase on business cost jobs with wages and salaries are tax deductible?
Wouldn’t that simply make a greater portion of business income taxable, and therefore subject to the higher tax?

Best answer:

Answer by Un-documented Liberal
I think companies cut corners (lay people off) to keep the profit margin the same – before the tax increase came along.

I forgot which country where the business taxes where so high – that most businesses figured out it was more profitable to run things in the red for tax deductions.

I think your scenario could backfire & gov would actually start to lose revenue.

Know better? Leave your own answer in the comments!

6 Responses to “Q&A: How can a tax increase on business cost jobs with wages and salaries are tax deductible?”

  1. Maxwell says:

    because the end product ends up costs more money, thus reducing sales, reducing income, and reducing funds available for salaries.

  2. Yahoo made me change my name says:

    It doesn’t. That’s just another right-wing lie to get stupid poor people to support tax breaks for the rich. Higher tax rates actually encourage reinvestment in the business, low tax rates encourage cashing out.

  3. daddio says:

    why exactly do you think business is sitting on 1.7trillion?

    there’s this thing called confidence…which is seriously lacking at this time. all economies move on it.

    confiscate more wealth from business…hasn’t worked in the past, won’t work today.

  4. jaker says:

    A tax increase means that people have less money to spend. People spending money is what creates jobs. If a business owner knows that if he expands his business his tax rate will go up he may decide that the risk and extra work and expense of expanding is not worth it.

  5. Schmuck says:

    Wages and salaries are tax deductible? Really? You need to fire your CPA for that one.

  6. railroad dave says:

    you are right . it wouldn’t . more and more people are realizing the BS coming from the Rs . in ’88 reagan gave the rich a 1 trillion dollars a year tax break ( that’s 1/4 of the entire revenue intake of the treasury ) , he said it would trickle down . in ’02 bush gave the rich an additional 1 trillion dollars a year tax break ( another 1/4 of the treasury revenue ) he said it would ” boost the economy and create jobs ” . in the last 24 years this adds up to 34 trillion more in the rich mans pocket , 34 trillion less in the treasury . so far not a dime has trickled down and the working mans economy is in the crapper and the jobs went to communists in china .
    wall street analysts are saying that in 2011 publicly traded corporations made the most profits , ever , in history , they are sitting on over 2 trillion dollars cash .
    NOW is the time to bring back the pre reagan era fed tax rates on corporations and the rich . now is the time to get rid of free trade agreements to bring home millions of jobs .
    i will vote for a president and congress that salutes a flag with five pointed stars , not six , sorry mitts , you’re out .