- Joined
- Sep 13, 2012
- Messages
- 18,233
- Reaction score
- 15,861
- Location
- veni, vidi, volo - now back in NC
- Gender
- Male
- Political Leaning
- Undisclosed
Not exactly apples to apples. The rates refer to are effective rates rather than the marginal rate. If I read it correctly.
The large corporation has more liquid cash to reinvest (one of those loopholes you refer to) which creates more jobs and builds the economy. A large corporation and end up with a EBIAT or EAT of 3% to 5%. If they have a 5% EAT then they're throwing a large party. What most people think about though when complaining about large corporations is either their EBITDA or Gross profits. When you hear about "The _____ Corporation showed $$$$$ dollars in Profit this quarter. And isn't that awful that they're soaking America." or something to that effect, you're hearing about either gross profits or EBITDA. A small company doesn't have the large amounts of liquid cash to reinvest to get their EAT down that low. That's why their effective rate are higher, in most instances. And that's also why you hear that the tax laws are not small business friendly. Not that the tax laws are rigged for the large business, but that the small business just can't survive with an EAT that's 3% to 5%. If a large business has gross profits of $1,000,000,000.00, then their EAT can be $30,000,000.00 at 3%, or even a higher dollar amount at 3% if its a $1B EBITDA. That's not a bad year.
On the other hand, a small business (S Corp or Partnership) that has gross profits or $100,000.00, will have no employees or be in business very long if they do, because if they had the same EAT as a large business, their bottom line would be $3,000.00 at a 3% margin. But a small business that has an EBITDA of $100,000.00 may have some employees. But their effective rate will be higher because they don't have the cash to reinvest to bring that rate down.
I haven't been here long enough to know the history of everyone so this is based solely on the limited information I have read in the past few days... that said:
Xerographica's thread http://www.debatepolitics.com/economics/168419-pseudo-demand-pseudo-supply.html has excellent explanations regarding this. Which you were an active participant in the debate. I'm more of a believer in economic policies that show real results that bring the entire economy benefits rather than just the labor side, or the business side (a rising tide floats all boats, if you will). Such as true Keynesian economics which I believe is what he was describing as part of his theories in his thread (private sector driven with a very limited but beneficial role for government).