Break the Chains Act [WITHDRAWN]

[Bacon King]

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sponsor: Libertas
bill slot: 3

[Bacon King]

An interesting idea, and one that I think has merit. I think the 4% and 7% might be a little steep, though. Also, I'd like to explicitly give the process some oversight to prevent companies from trying to receive credits illegally. I'm offering this friendly amendment:

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[Bacon King]

An interesting idea, and one that I think has merit. I think the 4% and 7% might be a little steep, though. Also, I'd like to explicitly give the process some oversight to prevent companies from trying to receive credits illegally. I'm offering this friendly amendment:

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I would accept that amendment.

So noted; Senators have 24 hours to object.

[Bacon King]

I'd like to offer another friendly amendment below; Marokai's concerns make sense.

the following be changed:
"2 to 3" in Section 1 to "2 to 9"
"4 to 6" in Section 2 to "10 to 29"
"7 to 9" in Section 3 to "30 to 49"
"10 or more" in Section 4 "50 or more"

[Bacon King]

I'd like to offer another friendly amendment below; Marokai's concerns make sense.

the following be changed:
"2 to 3" in Section 1 to "2 to 9"
"4 to 6" in Section 2 to "10 to 29"
"7 to 9" in Section 3 to "30 to 49"
"10 or more" in Section 4 "50 or more"

Marokai is just here to represent the interests of Big Business over small.

The goal of this tax is not to collect revenue but to incentivize selling off excess properties to create more individually-owned businesses. If we were to reduce the numbers any lower than they are in the original proposal, it would not accomplish that goal. The CEOs of conglomerates should feel at least a slight burn to encourage them to make themselves eligible for a lower bracket.

What big conglomerates don't have more than fifty locations? Also, there are plenty of smaller family-owned chains that have their number of locations in the 10's or 20's. I think this amendment actually fits your vision pretty well.

[Bacon King]

I believe the key thrust of this bill is/should be to allow small business to open and develop (thus the tax credit for owners of a single location), not to directly punish big businesses through taxation. I fear anything bigger than a single digit tax on profits would be too excessive, especially if added immediately rather than phased in. With the current economic climate, such a new tax could have pretty negative short-term effects on the stock market.

I agree with your principle of economic decentralization here, but I see nothing wrong with small firms. There's not much difference between, say, a restaurant that owns five locations and a restaurant that owns ten. There is, however, a huge difference between a restaurant that owns five locations and a restaurant that owns fifty locations. I think that difference should be what's reflected in the tax brackets here, and that's why I wrote that last friendly amendment.

Also, an idea; would you be up for allowing part of the fund to go towards low-interest loans for people starting a new business? If so, I'll type up another amendment.

[Bacon King]

Libertas, companies do not necessarily have that much income to spare, and your tax will hurt them a hell of a lot - not that you care, but this will cause fewer people to open businesses, because they're scared of being taxed too much.

It's a tax on profit, not income. Also, how in the world does giving new businesses effectively a zero-percent tax rate cause fewer people to open a business?

[Bacon King]

I believe the key thrust of this bill is/should be to allow small business to open and develop (thus the tax credit for owners of a single location), not to directly punish big businesses through taxation. I fear anything bigger than a single digit tax on profits would be too excessive, especially if added immediately rather than phased in. With the current economic climate, such a new tax could have pretty negative short-term effects on the stock market.

I agree with your principle of economic decentralization here, but I see nothing wrong with small firms. There's not much difference between, say, a restaurant that owns five locations and a restaurant that owns ten. There is, however, a huge difference between a restaurant that owns five locations and a restaurant that owns fifty locations. I think that difference should be what's reflected in the tax brackets here, and that's why I wrote that last friendly amendment.

Also, an idea; would you be up for allowing part of the fund to go towards low-interest loans for people starting a new business? If so, I'll type up another amendment.

I would support that.


As for the numbers, how about these?

1. Companies or individuals which possess 2 to 4 retail outlets or stores, inclusive, shall be assessed a differential tax of 1% on their annual profits.

2. Companies or individuals which possess 5 to 15 retail outlets or stores, inclusive, shall be assessed a differential tax of 3% on their annual profits.

3. Companies or individuals which possess 16 to 45 retail outlets or stores shall be assessed a differential tax of 5% on their annual profits.

4. Companies or individuals which possess 46 or more retail outlets or stores shall be assessed a differential tax of 7% on their annual profits.

Alright, I withdraw my last amendment. Now if you'll just accept your own as friendly

[Bacon King]

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Actually, here is my amendment adding the bit about the loans, and to simplify things I went ahead and changed Sections 1-4 to match your suggestions above. Offered as friendly.

[Bacon King]

I'd love to see an amendment you have to offer Badger, and would vote for it.

[Bacon King]

I honestly believe that your ideas fit the purpose of this bill very well. The loans and tax credits should go to small businesses, not simply establishments that happen to have a single location- that would allow the bill to benefit newer businesses rather than, say, something like a high-end non-chain department store in New York City that makes millions a year and definitely doesn't need the assistance this bill provides. The fund should go towards helping people to enter the business market and better establish their fledgling companies. Small multi-location firms also shouldn't be taxed in the same manner as something like Walmart.

Also, a note on Senate protocol- if the sponsor of a bill wishes to withdraw it, any other Senator can move to assume sponsorship (with a simple majority vote if that motion is contested) to keep the bill on the floor.

[Bacon King]

I like the amendment, Badger.

[Bacon King]

Senators, there is now a vote to amend the bill as listed below. Please vote aye, nay, or abstain.

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[Bacon King]

Aye.

The increased number of firms will prevent smaller businesses from being punished, the smaller tax raises more than enough money, and placing the money directly under the purview of the Small Business Administration will allow for the most effective use of the funds rather than us establishing an unnecessary parallel program.

[Bacon King]

Amendment has passed, with six ayes, one nay, and three abstentions.

Anything else to be said here? Otherwise I'll be opening a final vote soon.

[Bacon King]

I don't think this kills the bill. In fact, I think it makes the bill stronger. It taxes the companies that are legitimately too large, but not to such an extent that it will cause financial chaos, while still funneling huge and unprecedented sums of money into the existing programs of the Small Business Administration that will be used much more comprehensively than simple tax credits and loans. This will allow a new era of never-before seen small business growth in Atlasia. A useful and well-funded SBA will basically let anyone who desires to own their own company their own chance at the American dream.

[Bacon King]

I don't think this kills the bill. In fact, I think it makes the bill stronger. It taxes the companies that are legitimately too large, but not to such an extent that it will cause financial chaos, while still funneling huge and unprecedented sums of money into the existing programs of the Small Business Administration that will be used much more comprehensively than simple tax credits and loans. This will allow a new era of never-before seen small business growth in Atlasia. A useful and well-funded SBA will basically let anyone who desires to own their own company their own chance at the American dream.

As was mentioned, the tax amounts are so infinitesimally small that they will have no effect on the big chains. The goal of the Break the Chains Act was to convince chains not to over-expand and over-concentrate property and wealth lest they damage their own profits. At the current rate of taxation, they will just write-off the laughably minor loss in profits when they expand. It is at this point just a nuisance upon business that does not carry with it any social benefit.

Is the point of the bill to destroy larger firms, or grow smaller ones? I much prefer the latter aim to the former, even though if you did want to go with the objection of destruction directly, this upswing of new businesses the amended bill would allow would be far more efficient at evening out the marketplace than a tax on a tenth of total profits would. Just saying.

[Bacon King]

I don't think this kills the bill. In fact, I think it makes the bill stronger. It taxes the companies that are legitimately too large, but not to such an extent that it will cause financial chaos, while still funneling huge and unprecedented sums of money into the existing programs of the Small Business Administration that will be used much more comprehensively than simple tax credits and loans. This will allow a new era of never-before seen small business growth in Atlasia. A useful and well-funded SBA will basically let anyone who desires to own their own company their own chance at the American dream.

As was mentioned, the tax amounts are so infinitesimally small that they will have no effect on the big chains. The goal of the Break the Chains Act was to convince chains not to over-expand and over-concentrate property and wealth lest they damage their own profits. At the current rate of taxation, they will just write-off the laughably minor loss in profits when they expand. It is at this point just a nuisance upon business that does not carry with it any social benefit.

Is the point of the bill to destroy larger firms, or grow smaller ones? I much prefer the latter aim to the former, even though if you did want to go with the objection of destruction directly, this upswing of new businesses the amended bill would allow would be far more efficient at evening out the marketplace than a tax on a tenth of total profits would. Just saying.

The point is not to destroy firms, but rather to encourage wealth and property that had been concentrated to be more widely distributed. Providing funds to smaller businesses was the secondary goal. In its current state, the bill accomplishes none of the original goals.

This bill gives billions and billions of dollars per year to programs that assist new businesses! How does that not accomplish at least the secondary goal? Also, with money being taken directly from larger companies to allow smaller companies to start and develop, how is the first goal not being met as well?

(Also, Libertas, would you object if I went ahead and started a vote here? I legally have the ability to do so now, I just wouldn't want to interrupt our debate here if you didn't want me to.)

[Bacon King]

Because a corporation is not going to bother selling a property or even ceasing to buy out new properties over an infinitesimally small amount of potential tax savings.

That would have only happened at the margins under the old bill anyway. Under your originally proposed bill, for example, I highly doubt Walmart would have sold off 3689 of its 3698 locations just to pay a 5% tax instead of a 7% tax, know what I mean? Selling off 99.8% of the company's ability to generate revenue to do that just doesn't make sense.

But yeah, that's all I've got to say I suppose. Opening a vote.

[Bacon King]

Senators, there is a final vote on the bill below. Please vote aye, nay, or abstain.

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[Bacon King]

I believe Senator Badger reasonably responded to the criticisms of his amendment in the post below. It's worth noting that as you mention, Senator Franzl did raise questions to the amendment, but later voted in favor of it without comment.

Has anyone here actually estimated the amount of revenue to be raised by this bill, even at these reduced tax rates? It's a lot. For example, Wal-Mart alone would pay an additional tax of about $150 million a year from these rates. Compare this to the RL SBA's current annual budget of only $569 mil. And that's just one company. Apply these tax rates across thousands of affected companies and this will translate into the biggest expansion of small business loans and loan guarantees in at least 70 years, possibly in history. And I believe the actual response from CEO's will be to reach for the antacids, not "sly smiles".

Nevertheless, as I said I'm not wedded to these numbers. If the Senate truly believes that such an overwhelming expansion of small business loans and loan guarantees are still insufficient, I suppose we could even <grits teeth> double these rates. At some point though there is a question as to how many good loans can even be made with this revenue. At some point supply will overreach demand, and if we are multiplying the SBA budget by several times and the statute forbids any other use of the revenue, then we may very well hit that point soon afterwards.

Also, aye on the bill.

[Bacon King]

Current vote is 4-2.

[Bacon King]

This has the votes to pass. Senators have 24 hours to change their votes.

[Bacon King]

Senators in favor of the bill: Bacon King, Hans-im-Glück, Franzl, Badger, AHDuke (5)
Senators opposed: Libertas, Bgwah, Dallasfan65, NCYankee (4)
Senators abstaining: bullmoose88 (1)

This bill has hereby passed the Senate and is presented to President Purple State.

[Bacon King]

The passed bill, for the President's convenience:

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