Jolting the Job Creators

Mad Dog admits to being mystified:  The Republicans keep citing a Congressional Budget Office "study" which estimates we will lose 700,000 jobs ( out of 4 million expected to be created over the next 10 years) if taxes on people making over $250, 000 are raised from 35 to 39%. 

What Mad Dog cannot figure out is why this should happen.

Mad Dog ran his own small business with 2 employees for over two decades and never once did his calculations about how many more employees to hire have anything to do with what his income tax rates were going to be.  

The calculations had to do, primarily, with how much business we could expect to come through the door, projections of income based on insurance company payment levels,  and most importantly, on how we could make the employees we had more efficient.  My partner and I invested $10,000 in a computer system which made hiring another employee unnecessary.  What made employees expensive was: 1. Salary  2. Health Insurance  3. Pension plan payments 4. Unemployment and disability insurance required by the state government 5. Training. 

During years when personal income tax rates were high Mad Dog did not fire employees and when the Bush tax rates cut tax rates, we did not hire employees.  The fact is, we always paid employees far more than Mad Dog's change in tax rates. The difference between the two rates amounted to $10,000, and we typically paid our employees $40,000.  If I hired a new employee it was with the projection she'd bring in an additional net $60,000--if the tax rate was higher then it would be $50,000, still worth it.

And, the fact is, some years, Mad Dog made less than $250,000 and so Mr. Obama's changes this time around would not have affected anything, which is said to be true for over 90% of employers.

What made a significant difference was deductions:  When Mad Dog could deduct the cost of health insurance for his employees, that made a huge difference.

So Mad Dog fails to see why any tax increase on people making over $250,000 would turn them from "job creators" to abstainers. 

Can someone explain this to me? I mean, how does the CBO know what the 4% higher tax rate on income above $250,000 would do to thinking of these taxpaying job creators? How did they do this study? What were the questions asked?  I mean, if you had asked me, "If we made you pay more tax, would you hire fewer employees?"  Would I not say, "Oh, of course. If you do that, I'm firing everyone," knowing what effect that might have on your decision?  I mean, how do you factor out the effect of gaming the system when you ask questions like that?

Just asking.