Tag Archives: Taxes

What Is “Business Friendly”?

Big Business means a better life for you
Big business means a better life for you

There are many misconceptions standing in the way of informed consent on the part of the American Electorate.

Bugbears and villains and bogey-monsters are trotted out each election cycle to herd the voting populace into the desired frame of mind.

One of the common scape-goats (ab)used by many is the spectre of “Big Business”. And not merely content to blame big business, the abusers often employ shake-down tactics when they need additional revenue.

After all, nobody likes their boss, and everybody knows businesses are endless sources of greedy men with far too much money, right?

Sticking it to “the Man” is the favorite sport in much of America, and it’s bred and grown in an environment free of logic and fact into a monster few can avoid.

Well, here’s one shot.

Business does good for people.

It’s not that they hold your hand and sing Kumbayah, or even that businesses that contribute financially to causes we agree with are good.

This is a blanket statement without conditions: The average business in America does good.

What is good?

Good is a quality of action or intent that brings about, supports, encourages some reasonable benefit to another.

Me winning the lottery is not good. Yes I get tons of money, but that money to one not capable of handling it wisely will with great consistency, harm me and cause me greater damage than were I not to have such largess.

Me working and earning a reasonable wage is good. I earn the money and therefore know its worth to me. I use that value to trade for other things of value which have greater good to me.

Now what just occurred? Each of the players in that last paragraph exchanged something for something else.

What is that called? It’s an economy.

Let’s look at it closer: The business I work for values my work more than a certain amount of money, so we trade. My work for their money. But I can’t live eating money or in a house made of money, so I trade the money for other things I consider more valuable than the actual cash, usually with other businesses such as landlords, grocery stores, utility companies, etc.

Each of us has something we can trade for something else and it is the constant trading and exchanging throughout America that creates the immense wealth we have.

If you think you have little and you live in America, you’re most likely very, very wrong. And this pernicious lie, that we have little, that helps fuel the constant badgering that businesses ought to do this and that and owe us one thing or another.

There are plethora ways the government inhibits business, and in each and every situation where regulation and restriction purport to keep businesses playing “fair”, it is the consumer, you and I, who are hurt most.

In order for you and I to survive we must efficiently and effectively trade what we have for what we need, hopefully increasing the value of what we have in order to trade it more efficiently and for more.

Education is one key way to increase our value. By increasing our skill, our versatility, our ability, through learning and practice, we increase our value to those we’d trade our abilities to. We make a higher wage when we have more skills.

Looking at our small economy described above, government inhibits the economy, making exchanges more difficult, by taxing. By taking away percentages of the money value being used in the trade, they lower the value of our abilities. When we give a business our labor in exchange for an agreed-upon amount of their money, government takes a significant percentage of that money given to us in the form of income taxes.

They also tax the business itself, not just our wages. In fact, America has some of the highest business tax rates of the industrialized world. The government takes around one-third of businesses reported Net Profit.

Do you want to know why businesses try to write off so many expenses? Because for every dollar they cannot right off as a valid business expense, the government will take 30 cents.

What would happen if the government took 30 cents of your pay check? Well, unless you’re making very little, the government very well may be.

So maybe a better question is: What if you made 30 cents MORE for every dollar you currently make?

Let’s say you make 40 thousand dollars a year now. What would you do with 52 thousand? $12,o00 extra per year would add up significantly. A house payment in just a few years, the kids in private schools (or home schooled, grin), a new business you start yourself.

Instead, the government takes it.

I don’t begrudge the government a fair share of money. After all, government is necessary in a fallen world. And government has reasonable and rational expenses. And they are immense, relative to each of our individual budgets.

But when the government tells us it knows, better than we  ourselves do, how to do things which could either be left well enough alone or by private industry and a knowledgeable populace. Then coerces us into giving it an exorbitant amount of money to perform those services. That is not right. And it hurts us.

A business must, by nature, make more money than it spends. It must be profitable in order for it to stay in business. When people talk about windfall profits and how we ought to tax businesses making more than there fair share, they illustrate only how imbecilic their own level of understanding is regarding the economy.

When a business operates effectively and efficiently and makes an immense profit, those large profits entice other businesses into the same market. When multiple businesses operate in the same market, they must give reason for their consumers to choose them over their competitor.

Competition drives prices lower, as this is the most visible way to differentiate ones product. Competition also drives quality up, as a second, very visible differentiation.

So because a market was allowed to become lucrative, the consumers have better access to cheaper and higher quality products. Sounds great to me.

And it’s not just looking on the outside, at the balance sheets of the business and on the store shelves, at the price tags.

Those businesses that make more profit are able to employ more and more skilled workers to further improve their products.

Sure, this is a sunny picture. But in the market, averages work out in favor of the sunny picture. Your job may indeed suck, but have you tried looking for one that doesn’t?

It may not be the best time, in the present economy, with government ham-handed handling of the economy stifling the recovery and prolonging this downturn. But there are still companies looking for workers.

Maybe leaving the big city, with is stifling regulation on top of already onerous federal meddling causes most businesses to fail or move away, to a smaller city which is more willing to lower it’s regulation and encourage businesses to build and hire is what needs to occur.

But when you hear a politician or government bureaucrat tell you that businesses must pay “their fair share”, remember that business may be employing you with the money the government wants to take.

And what the government takes, it does not give back readily.

Business Friendly means employee friendly.

Employee friendly means you have a job. A good job. One where the employer has the means to take care of you and compensate you well.

As for me, I’m already paying my fair share and more, and I’m getting fed up.

A Good Evening’s Thought

All I need is a pipe:

Evening memories

This was yesterday evening. I was actually reading Anna Karenina, not Tolkien’s Silmarillion. But the Tolkien book was better for the picture.

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Frank and Earnest, May 20th, 2009

No Goliath (or GM) is too large to fail. Large things have extreme difficulty staying on top of the market when the free market is allowed run. When they stay nimble and able to anticipate demand, it’s good. But when they fail, they must be allowed to fail.

Any harm done in the failure of massive entities is more than undone in the growth allowed in the smaller upstarts in the newly opened market

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Frank and Earnest, June 1st, 2009

Hundreds of people who spend years telling us their so smart we should trust them with our money and our futures, and then they can’t balance a budget on a geographic plateau with all the money they coerced out of us.

There should always be a combative attitude between producers and takers. Tax payers should never be accepting of the amount the tax takers try and take. And when people in position to take taxes have shown they will actually not pay their taxes when it serves them not to, they ought to be thrown out.

Or kept in so people like me can make a big stink about it.

Government Economy: Ignoring Facts

In our increasingly government-controlled (-manipulated, -throttled, -ridden) economy, we get to see how people who do not believe in the free market expect the engines of American capitalism to run.

It’s not like we haven’t been able to see this before. After all, the 20th century is littered with the corpses of Command and Control Economies.

But this is the first (second: FDR tried really hard too with the alphabet soup of government agencies he successfully wielded to lengthen the Great Depression far beyond what it should’ve been) time we get to see what happens when our own beloved economy is ridden by the government to extremes we’ve not seen before.

Exhibit A is GM. Now bankrupt and after accepting huge loans from the government, the government will shortly own a majority of this company.

And now the revisionist history begins.

Today’s Bloomberg report on the bankruptcy, paragraph 1:

General Motors Corp. won court approval on its first day in bankruptcy to sell assets as soon as next month after collapsing under $172.8 billion in debt and failing to adapt to consumer demands for smaller cars.

All well and good except for one thing: Consumers are not necessarily demanding smaller cars.

Google “best selling cars” and you get a pretty consistent picture: trucks are selling well, and so are full-size sedans. The only compact cars in the top 10 of any list are the Honda Civic and Toyota Corolla, and they’re in the middle of the list. In the worst 10 selling lists are bloated SUVs such as the Hummer. No surprise there.

Green machines (hybrids and ultra-compacts) have always been a lethargic segment of the auto sales and they’ve suffered as much as anybody else with the economic issues.

The Bloomberg article was reworded shortly after initial press this morning and has dropped the bit about demand for small cars. (you can still find the original wording at this splog (spam blog) site that rips headlines to create content for itself. Not actually linking to prevent follow spam: http://itsp.info/index.php/2009/06/02/gm-bankruptcy-judge-approves-asset-sale-on-first-day-bloomberg.html).

One of the major plans of the now government owned GM is to increase production of one of the most lethargic segment of vehicle: ultra-compacts and small hybrids. From  Bloomberg again:

One idle GM facility in the U.S. will be retooled to make small, fuel-efficient cars as part of an agreement with union workers, GM said May 29.

Now what kind of business is run by making cars for which there currently isn’t a real market?

Especially for a company emerging from bankruptcy, this kind of action is pointless and worse.

Unless the leadership of that company is aware of changing market conditions well beyond the awareness we’ve seen to date, or they know something we don’t.

Unfortunately for what appears to be the deepest desire of most the leadership in the Obama administration: you cannot control demand so long as there is choice.

The only way communist countries control demand is by controlling the entire market. And even when presented with only one option, they still usually get to choose whether or not to take it.

Because the government will very likely own 60% of GM, they will be very interested in one or both of these two options: running the company according to the ideology, and making a return on their investment.

The ideology of the current government makes those two options almost completely exclusive. You cannot control the market and demand in what is still, essentially, a free market.

My prediction: GM will continue hemorhaging money. Lots of money.

Our tax dollars will continue to be poured into the black hole of stagnating demand segments and poorly made vehicles.

Until the price fixing monopolistic unions are torn free and GM is free to hire talent at wages the market supports…

Until GM recognizes the necessity of meeting the market where it is instead of where it ought to be according to some Command Economy wet dream…

Until the free market is allowed to destroy those who do not adapt and innovate…

…We will continue to be force to send good money after bad. And we’ll be told we like it.

Castles Of Corruption

Newt Gingrich:

Americans should look carefully at the anti-politician, anti-government mood exhibited in California last week.

This vote is the second great signal that the American people are getting fed up with corrupt politicians, arrogant bureaucrats, greedy interests and incompetent, destructive government.

The elites ridiculed or ignored the first harbinger of rebellion, the recent tea parties. While it will be harder to ignore this massive anti-tax, anti-spending vote, they will attempt to do just that.

Voters in our largest state spoke unambiguously, but politicians and lobbyists in Sacramento are ignoring or rejecting the voters’ will, just as they are in Albany, N.Y., and Trenton, N.J. The states with huge government machines have basically moved beyond the control of the people. They have become castles of corruption, favoritism and wastefulness. These state governments are run by lobbyists for the various unions through bureaucracies seeking to impose the values of a militant left. Elections have become so rigged by big money and clever incumbents that the process of self-government is threatened.

Albany is even more corrupt and dysfunctional. The special interests that own the legislators in both parties have been exploiting New York for two generations. They have impoverished the Upstate region to the point where it is a vast zone of no jobs and no opportunities. Their predatory tax and bureaucratic union behavior is beginning to cripple New York City. More and more successful New Yorkers are leaving the state. In the face of multiple crises, Gov. David Paterson has shown himself incapable of carrying out reform.

…the machines don’t care because all they want to do is own the wreckage.

…look again at the 62 percent-plus majority in California in favor of smaller government and lower taxes.

In the great tradition of political movements rising against arrogant, corrupt elites, there will soon be a party of people rooting out the party of government. This party may be Republican; it may be Democratic; in some states it may be a third party. The politicians have been warned.

Read all about it: States have become castles of corruption

But Dan Walters, in the Sacramento Bee,  says we shouldn’t be as upset as we are:

When… new taxes expire in a couple of years, Californians’ relative tax burden could also drop further – but if the economy is rising by then, it could also mean a surge of revenues even when the increased rates disappear.

If nothing else, these data indicate that while income and sales tax rates may make a difference, the economy is the biggest factor in how much tax Californians pay in aggregate.

When the economy rises, so do tax collections, and when it falls, revenues fall with it.

Walters asks if Californians taxes are too high or too low.

It’s not that the taxes are too high or too low, it’s the socio-political philosophy which supports such confiscatory policies and uses the money to pad pockets and entrench power.