Politician Tax Proposals

The following was published as a "Letter to the Editor" in my local newspaper following the 2008 Presedential election.
I'm sure you have noticed the massive increase in the cost of food and gasoline. The following will help explain one of the reasons for the increased cost of living.

Politician Tax Proposals

I’m amazed that elected officials who are proposing tax plans don’t understand a business Profit/Loss Statements.

I owned a Dairy Queen Brazier. Every month I prepared a Profit or Loss (P/L) Statement. The first line on my P/L was the amount of money that came into the business. The rest of the lines were money- out expenses for items like material, labor, utilities, government fees, royalty, advertising, my equal payment of Social Security tax, Unemployment Compensation tax, local business taxes, accounting, insurance, etc.

If things went well and my income exceeded expenses, I made a profit. The governments, Federal, State, and local, taxed my profit.

If there was an after tax profit I could pay myself and support my family. Of course the Governments taxed the salary I paid myself.

The “income redistribution” folks may find this dreadful but when any government agency increased taxes or operating expenses, I raised my prices. I hope you understand that my prices had to be competitive, but I was in business to provide an income for my family. My suppliers, utilities and service providers, etc, also had their costs go up for the same reasons.  They passed increased costs on to me, requiring me to further raise prices.

I’m writing to advise that when government agencies raise business taxes or expenses, the cost will be passed on to you. You may not consider it a tax increase but you should.

Please consider my input when listening to politicians who are telling you they are going to reduce your taxes by increasing taxes on business. That is “smoke and mirrors”.

Government Math

Manipulation of numbers by US politicians has been with us for years. It is sometimes called “Smoke and mirrors”. It is best described by the old saw, “Numbers don’t lie but liars can use numbers”.

Currently a “new government math” is being applied creatively by our elected officials and being propagated by the media.

The frequent reports on the number people applying for first time unemployment benefits is an example. The report will state that 300, 000 applied and that was less than the 350, 000 expected. This is reported as a good thing.

My question: When the last person working is layed off and the number of people applying goes to 1, and then 0, will the Media be ecstatic?

A second question: If at the same time the number applying for benefits goes to 300, 000 and the government reports that 200, 000 new jobs were created in the same period, is this progress? Didn’t the number of unemployed increase by 100,000? That can’t be good!

Second example; the selected use of percentage and dollar amounts. During the last State of the Union address the President stated that Warren Buffett’s tax rate was 15%, a smaller rate than his secretary. He didn’t say that Buffet’s rate was a Capital Gains Tax on his investments and the Secretaries was the normal Income Tax rate for her income. This was very deceptive.  Why not compare apples to apples, explain the difference in rates, and then state the taxes paid in dollars?

Our Federal Reps and senators also selectively do the same thing,.

During Senate hearings blasting big companies for making huge profits the Senators were stating profit in dollars and not as a percentage of sales. During the last Gas price increase hearings Senator Dianne Feinstein excoriated a petroleum industry CEO for making obscene profits, telling him he should be sharing profits with the poor. The CEO advised that their profit was 4%. The Senator accused him of playing the victim card. The CEO replied that his company was making four cents on every dollar of gas sales and the government was collecting and distributing 14 cents for every dollar of his company’s sales. The Senator was not happy.

I’m concerned that our schools are so concerned with teaching social science and promoting self esteem that they are not teaching the “Three R’s”. If students don’t learn how to think and analyze they will be ill informed sheep.