August 10, 2022

Once again into the breach

The new “lower inflation by spending” bill just passed will do anything but lower inflation. One of the core aspects of the bill is raising Corporate taxes. And that my friends, will go straight to higher prices for you and me and our neighbors. 

How is that says you? Because corporations do not pay taxes. Let me elaborate by actually quoting...myself. Here is an excerpt from a post I wrote way back in 2008:

Let us say you own a business. If it makes you more comfortable it can be a commune or a small company that makes environmentally-friendly organic tiny little vases that allows you to keep fresh flowers in your hair when you visit San Francisco. You decide that it costs you a certain amount to buy the raw materials. It costs you to hire workers. You need to pay for office and manufacturing space. You need to pay for advertising and marketing. Even 'green' packaging has a cost. Electricity and solar panels and wind power have to be purchased and maintained. . If you take all of the items I outlined and add them together you have COST. Hopefully you sell your little hippy vases for more than cost. You might want to actually make a little money yourself. This is called profit. It is not evil. The difference between selling price and cost is profit. The percentage of cost compared to selling price is called profit margin.

If it costs you ninety cents to make the vases and you sell it for $1.00 you have a ten percent profit margin. If it costs $0.93 to make the vases and you sell them for $1.00 you will have a 7% profit margin. If you sell 1,000 vases you will make $70. If you make $700,000 you will have sold 10,000,000 little hippy flower vases. Your profit margin is still 7%. Your profits increased 999,900%. Your margin remained the same. Did you gouge anyone? Did you have windfall profits? Should we now consider you evil Big Vase? I have probably lost you hippy liberal types here. Look up the profit margin of evil Big Oil after you are done here.

Back to your little, but growing hippy vase manufacturing company. You are cruising along making hot hippy chicks happy because they can put flowers in their hair when they go to San Francisco. Suddenly, you get a bill in the mail from the Government. You owe TAXES. These include payroll taxes, permit fees, waste fees, property taxes, warehouse taxes, income taxes, etc. etc. You divide the taxes you owe by the number of hippy vases you make and discover the taxes equal $0.10 for every vase you make. You are only making $0.07 per vase, so the extra ten cents means you will lose three cents for every hippy vase you sell after you pay the taxes. If you sell 10,000,000 vases you will lose $300,000! Your only recourse is to raise prices. To keep the same 7% profit you made last year (and you really wanted to make a little more to get that new hybrid car)your new price for hippy flower vases is now $1.07 each. Some hot hippy chicks are going to have to pay just a bit more to put fresh flowers in their hair when they go to San Francisco.

Are still with me here, my Liberal Friends? What happens if the Government raises taxes on your business again? That is right, you will have to raise your prices more (please tell me I do not have to go through the math again). Thus, raising taxes on businesses equals higher prices for the consumer -- even hot hippy chicks who just want to put flowers in their hair if they go to San Francisco.

Hey guess what? The business did not really pay the taxes to the Government. The initial .10 per vase was rolled into the selling price and subsequent tax increases were too! Businesses really do not pay taxes.


Ed Bonderenka said...

Still relevant. Posted to anti-social media.

Practical Parsimony said...

Once again, you lose influence by insulting your target audience. How about teaching without snide remarks and insulting comments.

Anonymous said...

Some people are too stupid to understand basic’s.

Anonymous said...

Daughter is one of those hippy drippy chick's. Has multiple college math classes and still does not comprend this. Love her but we just no longer talk about business. She thinks they are all greedy s.o.b. things like stockholders who want dividend checks just does not compute.

Anonymous said...

What whaaaaaa whaaaaaaa

Joe said...

What whaaaaaa whaaaaaaa

Sorry, that’s a bit obtuse. I have no idea as to your point.

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