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The Profit Motive

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By BuildMWell
January 2, 2003

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There is absolutely no reason to be in business except to make a profit. Without the profit motive, everyone would have to raise their own chickens...even in the middle of New York City. We would have to build our own TV sets because that would be the only way to own one. Businesses are just a way to more efficiently make mass quantities of any product, but the driving force is the profit motive.

Taxation is the bane of Capitalism and the profit motive. Workers pay the taxes rather than the business since the business is nothing more than an organization of people. BUT, I maintain that the organization of people into businesses is what pays all of the taxes in America. And, Democrats continually attack the two things that make this basic foundation work...they attack the business itself with regressive taxes and they attack the very driving force of Capitalism which is the profit motive. To them, profits are bad. How can profits be bad when they allow everything to happen in America?

Taxes perform two functions. They raise revenues, which may be spent for the "Common Good", and they can be directed to mold desired action on the part of the tax payer. The home mortgage deduction is one great example of this molding of desired action. But, why encourage home ownership and discourage business growth? Does that make any sense?

When Democrats attack business by taxing the earnings they discourage earnings! This is a natural effect of taxing earnings. Now, a businessman still has the profit motive at work...so he finds tax legal ways to get around the corporation profits taxes while securing his personal profits in a tax exempt manner. This is where almost all of the gamesmanship has been devised in business in recent years. Excessive stock options, no interest loans, executive perks, and a myriad of other games have been devised to hide profits and to still pay the management. BUT, the real business owners, us stockholders, get screwed because we are out of the loop. The taxation of profits has taken the stockholder out of the business and put the government between the business and us owners. The Fed gets their 35% before we get a dime of the earnings which we have earned from our capital investment. Then, if we finally do get a dime, the Fed taxes our dime again at our income tax rate! That is a sure way to kill business investment! The Democrats have done it with great determination for over 50 years. And, today, I believe we have reached the end of the ability for business to prosper in America while paying all of the damned taxes.

The Democrats have created this travesty through one proven technique...divide and conquer. And who have they divided? You and me. Not from each other but from ourselves. I have been divided right down the middle into two people. I am a wage earner and I am a consumer. As a wage earner, I believe I pay all those federal taxes I see taken from my paycheck because I am the one who has to file taxes each year. The liars in Washington have made me believe I paid ever dime of the tax because I see it coming from my wages! Heck, why else do I have to file a Form 1040 each April 15th? Isn't that enough proof of who pays the taxes in America?

But, I do not pay one single dime as a wage earner unless I have a job! I do not have a job without a business to hire me. The business pays the taxes to Washington and adds every dime of tax to the end product cost. So, I agree with you, the business pays no taxes...taxes are just an expense to be paid by the consumer!

But, I am the consumer. So, I pay all of the taxes when I buy any product. Well, except for foreign products...their taxes were added in another country and benefited some foreigners. Thus, all of the taxes paid in America are paid by the consumers of all American goods. If you take the time to do the math, you will find that all goods made in America include a tax exceeding 50% of their real value! With Philip Morris' cigarette business, the taxes are closer to 85% on average and the taxes are as high as 96% in New York City! There you pay $7.00 for 25 cents worth of cigarettes. Of course they claim that is to discourage use of tobacco...but that is not true because tobacco pays the salaries of the politicians.

Conversely, on a new BMW 740-iL the total taxes are zero...all profits, real costs and the included German taxes flow right back to Germany! Well, unless the dealer who sells the car happens to make a small profit after all of his expenses. Then he will pay his 35% of the gain. Let's assume he makes $2000 net profit at the end of the year on each 740-iL he sold. The tax will be $700 or just under one percent of the sales price. So, the BMW sale nets Washington, DC 1% while Philip Morris pays over 90% of cigarette sales in taxes.

But, you say, "It isn't fair to compare apples and oranges. BMW's aren't cigarettes!" So let's get back to my main point..."Americans pay all their taxes as consumers!"

Look at a General Motors car compared to that BMW...it is 100% labor! The iron ore was mined in Minnesota and smelted in Pittsburgh. The labor was taxed and the taxes were sent to Washington. The steel was stamped into panels and assembled in Detroit by more labor, which was taxed and the dollars sent to Washington. Then other workers assembled the auto using even more labor, which was taxed and sent to Washington. Then when the car was sold to a dealer, if GM made a profit, that profit is taxed at 35% and sent to Washington. That GM car is almost 50% tax dollars if you look at it correctly. So, a GM car results in half of its value in tax dollars going to Washington, while a BMW nets zero. Then, if the GM dealer can make $2000 profit on the car, he will also pay the same $700 tax as the BMW dealer. But, of course he cannot make $2000 net...he is very lucky to make $2000 gross! The consumer will shop the price and beat him down to the bottom dollar. Meanwhile, BWM won't discount their product one thin dime! They don't have to because the price is fixed by the factory in Germany.

Do you see the real problem? The consumer never sees his tax dollars being paid. The consumer pays all the taxes but the tax dollars are concealed completely. That consumption tax hits the poor as well as the rich equally! The lies about "taxing the rich" are just lies! The rich buy BMW's that cannot be taxed. The not-too-poor buy Chevrolets and pay it all! The very poor cannot afford a car but they pay their 90% tax on their cigarettes and liquor and beer! They pay the taxes with their few real pleasures in life.

The key in America is to get folks to see the divide that has occurred. WE have been divided internally. The wage earner is divided from the consumer. The retired are divided from the workers but they are both consumers. The Blacks are divided from the Whites and Republicans are divided from the Democrats and the rich are divided from the poor. However, the real division is between each person and his role as a consumer. The Democrats refuse to allow us to see the real divides because that will expose their game plan. The plan is to benefit themselves even if it destroys us through division. If enough special interests can be established, the Democrats will get enough votes to regain their power. But, the truth must remain concealed.

What is their solution to the present slow economy? Give more free money to the poorest wage earners who pay almost no taxes. That's right, they want to increase the consumer's taxes to pay for the non-consumers. They want to play on the "rich versus poor" division of America. But, because the lowest wage earners actually pay the highest taxes in America, giving them free money actually brings more bucks to Washington while robbing America of its wealth. Think about what is really going on in this Country and the game plan falls apart. Or, we can remain divided by race or age or sex or wealth and we will all fail together. Unite as consumers and the Democrats are history...their game plan falls apart under it's own weight. The math proves it to be true.

Our job is to define the real problem. We have to face up to the fact that we are over taxed as a society and we all pay the same tax. There is no tax break for either the rich or the poor...we are all screwed equally by the tax code! The rich are just screwed less because they know how to avoid the game. This is exactly why Ted Kennedy is a Democrat. He knows how to divide and conquer and at the same time benefit his goal of remaining very, very rich and in control. The lies work because people fail to see the real harm of taxation.

But, the solution is in the Profit Motive and Capitalism. WE absolutely have to get the tax dollars out of our goods. WE have to stop taxing the wage earner and the business in America. WE need to tax the consumer and make him see where he is actually paying the bills and what it really costs him. Then, the consumer, both rich and poor, can decide if he is getting his money's worth. Or, would a smaller, more efficient government actually be a better way to go? Maybe we could let social security be self directed by the wage earner rather than squandered in Washington as it is today. Golly, maybe we could actually see the real problem face-to-face.

See how easy this is? Or, maybe will you begin growing your own chickens in your back yard and making your own TV sets? The choice is yours. I do not see how we can have it both ways. Either we once again begin to reward Capitalism or we revert backwards. Capitalism brought us to this point in our history...why not allow it to carry us further forward into greater prosperity?

I say profits are good. Let Capitalism work its magic! Stop taxing business!


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