"Notes and Quotes"

One machine can do the work of fifty ordinary men. No machine can do the work of one extraordinary man. - Elbert Hubbard

Saturday, September 26, 2009

Who Pays. Where it Goes.

Who Pays. Where it Goes.



09/26/09

By Chuck Hakes


Where does our government get money? Where does it go? I tried to summarize these questions on the attached spreadsheet. Wouldn't it be great to have a clear, truthful reporting of the numbers that should be included.


Please note that the money that is spent, or is to be spent, has only one source -- YOU.


When you take away all of the business accounting gyrations, tax on businesses is paid by their customers. Since everything is ultimately purchased by consumers, consumers, meaning YOU, pay all the taxes.


Unfortunately, many voters think there is some kind of "free lunch" if government taxes business.


I think of it very simplistically, this way, as if there were only 4 companies and the consumer:


Company A is a chemical company that makes plastic and sells that plastic in a raw form, ready for manufacture to Co. B. Co. A covers its expenses and makes a profit and pays tax on the profit. Co. A also pays its portion of FICA taxes on employees.


Company B buys all of Co. A's plastic and in so doing pays for all of Co. A's expenses, taxes, and profit. Co. B makes auto parts out of the plastic and sells them to an auto-maker, Co. C. Co. B covers its expenses and makes a profit and pays taxes on the profit + paying FICA.


Co. C, the automaker, buys all of Company B's parts and incorporates the plastic parts in cars and sells those cars through an independent dealer, Co. D. At this point the automaker has paid the costs for the production of the plastic, the production of the part, and the profits and taxes for Companies A and B, and their FICA's.


Co. D, the dealer, buys all of the cars produced by company C and sells them to YOU and other consumers, covers expenses, makes a profit and pays tax on the profit, and its FICA.


Now YOU and the other consumers have paid the costs of materials, manufacture, and marketing for Companies A, B, C, and D. YOU have also paid for their profits and taxes and FICA contributions in the price you paid for the car.


There is only one source of revenue for the United States Government. That is YOU and your fellow consumers.


The recent tariff on Chinese tires will cost YOU when you buy a new car, buy tires for your old car, or buy cabbage that was hauled by a truck on which the tires were replaced. That's because you will either pay the tariff in the price of the tires, if they are Chinese, or the amount of tariff will be a component of the price of domestic tires because price competition has been reduced.


I encourage you to review this spreadsheet, correct it if you see fit, add numbers to it if you have them or can get them, and I'd be delighted to get it back in a corrected/amended form, with or without comments, expletives, whatever.


An added thought: In a free enterprise system you can choose the vehicle you wish to drive, if someone wants to make it. You vote with your dollars. Auto-makers will try to make the vehicle you want available to you if they can because they want your dollars.


The liberal left grumbles about the cars that American auto-makers make. If these libs voted with their dollars and buy the kinds of cars they think people should drive, and buy enough of them, the auto makers will catch on and make them.


This is called "putting your money where your mouth is."


Put government in the equation and your dollars don't mean as much.


Somebody else will decide what vehicles should be available to you even though your vehicle will still be paid for with your very own dollars. They may not even buy the kind of vehicle for themselves that they advocate for you, or they may buy nothing. The president doesn't need to buy a car, nor is he transported in vehicles with the small "carbon footprints" he and his minions advocate.


This is the hyprocrisy of the Nancy Pelosi airplane.


At its best, this kind of government intervention in business decisions will be derived from input by your elected representatives. At the worst it will be dictated by special interest groups who get the ear of the "car czar" and may or may not advocate the type of vehicle for which you want to spend your dollars.


Simply put: In the free enterprise system you have a greater voice in your choice. In a socialized system, others make the choice for you. But it is still your dollars that do the buying.


Much has been written about the war with the Obama administration that Rick Wagoner, former GM CEO lost. One thing seems clear. He wanted to build the brawny high-profit SUV's that the market was demanding.


Some say that money is power. It gives the power of choice. I happen to believe that myself. When any entity controls an individual's money that entity has taken power from the individual.


Chuck Hakes

cnhakes@sbcglobal.net

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"Notes and Quotes" Archive

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