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Thursday, May 13, 2010

Skin in the game!

Following my last post, I also wanted to mention that quote from both Obama and Biden.
Regarding the raising of taxes as being "patriotic" and the need to have "skin in the game", let me ask which actually has more skin in the game: The person who now has to empty their own trash and clean their own toilets at work in order to cover the added overhead (more on that later) of higher taxes? Or, the person who used to do that work and is now sitting on the couch collecting another 99 weeks of unemployment?!! Who really has skin in the game?!
Business now needs to produce 3 times as much to produce income for half the people. See, the problem is, that government sees the purpose of starting a business as to create jobs. That's the problem! The purpose of starting a business is to make money! Then, if business is good, there's room for expansion - job creation.
The other implied assumption is that companies will take the extra overhead of higher taxes out of profits. No! The extra overhead will simply be passed on to you - the moron consumer.
Unless they can guarantee that the overhead will be absorbed from profits. Do you really want the government to go there? They do! Who's salaries are being capped? Who is Kenneth Feinberg?!
So play it out - A company has to absorb from profits higher taxes. Or, a company needs to pass the overhead on to the consumer.
The first way, maybe they can keep the prices competative, but with les cash flow people need to be layed off to maintain staying in business. And, more people out of work, less disposable income available so volume is down and the business begins to lag.
The other way, more people get to stay working, but the price is so high that fewer people can afford the product. Business lags and you get layed off anyway. Good for you! Feel better?!

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