Thursday, February 28, 2008

Economics Should Be Mandatory for Public Office

I am watching this election process unfold and I have suddenly noticed that none of the candidates have even a basic understanding of economics. They seem to fail at the most basic concept of supply and demand. They have no understanding of competition in the marketplace and completely fail to grasp who ultimately pays the taxes.

This is clearly demonstrated in base issues such as:
Minimum Wage
Capital Gains Taxes
Corporate Taxes
Estate Taxes
Government Health Care
and OH So Many More

The first thing we need to realize is that Corporations and Businesses don't really pay taxes. Yes, they write the check to the government and it is drawn against their account but where did that money really come from? Us the consumer, we are the ones who pay their taxes. They simply add it to the cost of goods sold and if we want it, we pay the taxes along with it.

Congress is currently debating the idea of raising the taxes on the Big Oil companies. These companies make between 7-10% profit. There profit margin isn't going to change. They will simply move the new expense (tax) down the chain to the consumer.
The tax gun of the government is pointed at the oil company so they take it out of everyones pocket and give it to the government so our elected leaders can hold up the big check and declare they have won a victory for the people. The people were robbed by the government and then told it was good using Big Oil as the middleman to collect their newly acquired wealth.
Look at the taxes paid by Exxon. This one company pays as much tax as almost 50% of the tax payers in America. This tax equates to the government making $2.41 profit for every dollar of profit Exxon makes. This does not include the additional,so called, road taxes paid at the pump by the consumer. Yes, Big Oil made record profits over the last couple of years, but that is nothing compared to the profit our government made.

Then there is the constant drum on the minimum wage. I have written many articles on this issue. I have even debated an economics professor in DC on this key point. As the minimum wage increases the number of jobs available decrease. The risk of hiring and training a new employee with their probable mistakes and losses becomes to great for the company. This loss to reward balance is fulfilled by reducing the number of candidates brought into the work force. This reduction in employment translates to increases in welfare and other failed support programs that increase the taxes on the people.

Simply put, Increased Taxes Increases Poverty. The consumer pays the tax and the consumer is the employee who is driven out of the work force by the additional taxes and mandates. Increasing the taxes on business will only increase the cost of the goods sold and further reduce the spendable income of the less fortunate and under educated. Increasing the bottom wage only reduces the work force and increases the amount of work that needs to be done by the individual worker who is now more desperate due to increased costs for needed goods and services thanks to taxation.

Capital Gains Taxes are removing money from the business environment. Why should someone invest or strive to be successful if they are not going to be rewarded. If you are punished for success would you still strive for it? People with money look for opportunities where they can invest and grow their nest egg. This could be a few hundred dollars to hundreds of thousands of dollars. Smart investors find ways to build wealth by helping others succeed and then participate in the rewards of success. This participation could be land, equipment, or buildings that improve the operation and success of a business. All that translates to more jobs.
If you instead, punish investors big and small for taking that risk, fewer will invest and there will be fewer jobs. In the global economy those investments simply go elsewhere.
We all would like to retire and live a reasonable life. Many of us have 401k's or 503c's and the like to use as wealth building tools. These small returns on investments over the long haul will fund a healthy retirement. The government is looking to cut into your ability to do just that. They know Social Security is failing and under their current plan your private investments wont do much better. And If you should die before you retire, the government already has a plan to take as much as possible from your estate as well. You can't even hold out hope of passing what little you have onto your kin to reduce their struggle.

I don't know about you, but anyone who would take office and then seek to destroy the people they were sent to represent shouldn't be promoted to a hirer office, they should be fired. You may want to look at your ballot closely and choose a candidate who actually understands basic economics. If they are not promoting policy that will improve the lives of your fellow citizens, choose someone else.

Article of Interest -- Best Quote from Article:
"Economists have long understood that companies don't really pay taxes; they merely collect them."

Prior Writings:
Tax or Not to Tax
The Minimum Wage Isn't The Problem
Knowing When You Need More Help
Minimum Wage Increase Passed

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Anonymous Anonymous said...

As you have written, the realities of economy do not make good political promises. It is much more enticing to go after the big, bad corporations than tell the truth. That along with the problem of over 50% of the budget going for sacred-cow entitlements, means that nothing will change until people begin to realize that the "emperor has no clothes." By that time it may be too late to implement the real change the is needed.

7:19 AM, March 01, 2008  
Anonymous AtTheWaterCooler said...

It should be one of many requirements we demand from those who seek public office.

However, It seems like after Clinton, any pot smoking, lie-ing, rich attorney will do.

PS. hope attorney was not to disrespectful for those in office?

12:36 AM, March 02, 2008  
Blogger Debbie said...

But they are giving dictators a tax break. What are they thinking?

"On the surface, H.R. 5321 is awful all by itself. Passing 236-182 last week, the bill scrapped the tax deduction routinely given to the major integrated oil companies — Exxon, Chevron, BP, Shell and ConocoPhillips — that helps them explore, extract, refine and market the energy that drives our economy."

Debbie Hamilton
Right Truth

11:18 AM, March 02, 2008  

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