This is a microcosm of how wealth is created, and how it is destroyed Since wealth is created by business, we start with the formula a business must use:
A = gross income (or price you pay for products/services)
B = cost of business (inventory, salaries, marketing etc.)
C = taxes
D = union perks and costs (pensions, insurance etc.)
E = regulations (federal and state)
F = profits
The basic business formula, therefore, is as follows:
A - (B+C+D+E) = F
The only way to add jobs is by increasing F (profits), to allow for more salaries
The only way F (profits) can increase is if either A (gross income) increases, or (B+C+D+E) decreases
If any part of (B+C+D+E) should increase, then F decreases (unless A is increased accordingly)
The sole purpose of any business is to maintain, or increase, F
Therefore, whenever any part of (B+C+D+E) is increased, then A must also be increased, or profits go down and jobs are lost
And the only way to increase A is to increase the prices of the products/services
Ergo, any increase in (B+C+D+E) is paid for by the consumer in the form of higher prices or fees.
There is no other way. None. Every time the government increases taxes, or unions get another perk, or the government passes another regulation, it causes prices to go up, profits to go down, and people losing jobs. Every time. So do not blame the corporations, or the rich - they are not the problem. The problem is those who attack the corporations and the rich - attacking the very people who provide the things we need - jobs, products, services.
This is why I have always said that EVERY tax is paid by the poor, because every cost gets passed down the line until it hits bottom - and that is where the poor reside.
Every union benefit is a tax on the poor. Every government regulation (which always incurs a cost) is a tax on the poor. Every tax increase on anyone is a tax on the poor. Because costs must get passed on; because businesses do not have the power to print money like the Fed
And now you know WHY the poor get poorer.
If we, as Americans want to improve the economy in this country, the only way we can effect that is by reducing any or all of (B+C+D+E). By doing so...
1) F (profits) go up, allowing the business to expand and hire people
2) Taxes go down, allowing more earned income to be passed on through the economy via spending or investing
3) Some of the burden is lifted from the poor
4) All the increased activity and prosperity will result in more tax revenues into the treasury even though the tax rates have been reduced, as more people pay into the system and business earns more taxable profits
Taxes hurt the economy. It's simple math...
I pay you one dollar. Of that, you pay 15 cents in taxes, leaving only 85 cents to put back into the economy. When you put that 85 cents into the economy at Joe's Market, Joe pays 13 cents taxes on it, leaving only 72 cents to be floated back into the economy. When Joe spends that 72 cents, someone pays 11 cents taxes on it, leaving only 61 cents for economic growth. Eventually, there is no part of that dollar left to put back into the economy.
They call our tax system "progressive taxation", when in fact it is regressive. Certainly, much of that tax money makes its way back into the economy via government spending, but government spending does not create jobs and has a neutral effect on economic growth since you are taking the money out of one pocket and putting it into another without actually creating products. There is no true net gain. Nothing is created; nothing added to the GDP.
Now take another look at the formula. If you think about it, you will discover the simple reason why businesses and jobs go overseas. (B+C+D+E) is much lower in India and China. This allows F to increase, and allows A to decrease. This is why products made in China are so inexpensive - because in China, (B+C+D+E) is low. And that is why everything in a WalMart store - except for the employees - is imported from China.
If you want the jobs to stay in America, and if you want to pay less for American products, then America - that means YOU - must force cuts in (B+C+D+E).
But we do not do that because too many people have been bamboozeled by progressives and socialists into believing the opposite is true - that somehow businesses go overseas only so they can take advantage of cheap labor. But if that were the case, businesses would have left our shores 70 years ago.
Business goes where it is welcome, and where they can profit most. And most of the largest drains on profits are taxes (35%), unions (20%) and government regulations (8%) - the very same things that progressives and liberals keep pushing.
Now tell me - if you could run your business for 63% less cost by moving to another town, would you not do it? Or, conversely, if your town were to impose 63% more cost onto your business, would you not move?
If you are truly interested in knowing what you are talking about when you talk about economics, consider reading "Basic Economics" by Thomas Sowell, or any of the writings of Nobel Prize-winning economist Milton Freidman. It won't take a Masters Degree to discover the progressive liberals have it all wrong.
Actually, the true liberals don't have it wrong - they know how money works, but the progressives want socialism. In order to turn America to socialism, they must force capitalism to fail. If capitalism fails, the people will accept any alternative offered - even socialism. And that is why progressives keep trying to con everyone into believing class warfare is good - that "the rich" must be cut down to size. But a thinking man understands that if jobs are to be created and prosperity is to rule, it can only come at the hands of the rich. They create the products that create the jobs that create the salaries that create ecnomic prosperity for all.
Think of all the jobs, salaries and wealth created by the Ford Motor Company in its first 50 years. In 1950 Detroit was the most prosperous city in the country. Then think about how many jobs, salaries and how much wealth disappeared as union pensions and demands, higher taxes and increasing government regulations strangled the auto industry over the last 50 years. And now Detroit is the poorest city in the nation.
Again, in a nutshell, that is a microcosm of how wealth is created, and how it is destroyed.
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