The Role of Businesses in Society: It's More than Just Taxes

I often revisit the topic of taxing the rich and big businesses because I think it's crucial to understand it in a different way than we usually tend to. Although, I will admit, it's probably a rather controversial thing to say, I think it's likely in the best interests of most Americans to maintain the current system, even if it appears unfair.

If we view taxes as a contribution to society and our way of life, as they fund essential public services, infrastructure, and social programs like Social Security and Medicare, forming the glue that keeps everything functioning, similarly, businesses contribute enormously too, even if they pay a lower percentage in taxes than the average working-class citizen.

If we consider taxes as a means to enhance society, ensure smooth functioning, and in some circumstances, redistribute wealth, businesses also play a crucial role in achieving these goals through what they produce.

Consider that businesses provide employment, helping people support themselves and their families. They drive innovation, creating new products and technologies that improve our lives. Although they may not send a physical check to the IRS, they significantly contribute to the tax base by stimulating economic growth through their goods and services, which generate tax revenue. Businesses also make substantial contributions to society by supporting communities through charity, sponsorships and volunteer efforts. For example, Anheuser-Busch has donated cans of water for disaster relief, and Elon Musk made Starlink available for communication in hurricane-affected regions. Additionally, businesses heavily invest in infrastructure, including communication networks like telephone and Internet services, as well as rail and shipping services.

In other words, when we demand the rich and the businesses pay their fair share, are we overlooking the valuable contributions they already make? We all play a role in a functioning society, and if we solely measure contributions in dollars and cents, we're missing the point. We're focusing on the wrong things.

How would we feed our families without the jobs that businesses provide? Beyond that, how much wealth would we miss out on without the opportunity to invest in these businesses through stock sales? Without the profit incentive, what inventions that enhance our lives might never have existed?

Taxing businesses or the wealthy more pulls money out of the real economy and places it in the hands of the government who are not equipped to function as drivers of innovation and growth. The rich, with less to invest, would be hindered in creating new ventures or expanding existing ones. Instead of fostering economic growth, as the government suggests more taxation would achieve, taxing businesses more actually depletes resources, leaving less money available for meaningful contributions to society.

Sure, it can seem disheartening to see the top 1% getting richer and richer, and it may seem like they're holding back the lower rungs of the financial ladder. But I believe the opposite is true. Without strong businesses growing and generating massive profits, society would be in far worse shape than it is today.

As I said before, we all have a role to play. I think understanding our place in the world is important, and rather than undermining the achievements of one class, what another class achieves should be an incentive to have loftier goals for ourselves—on top of that, success should never be something that we should ever want to penalize. 

When it comes to taxation, we have to ask ourselves what truly improves our lives? Is it economic growth that fosters better opportunities for working Americans, or the artificial redistribution of wealth that fails to lift anyone out of their current class and circumstances?

Regardless of what anyone thinks "fair share" really means, I think businesses are already paying their dues and we have more to be thankful for than to be angry about. No matter how unfair it seems. When we look around us, all we see are the businesses and the massive profits they generate. We fail to see how our lives might be very different if they did not exist, or what opportunities might not exist without what they contribute for them to even be possible.

The United States is the richest nation in the world for a reason. And that's because we allow people to become rich and be more in control of their own wealth. You can say my commentary here is a commentary on trickle-down economics and claim it doesn't work. I contend it has always worked, and the only problem we have with it is that some people simply don't open the spigots to their faucets.

Taxing the rich and businesses more is not the solution to our own financial problems we face. Allowing the free markets to work and educating people on how they can participate in it is the answer. Taxes do not contribute to better opportunities for society as a whole. It robs us of them.

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© 2024 Jim Bauer

The Danger of Talking Points in Elections

Democrats and liberals will often utter talking points, which on the surface sound fine. But rarely do they think through what the effect is ultimately of any of it. They simply drop their line, smile, and walk away feeling there is no reason to further explain. This is especially dangerous when these talking points are actually acted upon by our elected officials.

Take this democratic talking point as a case in point: "Everyone should have the ability to own a home."

On the surface it sounds wonderful and fair. Owning a home is the dream of a good many Americans, and in communities where people own their homes, the communities generally tend to thrive since there is a tighter bond between the real estate and the person who occupies it.

This talking point, and the action that was taken in support of it lead to the biggest financial decline in recent history and nearly caused an economic collapse.

Sure. The blame was placed on the big banks, Wall Street, and the rich. But the truth is that while there is some blame to lay there, a larger part of the blame lies on the politicians who signed into law the opportunity for people who could not otherwise afford homes to have them anyway.

Let's keep in mind that what the banks had to do in order for this to be possible was to have to take on enormous amounts of risk of capital. In answer to that they created credit default swaps and took on other measures which could not truly be valuated when all was said and done. When loans were called, no one had the money to pony any of it up.

Therefore the system fell apart.

The current lineup of democrats on the stage vying for the presidency are all spouting off talking points, and not a single one of them are backing up what they are saying, or explaining how they intend to do any of the things they say they want to. Americans are lapping it up like fresh milk to a cat. Granted, there are a handful of republicans doing the same thing. The difference is that most of the republican candidates are actually explaining how they intend to get something done, and stating the reasons behind why it must be done.

The key behind, for example, how the republicans intend to fix the economy? Jobs. And in one particular case, putting to task those countries that have for years siphoned off good jobs and unleveled the playing field when it comes to trade. Republicans know, and history shows clearly, that when Americans are working, and when the middle class is viable and strong, the economy thrives.

As for the democrats, they want to attack the so called evil rich who are simply counting their change and leaving everyone else behind with evil grins on their greedy faces. "Tax the fat cats. Pay their fair share. Close the gap between the rich and the poor."

The truth is that while this sounds fine on the surface, and I can certainly see where a good many Americans might be on board with this idea, it is a completely dangerous and counterproductive path to take.

When is the last time you received a paycheck from a poor man?

The rich are hard working people who build businesses and innovate products to sell to consumers not just here, but abroad. They are the machine that drives jobs which provide for the welfare of Americans. Yes the idea is to maximize profits. Sure, the playing field is a bit uneven. Yes the corporations have as much to be blamed for when it comes to how we lost those jobs as the government is to blame for opening trade in ways that allowed for it to happen, and which all but took away America's competitive edge, especially in the case of manufacturing. The heart and driver of the middle class in America.

What the republicans want to do is to restore manufacturing in the United States, and make it harder for countries like China and Mexico to provide cheaper labor which hurts American jobs. The republicans want to remove things like Most Favored Nation status and reinstate tariffs which were designed to even things out—a tariff on goods coming from China, for example, puts the cost of their products on par with the cost of making things at home in the U.S. Lacking a strong incentive for American businesses to get labor from China, they'd be more inclined to keep their shops open right here at home and keep Americans working in them at good and competitive wages.

The main thrust of this post is that at the end of the day as we approach the 2016 elections, we need to be paying attention to what is being said on both sides of the aisle. We need to not only hear the talking points. We need to be able to see the forest for the trees. We need to be able to read between the lines. We need to be able to consider the consequences—intended or unintended—when it comes to any decisions that might be made in consideration of what sounds good. As well, we need to fundamentally understand what has driven down our economy, and our standard of living. It has not been the rich. It has not been tax loopholes. It has largely been trade policy which has allowed for companies to provide jobs abroad and leave Americans behind, unable to compete. I will be fair and say that the republican party is largely to blame for this. But the fact is that they now see the harm it has done and want to set it straight while the democrats simply want to take from the rich to redistribute wealth without considering the impact of that, and without considering the benefits to restoring manufacturing, and restoring good paying jobs and the middle class to rebuild the country economically.

Why are the democrats so hell bent on focusing on welfare programs instead of jobs?

Because it equals more power for them to push their agendas through and hold the American people hostage. Americans who have more, have more power and control over their lives. Americans who have less become dependent on what the government can provide, and so the power is given to them, and the power of the American people erodes.

We are at a critical time in our nation's history. In order for us to get back on the right path, I think we need to stop listening and adhering to the talking points. We need to begin to dissect the talking points in a way we haven't done in a long while and begin to really get at the root of how we make America great again.

One Way Raising Taxes Stifles Growth

If Sam Walton were alive today, he would be the richest man in the world, and his riches would actually pale the worth of Bill Gates' fortune by a lot. The total wealth of the Walton family as of January of 2015 was $147 billion. Gates is only worth about $80 billion by comparison. I would even venture to guess that if old Sam was still at the helm, the additional wealth he would have accumulated would have put him closer to around $200 billion. The "kids" don't have the vision and business prowess that Sam Walton had, and his empire would be larger by leaps and bounds without a doubt.

But there is a hidden message in the success of Walmart that anyone should be able to recognize. Set aside how Walmart conducts business. Or the effects positive or negative that Walmart has on other businesses. That is for another discussion. The key here is understanding one simple concept. The more money people have to spend on goods, the more goods they will buy. Sam Walton was not a man who gave a lot of consideration to margins. What he considered was volume. And he understood that if he could create volume, he would have more ability to increase margins. The volume of goods and money flowing would make the whole process more profitable. And his ideas are still well in play today.

Enter the idea that if you raise taxes, you increase revenues.

Democrats and liberals are huge fans of simply taxing as much of any money flowing in the marketplace as they can, having the simple idea that if you take more you'll get more. But this is largely because most of these guys are of course politicians. Not businessman. So, they really have no idea how money really works. Incidentally, the majority of Americans are not businessmen either, and they know about as much about how money works as the politicians do. So, when they hear "tax the rich," and "tax the corporations," they actually believe that this does something positive for the economy, and in some odd sort of way they think it helps them out as well.

The truth is that it actually hurts everyone and there is one simple thing to keep in mind to really begin to understand the effect of higher taxes on everyone. The rich, the middle class, and yes. The poor as well.

Cost slows things down. The more something costs the less people will buy it, do it, or work for it. It is really that simple. Taxes are cost. Let's get that straight right away. Taxation adds cost to earning money. And the more something costs, the less of it will happen.

The most recent example of this effect was of course gas prices. As gas was hovering around $5 per gallon, people suddenly drove less. The median national miles driven went dramatically down. The number of gallons of gas consumed also went down. People did drive less. But they also ditched gas guzzlers for more efficient cars. People directly changed their behavior and their spending based on the price of a gallon of gas. The more the gas cost, the less people used it.

The oil companies did not make more money ultimately. The states did not collect more highway taxes. It was really a zero-sum gain when all was said and done. On top of everything else, the more people had to spend on what gas they did use, the less they spent on other things in the marketplace.

People took less vacations. People reduced discretionary spending on clothes. They spent less as a whole on everything. Higher prices at the pump slowed everything else in the economy down. The entire economy suffered. No one gained anything at all. In addition to that, higher gas prices also caused a rise in everything else in the economy slowing things down yet further.

Delivery charges were added to order out. Extra fees were added to flights. Prices on other goods and services rose as well since it cost more to move things around, and for service providers to get to customers.

A guy who sells strawberries can wake up one morning and decide that he wants more money for his strawberries. He can raise the price to accomplish this. But, if he raises the price too much, people will simply buy less strawberries. He will make less than if he kept the strawberries the same price, and actually if he had lowered the price a bit, he'd have made more money in total revenue even though he made less on each strawberry sold.

Again, enter Sam Walton who understood this very basic concept. A concept that many Americans, and certainly the government fails to understand fundamentally.

You can raise taxes to whatever percentage you want. The end result is that you will get more per dollar, but less as a whole. Less dollars will ultimately be earned. Higher taxes equal lower revenues because it slows down the process of earning and spending.

If you want to increase tax revenues, the best way of accomplishing this is by leaving more money flowing in the real economy and reducing the cost of earning. The higher the volume of money flowing freely in the marketplace, the higher the total revenues you will collect as a result of it.

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