Free Stuff Ain't Free, Folks

With the democrats getting going in their "race to the White House," we are of course hearing the beginnings of all sorts of promises they are making that are supposed to make your life better, and perhaps in some ways more prosperous even.

But, it's "free" stuff they are mostly chattering on about, folks.

Free college tuition, free healthcare, and even one of the contenders, a businessman by the name of Andrew Yang, is talking about just simply cutting every single citizen over the age of 18 a guaranteed monthly check for $1,000 to help boost your bottom line and supposedly, level the playing field.

But the reality is that nothing that is government funded is actually government funded. It is taxpayer funded.

The reality is, folks, that at the end of the day SOMEONE has to pay for all of this stuff that the government wants to "give" you. Remember, the government DOES NOT operate as a FOR PROFIT organization. EVERYTHING the government takes in in revenue comes directly from you...the TAXPAYER.

The government is not out there opening up a few McDonald's franchises to take in a few extra bucks. They are getting every single dime of what they take in from the people who pay taxes.

So what is a free college tuition? It is a tuition that you will ultimately actually pay for anyway. And depending on how things go, your children and grandchildren, and even your great grandchildren will have to pay for as well.

What is a free $1,000 per month? It is basically taking from Peter to pay Paul. You give the government your tax dollars, and they give it back to you in the form of a guaranteed monthly payment.

Anybody should be scratching their head at that.

Beyond that, you might be saying hey, there are enough of those evil millionaires and billionaires out there who can pay more into the system certainly to help to cover all of this free stuff. So then, if that were the case, it is actually free, right?

But hold on a minute here. Here's a little fact that you need to know.

Even if you literally confiscated every single dime of every single millionaire and billionaire in the country, you would not even come CLOSE to covering the amount of money needed to pay for all of this free stuff, let alone make a dent at all in the deficit NOR the debt itself.

And eventually, the money would run out. No matter how you look at it, the only way any of these programs stands a chance to be viable, everyone would have to pay something. Ultimately, the tax code would have to be rewritten to now find ways of getting more money from the hands of even those in the 50% who don't technically pay any taxes at all.

By the way, it should be noted that if you paid $5,000 in taxes but got a refund check of $7,000, you are part of that 50% that does not pay any taxes at all.

Paying taxes is NOT sending the government a check, or having them pull money out of your paycheck. Paying taxes is either getting less back than you paid in, or owing more than you paid in.

If I paid the government $5,000 and got a refund for $2,000, I paid taxes. They kept $3,000. Catch my drift?

I only bring these examples up since many people think they are taxpayers just because they send some of their money to the government. But unless you get less back than you paid in...you are not a taxpayer.

Look, the main point here is that nothing in this world is ever free. Everything ultimately must be paid for by someone. And there is not enough money, believe it or not—but it's the truth—to cover the expenses of everyone in the country when it comes to just college tuition and healthcare alone, let alone anything else the government may want to promise to hand out to you.

Free is not free, and the more you take, ultimately the less you will get in the end.

No one ever got ahead from a handout. Anyone on welfare or food stamps has not gotten rich from that money. Nor has anyone who collects social security alone ever get ahead.

As the democrats get up on their podiums and start making promises to give you this and give you that, keep in mind that what they are actually giving you is something you have already, or will eventually have to pay for one way or another.

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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