I submit that when I ran my business, I could make better use of that money in terms of advancing society’s goals by hiring and innovating and inventing than the government did by taking it from me handing it out as entitlements (and putting roadblocks in my way to boot). How does that “ring” for you?
To me it rings possibly elitist but definitely irrelevant. Every successful business owner feels self-made and unfairly burdened by regulation and taxation. If only they would leave us alone and let us keep the money we earned, eh?
It helps to imagine what country in the world would have been better for our business overall. Where could we have worked just as hard, been a bigger success and been happier. Maybe you can think of a place, but I like it here.
Obviously missed my point entirely about investing that money in personnel and innovation.
Ah, so because this is the best place we should not be concerned a whit about keeping it the best place. Just let things slide until we’re not.
Sheesh. Misdirection got you nowhere.
Hey Gordon I apologize for calling you out personally. Your “pennies” comment incited me I suppose. My bad.
I count you as a friend, and we’ve learned we have a lot in common. We are both business people who own our companies, pay taxes, fly airplanes.
But let’s see all of this in the right perspective. Perhaps the current tax system is bad. I’d aver it has something for everyone; something to love, something to hate. But historically, it is pretty favorable to those who produce a lot, and even more so for those with accumulated wealth. We have relatively low tax rates compared with US history. Just a fact. And we have greater concentrations of wealth than any time since income taxes were first imposed. Our current tax scheme doesn’t prevent entrepreneurs from inventing, hiring or building wealth.
Many will throw out the fact that a large percentage of Americans pay no income tax, but that number includes retirees, the unemployed, and the poor. Income tax totals $2.6 trillion, while social security and Medicare taxes raise $1.5 trillion and Ad Velorum taxes raise another $1.4 trillion. So our income tax accounts for about half of government revenues, which in turn are about 1/3 of our nation’s GDP. Surely seems enough, and surely most are paying some of this in one way or another. I’ll go out on a limb and say that’s enough revenue for governance, entitlements and defense. So let’s agree they have enough money, just not enough for everything.
So we’re left with the question of what spending is worthy. If you were tasked with removing our $500 billion in excess spending, where would you turn? Seems to me $7,500 subsidies on $142,000 luxury cars would be an easy choice. Section 179 depreciation? Well, that’s a timing issue rather than a cost, but I’d go ahead and ding that one, too. For our airplanes all it amounts to is a one year vs. 5 year depreciation schedule. I don’t use it, so it’s easy for me to choose.
Now to your point about paying taxes vs. using that money to innovate and hire as a business owner. Bullshit. If you wanted to you could use that money to invest in your business, innovating and hiring, instead of letting it drop to the bottom line as a taxable profit. You’ve done this, and I have, too. It’s why I have 34 clinics today instead of the original one, why I own restaurants, and why I’m building a pharmacy business. Hell, if I need to the government will even let me take section 179 depreciation to conserve current cash! When we finally do sell, as you did, your accumulated profits were taxed as long term capital gains, ignoring the untaxed, otherwise ordinary income you reinvested. We pay no taxes on the money we reinvest, and ultimately pay 20, now 27.5% on the gain when it finally drops out to us personally. As for the California component, well, you didn’t move did you?
As long as I’m working, I hope our current tax code doesn’t change a bit. Just don’t spend it stupidly. Or, lets say on Ludicrous things.
If it helps, I do think your jet is cool, Papa Lima is cooler, and your life is the coolest! No wait. My jet is cool. And Dan Bilzerian has the coolest life. (You’ll need to find him on instagram to understand).
I didn’t miss it but I responded so poorly I can see why you would think I did. I’ll try again. That’s the part that IMO makes your post irrelevant. I don’t think successful private business and good government are comparable in any meaningful way. They have completely different objectives.
I don’t believe anything that resembles that.
Jason, I appreciate your post and sentiments but disagree on the “bullshit” part! For anyone, there is work/reward breaking point at which you will not put yourself out more and more for less and less return. The more the government whittles away at the “reward” part, the less apt people are to put themselves out risk- and effort-wise to do extraordinary things. Sure, there are those driven by pure passion, but in aggregate when there is less reward incentive there is less production. The USSR didn’t work.
“Government does not tax to get the money it needs; government always finds a need for the money it gets.” ~Ronald Reagan
Government is us. If we don’t trust the government, we don’t trust the American people. If that happens, it’s time to get out! The only problem is – Where to?
Australia ?
Well if you do move to Australia you can do so with the comfort of knowing that they have a half dozen Tesla Supercharger stations available to use with any P90D that you decide to buy, with or without any applicable tax credits. [:D]
The government today seems to represent the takers over the makers. if it keeps up at this pace at some point like Gordon mentions the motivation will be gone. Once the scales tip in the favor of the takers it’s tough to turn back course.
I have grown my company from nothing to a team of 10 people and getting over the initial hurdle felt like it took forever. I can continue to grow it but at progressively increasing risk, which sometimes makes me wonder if it’s worth it.
No shame in taking tax credits that are there for the taking. It irks me to no end when small business owners are shamed for it. i don’t trust our government for making fiscally responsible or even sane decisions when it comes to spending or legislation.
Gordon, the USSR lacked capitalism. Socialism failed for them, and, interestingly, today the size of the Russian economy is about that of Brazil. It’s 1/5th of ours, China’s or the EU.
So start a company in the US. Keep reinvesting the earnings, taking out cash as you need it not to exceed your non-cash expenses (depreciation, like say $600k/yr on a new Eclipse!). No taxable profits, just taxes on whatever salary you take. Keep investing, innovating, hiring, growing. Then, when you’ve built of the value of say, your brewery, sell it to someone else. Pay long term capital gains taxes. For you that was probably 20%; today it’s 27.5%. Hard to be genuinely upset. Or take stock in Bershire Hathaway when Warren buys your company stock-for-stock and pay no taxes until you sell those shares. Or sell your commercial real estate and buy similar property in a 1031 exchange and again, pay no tax. So this tax code isn’t the hindrance to investment or building wealth you describe really. Hell, today you can die and pass it all along to your kids and your estate will be taxed at zero. Let’s be careful about demanding tax reform, as it may end badly. Spending reform is what we should demand.
Indeed. And when we are demanding that reform, we should shape our demands around practical changes that will shape our future to be the very best our country can be, not just to maximize our own piece of the pie. And definitely not reforms based on sweeping generalities that demonize those with the least power and the least influence.
I’m 67, and still I think it is time to start phasing Social Security benefits into a needs-based model rather than the “insurance” model we’ve been fooling ourselves to believe it still can be. The current model made good sense with the demographics of the 40s and 50s. It no longer does. I don’t think these thoughts are political in nature. If anyone else thinks they are, this post can be moved or deleted with my blessing. Hell, if even one person thinks this is HS stuff, I’ll just delete it myself!
Not responding to Jim - his was just the last post to hit Reply on.
Haven’t enjoyed this thread that much - off the rails into taxation issues, which is still somewhat relevant to the original post. But…
For my money, Ryan is… the most interesting man on COPA.
Makers vs. Takers. Okay. I get that my 82-year-old mother is now a taker.
So, then, are the Red States … which take by nearly 2:1 more than Blue States in federal income taxes to fund their meth clinics, country music museums, or whatever.
Farmers in Red States … taking tax breaks for not growing, water subsidies … takers, right?
Wounded veterans, takers, right?
Nice non-response, Terrance!
For me, it was 15% Federal but the State of California does not recognize capital gains and it all was taxed as income (at 13%), so add it up. It ain’t pretty.
No kids. Do cats have to pay step-up?
For me, I just got fed up with all the hoops as well as the taxes. California, and particularly my area of Santa Barbara, is not what you’d call business-friendly. “Tolerant” is even an exaggeration. I got tired of do-gooders like the battery nazi coming in to my office and interrogating me. But right up there was the fact that the leader of my government was trashing me and telling me that I was not paying my fair share. So I shrugged. Haven’t looked back. Don’t miss the battery nazi, either.
Well Gordon you’ve brought us to our last tax lesson of this thread from me! Indeed, you can give your appreciated assets (stock) to charity and never pay any tax on your gain while deducting the gift to charity. So before any of you write a simple check to your favorite charity this holiday season, consider transferring stock shares from your portfolio. It’s a great gifting strategy, and one more reason our current tax scheme is pretty wealth friendly.
Now back to Ryan’s new car. Very cool car! Yes, very fast, but more. I got some experience in one last week, and I was impressed by the giant smartphone that is the dashboard, the remote control app for heating and cooling, and the eerie silence that allows quick driving without any attention-getting histrionics. Stealthy with it’s inherent silence and vanilla styling. The materials and fit and finish are good enough to compete under $100K andthe idea of no gas stations is a new luxury. Then this morning I watched a BMW e-car (fugly) outpace a furious new Corvette from a stoplight. Electric is the way to go, and will change world politics.