Earlier I presented the video of Senator Obama as he spoke to a plumber about his tax plans. I discussed how I thought his answer fall flat when considered in the real world. The implications of his tax plan will not benefit the public, nor the economy in my opinion. But the plumber in question had his own answer about what he thought of the question, ‘How will your tax plan affect me?’



Not the American dream. That says a lot. A common American that provides jobs to others and works for a living. That’s who the Democratic tax plans affect. Not the CEO’s and multimillionaires that the polispeak ads and stump speeches try to convey, just people in the house next to you.

How normal is this part-business owner? Is he a mega wealthy tightwad that is unpatriotic as the Democratic ads, and potential VP Senator Biden would call him?

He lives in a home that is worth between $90,000 and $140,000 and can’t buy a bigger house because he can’t afford it. Sounds normal to me. Sounds like the people in Binghamton. Sounds like some of my readers too. And he doesn’t like what the Obama tax plan will mean to him. And as a result to his employees.

So is Senator Obama Robin Hood? Not according to this man. In perhaps the best description I have heard yet. About taxes he states clearly that Robin Hood stole from the greedy rich. Not just the rich, but the greedy to give to the poor. Small business owners are not the greedy rich that have been discussed in the media and Democratic pundits. They are not the people that the Obama tax plan would like you to believe. They are your neighbors and bosses.

In effect, what Obama is promising is that if you strive and save to be able to live the American dream of owning your own business and home, you will be punished for that achievement. That is the potential of an Obama Administration.

Does that in any way sound like a positive for the economy? Does that in any way sound like a benefit to 95% of paycheck earners?

The economy has finally taken center stage in the Presidential election. It’s finally on all the voters mind. And the Obama campaign has strived to tie Senator McCain to President Bush on this and other subjects. In that attempt they have obfuscated what the real effect of their proposals will mean.

Don’t believe me? Listen to Joe Wurzelbacher, a plumber and small business part-owner. Because if the tax plan of Obama doesn’t work for him, it means that employees will ultimately be hurt as well as the economy. And are you really voting to make things worse or better in a world that doesn’t react in a vacuum?

Labels: Joe Wurzelbacher, Presidential election race 2008, Senator Barack Obama, small business, tax policy

Wealth redistribution. Senator Obama has promised it, Senator Biden feels it’s patriotic. Communist nations are built on it. But is it bad for America?



By now many have seen the conversation that Senator Obama had with a plumber over the weekend. This plumber, as I have seen reported, makes $280,000 and owns a small business. This is no fat cat Wall Street tycoon. This is no mega-corporation owner or major stockholder. This is a guy that comes to your house (or has employees that do) and fixes your pipes. No glamour, no excitement. And he might just live in your neighborhood, and his kids go to the same school your kids do.

According to Senator Obama, this man will pay more in taxes, and so will his business. Now plumbing is a decent living, but there is not growth spurts really. Plumbing companies don’t jump on the stock exchange, nor do they have 10 – 15% growth year over year. It’s likely that this guy makes 3 – 5% profit just like a grocery store owner or most other small businesses. And the 10% tax increase to businesses, plus another tax on him directly, means that he will be losing money in a company he may have been working on and living off of for 20 years now. Just because taxes changed and nothing else.

He will have 2 choices, raise prices – which most home owners can’t afford these days – or fire workers and cut their hours. And if Obama and Democrats can raise the minimum wage, he will likely have to do both with his higher taxes included.

But Obama doesn’t see that.



His focus is that people will have more money to pay the plumber. But he forgets that if more people are working fewer hours, if at all, then they make the same money or less and prices have to go higher just for the plumber to cover his breakeven cost. In the vacuum that Obama spins, changing how businesses make money has no effect on the people they employ. That’s polispeak. The real world means that if you change one part, the others react.

Personally I have seen a government that took money from hard working people to give to others. I lived in Russia in the 1990’s. And while I could afford to have people wait on line 2 hours to buy good meat for me, or 1 hour for bread, I don’t advise it. The people were great, but the style of life was – and continues to be – so far below the American standard that ex-patriots are often required to take vacations every 3 months and leave the country. America should not follow this path.

I’m not calling Senator Obama a communist. He is not. But his socialist plans do lead to a path where everything decreases the quality of life from what Americans are accustomed to and deserve. His economic plans are not to the benefit of the country. Wealth distribution benefits no one.

Labels: Presidential election race 2008, Senator Barack Obama, small business, tax policy, Wall Street

The bailout deal that was rejected on Monday by the House of Representatives was a bad deal. And the result was a Congress divided, a media blitz, polispeak galore, finger pointing, and a 777 point drop in the Dow Jones Index.

Most focus on the drop in the Dow Jones. The media love to play that up. I even heard the number increasing as the night went on. Some newscasters call the drop “a nearly 800 point drop”, or “nearly a 1000 point fall”. Talk about exploiting the facts to gain viewership.

The fact is that nothing that happens will stop the drop in the market. The second that short-sales are allowed back into the market, bigger drops will occur. All that stopping these trades has done is increase the power of the drop. Because while the numbers look big right now, the actual affect is not nearly as big. That’s because of the current value of the Dow Jones Index. But as the Dow drops, these big sell-offs become more meaningful and powerful. And they feed a bear market like honey.

But the bailout, now trying to be spun into a “loan” by pundits and politicians, is horrible. Because it fails to answer 2 simple questions. How much is being assumed in bad debt, and how do taxpayers get repaid?

The first problem goes like this. Under the deal laid out on Sunday, at least 3 separate payments would be given to Treasury Secretary Paulson to buy bad loans. The value of what he pays for the loan is unknown. Would he pay the original price of the loan, the current value, the real absolute value? No idea, nor was one required by the legislation. Thus he could buy all the bad debt at the top price, ensuring taxpayers could never break even or be repaid.

The second problem is that there has been nothing said on how taxpayers get the money back. The money is coming out of our pockets. We know that. To the tune of about $10,000 per person. And it will likely be collected from higher taxes for EVERYBODY. But how are we to be repaid. Will we get tax credits in the future? Or a check? Or guaranteed lower taxes (though how much lower and lower than what level is yet another question)? If you can’t say how we will get repaid how can we believe we ever will.

To deal with these 2 major issues the politicians that were trying to rush this version of the bailout proposed this bit of eyecandy. Executives would no longer get ‘golden parachutes’. Yea! It’s nice that the Government is in effect starting on the path to regulate how much money anyone should be paid. It’s very socialist of them. Still I can agree that paying someone that bankrupts or severely damages a company millions is folly. Though I see no problem paying them is they create a bigger stronger more profitable company than they took charge of. But the legislation is unclear if a great executive doing a great job is free of the same stipulations and restrictions.

And all of this says nothing to the power suddenly endowed to the offices of Secretary of the Treasury and Fed Chairman. They get control of more money than 1/3 the countries of the world make combined. And if you think that Congress can watch over those positions and keep them in check remember that it was the brilliant and attentive eyes of Banking Committee leader Barney Frank that said in July of 2008 that Fannie Mae and Freddie Mac could not fail, and that he saw no problems in the financial markets.

And another unseen problem of the bailout deal that was thrown out is its effect on the nation. This deal would have effectively kicked out the last leg holding New York as the financial center of the world. And it still might happen. And with that loss of status means tens of millions of dollars lost to the nation and New York State.

This is not a game with obvious consequences. Some things have to be thought about. And because some of those most responsible for this mess don’t want the blame, they are insisting on the most speed in passing the buck and a deal.

The bailout will cost over $1 trillion by the time it’s all said and done. The stock market will fall as the dust settles and every industry with debtors lines up to be next to be paid. And eventually things will improve. Such is the nature of markets and trade.

But if the main questions I have asked are not answered in future bailout proposals, because of the rewording of what the deal is called, or political favor to a Presidential candidate, or rushing to soften the ultimate downturn of the bear market, or just because no one was smart enough to ask, then the real cost will be far worse than just the money thrown away.

Labels: American economy, Barney Frank, Congress, Dow Jones Index, Federal Reserve, small business, stock market, Treasury Secretary Paulson

Let’s talk taxes and business. It’s one of the key items in the campaigns of each of the Presidential candidates, and I know its something average Americans are concerned about.

Now let me state something up front. I am a Republican, business owner, Black Puerto Rican, 40 year old man. I am voting for the McCain – Palin ticket. So if you cannot accept any of those thoughts, click away now.

I want to examine one of the tax plans that has gotten huge support and acclaim – that of Senator Obama. In reality this is a tax plan that the Democratic Party has always pushed for most of my life. It can be summed up in the following:

• Tax the rich
  
  
• Tax business
  
  
• Tax the stock market
  

Let me explain in simple terms why this is a stupid plan.

Assume that Senator Obama wins the election. And a Democratic Congress remains in force. And their tax plans are enacted.

First the President Bush tax cuts will be reversed. Based on the votes from earlier this year that would mean that every American making $31,850 or more would have a 3% tax increase.

Now add to this the thought that business taxes increase 10%. And payroll tax increases 3%. And short-term and long-term tax on investments increases 10%. And lastly the minimum wage is increased to say $9.

Middle and low income Americans should rejoice, right? The rich are now paying for everything like some believe they should. The economy will improve and everyone will get nationalized (meaning standardized) healthcare.

So if you were at 28% tax, you are bumped up to 31%, but you are making more money now so it’s ok? Well in a vacuum yes. But in the real world you are out of your mind.

As a business owner I have to pay corporate taxes as well as my personal taxes. So I am faced with a situation where my raw materials cost more, my employees cost more, and I pay more in taxes at every turn.

If I had a business that had revenues of $100,000, and 2 part-time employees, and paid myself a salary here is the rough scenario.

Let’s say that my cost of goods is only 10%, research 3%, location 15%, energy use 15%, corporate taxes are 39% and employees get $7/hr. This is before the tax increase and minimum pay jump. They become 49% and $9 respectively. So if my employees cost $9/hr @ 20 hours a week each they are a minimum of 17% not including tax for them. For simple math let’s just call it 20%.

That’s a total of 112%. Without assuming my cost of goods from other businesses in the same position have increased, or if the price of energy increases (which it has for every year since 1972), I am in debt 12%, or in this example $12,000.

That says nothing of paying myself anything. Add in a modest living of $35,000 for owning the business and you get even more debt – but let’s say that I just have it at no cost to the business – though I am paying at least 31% on that money (including the end of the Bush tax cuts) as well.

So I am now in debt. Where can I cut cost? Raw goods and energy are essentially fixed to me. Location is fixed. Taxes are fixed. I could increase prices of my finished goods or services, but there is no guarantee that consumers will pay the higher price. Plus I still have to pay everything first to even test if consumers will pay a higher price.

So a smart plan is to increase my sale price by no more than 5% - small enough to test if the new price range will work, and most won’t notice it. Still I am short the upfront money to get the goods. The only variable left is to cut what I can affect.

I would need to cut either the number of employees and/or their hours until I can bring costs to just even (and probably take a pay cut). At that point I can see if I can make a profit with the price increase.

Now this scenario is overly simplified, given. [A more realistic view is location 11%, Energy 4%, Advertising 1.2%, Raw Goods 3.2%, Communication 4.2%, Operation 2.35%, Outsourcing 2.2%, Employees 32%, Tax 34% - which nets 94.15% of Revenue. Increase cost of higher taxes means that the 6% profit becomes 11.5% in debt.] But the theory is sound. So please explain to me where the higher taxes benefit the 95% of people that receive a paycheck? They will get more money, but fewer of them will be working – and working less hours with higher expectations at that.

The pressure to make a profit increases exponentially if that company has stock and needs to make a profit for investors. And higher profits than normal since they have to make up for the loss incurred from taxing investments.

People that have investments so they can retire are now hurt as they either have to wait longer to retire, or must lower their quality of life. I don’t mean the CEO’s on television quality of life, I mean papa Joe who built up positions in GE so he could sell it over time to make up the difference between SSI (which will be going bankrupt shortly) and his pension that was cut after the company lost it’s ass in the internet bubble crash.

Feeling cheerful? Taxing the rich sound good still?

Add in the cost of higher raw goods since those companies have to make more money too. Add in the higher cost of energy – either because of higher oil prices or the cost of creating and converting to alternative energy. Remember ethanol is only ¾ as efficient as gasoline, so you will need more of it and thus spend more money for the same usage. Plus building solar plants, wind power generators, research and development of biomass, geothermal, and the rest.

And these costs go up every year.

And don’t even mention paying for healthcare, which employers have to cover.

So someone please explain to me how the Democrats plan to raise taxes will benefit anyone. Like I said earlier, it looks great in a vacuum but I own a business in the real world and it doesn’t look so good there.

Labels: Presidential election race 2008, Senator Barack Obama, small business, tax increase, tax policy

I noticed something recently while writing the previous post. We all know that the race of the Presidency in 2008 has already begun. We have heard candidates speak on how great they are, thus being deserving of our votes. Respective of their political parties they have all claimed to be exemplifying the core values that voters want. But they haven’t told us anything really.

Yes, as the previous post proves there are some subjects that the potential candidates cannot avoid, but beyond that one subject what have they really said? If you have taken a look at my various questions posed to several of the main Presidential candidates, I have asked question on a spectrum of subjects. Taking out specific questions concerning health, age, and religion they all have been asked essentially the same thoughts. These thoughts have not been addressed by any of the candidates (nor have any of them been bold enough to respond).

In terms of healthcare, what has been said? Who is for national healthcare, and how do they expect to pay for it? How do they plan to keep taxes affordable? Who will help small business creation or growth? What initiatives will they champion for better race relations in the nation, or how about providing better educations to our children?

Can you honestly say that the WHOLE nation has been told these thoughts? Or have there been a lot of selective comments targeted to specific areas and groups that may contradict comments made to other areas and groups? Has anything said to raise money been specific or has it just been superficially all encompassing and popular enough to get free advertising?

Before you send out $1 to any candidate, check out the questions I have sent and have not been responded to. Ask yourself if you know the answers to the questions I posed, and if the nation knows that answer as well. I mean a detailed answer, not a cursory redirection of the answer. Ask them why they won’t answer, or respond, to the questions I have sent out since December 2006. Ask why they believe that questions from individuals, especially those that interact with tens of thousands of voting citizens, are unimportant while they ask for your money. Even asking while contacting you via the same medium that you and I are using now.

These are important questions. You should know the answers. Because once they are running, or are elected to office, it’s too late to say ‘this isn’t the guy I wanted’ or ‘I didn’t know you were for that’.

By the way, in polls on my various sites, Senator Obama is leading with 31% of votes, and Senators Clinton and McCain are tied for second with 21%. This includes the votes of visitors 18-65+. Just so you know.

This is what I think, what do you think?

Labels: national healthcare, presidential candidate, presidential election, Senator Barak Obama, Senator Hillary Clinton, Senator John McCain, small business