Sunday, March 15, 2020

Dialog wth small business people; message to progressives

For Grand County small businesses, https://www.skyhinews.com/news/covid-19-emergency-help-for-small-businesses/

https://www.skyhinews.com/news/county-municipal-officials-seed-small-business-grants/

https://pos.toasttab.com/blog/average-restaurant-profit-margin

The message is that whatever programs progressives propose, do not put the burden to pay for them on small business.   You cannot get blood from a turnip.
Our family has many points of view, those who feel the Bern and those who live in the real world of small business. One family member, son Ted, is a Harvard MBA (Stanford economics) and an international consultant and he has been a part time resident of the Winter Park area since 1967.  He brings with him a world, literally, of experience and many contacts.  His dialogs with friends contain some warnings for progressives.. I am going to reproduce this here because I think it deserves serious consideration from a perspective we do not hear often in this valley. If I can pin my grandson down, I will give him a platform, too.  For now..his uncle has the floor.

From an Oregon small business friend,Spence::
My freight business consistently runs with 5% pre-tax margin. Remove Silicon Valley firms and my average is on par with vast majority of American businesses. To put that in perspective, I run in the red for 28.5 days out of the month. That is not fun. It creates a lot of stress for myself and staff. Of the 1.5 days of profitability, taxes take one third.  This leaves me 1 day for profit, employee bonuses (I pay  30% ea mo to employees), and new investment. The progressive movement has noble goals, but must find excess to reallocate and I don’t think there is enough excess in day 30 of the month to achieve all those goals. The American people understand to attempt it (with uncertain outcomes) is like making a radical move at the front of the pack in a NASCAR race of nations. Risky to say the least. 

Ted's response: Spence,  I hear you! This is the single biggest problem with the idea of spending something like 70 trillion dollars on a new society and essentially using smoke and fog about how it is going to be paid for. We are all going to pay for it and especially small business owners. I share your concern. It is one thing when billionaires and multi millionaires can propose glowing ideas about changing the world, it is far different when you talk to hard working business owners and their employees about how this impacts the real world. The Democrats will not win in my opinion if they do not see that and to all my progressive friends out there, sorry.. that is why I am with Joe.

There are a lot of good things we can do to improve our society. But there is no way to pay for all of what Bernie wants on the backs of just the rich. The math simply does not work. Should the rich pay more?  Absolutely. Should we change our tax codes and start rewarding work rather than wealth? Absolutely. Should we make investments in infrastructure, communities,  education and access to affordable health care for all and save the environment?  Absolutely. Should we blow out our public debt even more to do it? Definitely not. Should we tax at rates like Denmark and Austria where average middle class taxes are 50%+ of gross pay? No. Should we continue to subsidize large corporations with corporate welfare? No. Trump's tax cut did benefit many small businesses. It is a fact. But it also gave away an unnecessary windfall to large corporations who did in fact just use it to prop up their stock prices. Let us work for a fair and more just society with a balanced and reasonable and transparent approach to how to pay for it. Let's get rid of this systemic corruption in our politics. Let us reward work, innovation and perspiration - not inherited wealth and excessive greed. We can make the tax code fairer and simpler. We don't need a revolution. We need practical solutions.

Interweaving two interesting conversations here from another of Ted's friends.  Spence, my eight member law firm, from a financial viewpount, is a small business, too, like a restaurant or hardware store. By the time we've paid rent, staff salaries, staff group health (which is getting harder and harder), and taxes, we take our profit and divide it, and then we're individually taxed again. Long way of saying our profit margins are thin. Not complaining, but to fund anything on the scale of LBJ's Great Society, the money will have to come from somewhere other than the middle class and small businesses. Not saying we shouldn't make major investments like the interstate highway system or whatever, or that the money's not out there, but it's not going to be found in the aforementioned places (middle class and small businesses).




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