Monday, February 13, 2006

Liberal Recipes For Disaster

Businesses do not pay taxes, or health costs of their employees, or make charitable contributions., they just pass these costs along to us in their costs of goods or services. Since most Americans do not understand accounting, please let me explain. For-profit businesses are in business to make profits. Not to cure all ills, right all wrongs, kiss all hurts and make them go away. They won’t mind if all that happens, but that’s not why they were created.

Anyway, they get their money, which in accounting is called revenue, from you and me. If another business buys from them, that other business got its money from you and me. Eventually, at the top of every money pit, you will find that it is a person, not a business or governmental agency, that is shoveling his or her money into the pit, and that person is the ultimate source of what makes the world go around.

So when we say business should pay more, in taxes, health care, charitable contributions, etc., in accounting terms we would recognize these additional costs as increases to business expenses. If we think businesses should pay more to operate, we are really saying we want to pay more for its product.

On the other hand, businesses are glad to pay these costs and pass them on to us when it gives them a competitive advantage -- they can hire and retain better employees -- but not when the higher cost structure places them at a competitive disadvantage – their taxes are higher than those of competing businesses.

National health care systems cause countries to place huge tax burdens on their businesses and citizens, and the businesses cannot shed these costs when they are placed at a competitive disadvantage. And as the national health care systems become more expensive and fail as the population gets older and needs more services, the situation just gets worse. France and Germany are good examples. Neither county has been able to increase employment significantly for decades, and their economic growth is stagnating.

Of course, the Left would like us to copy the mistakes of others and increase business taxes, demand government provide universal health care or have business pay more, and increase regulations. Then we can participate in and enjoy all the misery the governments admired by the Left dish out to their citizens. Liberals are good at creating recipes for disaster.

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