Wake up and smell the coffee! Its political season again and unfortunately it appears most candidates for State Governors and Congress are advocating a “tax the other guy” approach.
• “We need more money for the schools!”-Tax the Rich.
• “We need more money for the poor!” – Tax the oil companies.
• “We need more money for the seniors!”-Increase sales tax.
• “We need to fight Ebola!”-Tax the pharmaceutical companies.
We need money for good causes so therefore we need to increase taxes? Does that really makes sense? When a politician advocates increasing taxes they always try to make it sound like they are not going increase your taxes but somehow your taxes will be increased. Has any country ever taxed themselves and prosperity? The fact is if you tax something you get less of it. That truth is immutable and is not difficult to understand. Politicians just simply ignore that and try to get voters to forget about it.
Taxes are drain on the economy. It is not just simply the taxes that need to be paid at all levels, it is compliance with tax laws and regulations. The requirement to keep more and more records, file more tax returns that are more complex and dealing with long and expensive State and Federal audits cost the economy a tremendous amount of money. For example, I had one client that was being audited by the State of New Jersey for Sales and Use Tax as well as Gross Income Tax. (Yes, I said gross income tax, not net income tax which is type of tax and most states and the IRS!) After more than 100 hours of my time, countless hours of my client’s employee’s time, as well as work by the business owners and CPAs, the State of New Jersey came up with a whopping $1900 of tax due. The cost of compliance was so expensive, they would have been better off if New Jersey has simply sent a thug and said “pay us $10,000 more and will go away.”
So in review, if anyone says increases in tax and regulations will improve the economy you either do not understand much about economics or are just simply pandering for votes.
By the way, living in Cherry Hill, New Jersey, the home of Melita Coffee, some mornings like today, when you step outside literally you “wake up and smell the coffee.”
Original Post By: Ronald Cappuccio