The New Business Format

Tax Reform resounds as an absolutely necessary measure. This article offers a fair presentation of the growing debate, at least as seen through the politicized lens of Washington D.C. There are other Viewpoints, and Some of these need consideration. I will not try to discuss these Viewpoints here, but I will attempt to approach the Tax Problem from a comparison angle, and hope to obtain support for new initiatives.

American Households are, if anything, worse off since the origination of the last Round of major Tax breaks. Tax Savings from the new Tax Breaks do not quite equal the rise in Energy Costs to American Households since their inception. This is not actually incidental, as I have already gotten a Letter from my Vehicle maintenance unit, advising a list of high-Cost maintenance should be implemented immediately; guess what, the total of listed Charges equals about $450, the Letter mailed immediately upon it being apparent that Taxpayers would get the Stimulus rebate of $600, marking the most expensive maintenance efforts. This is the first rule of Tax Cuts: Business will expand their Prices and Services to absorb all realizable Tax reductions.

It highlights a second reality of all Tax measures. Lobbyist efforts will always insure that Business is not harmed by the new Taxation measures. Households will get at most some $1200 from the Stimulus Package, while Business will get another $100,000 Write-off on their Capital outlays. Translation of the new Write-off could be thought: If you buy it, the Government will pay for the first $100,000. The measure has a slight detrimental effect of delaying actual Capital investment, as Business stage large Capital outlays over a number of years, to fully maximize the Tax break. Case in Point: A business needs $1 million in Capital refurbishment(with a new $250,000 Write-off limit), but it is not Time determinant, so the Business spreads the Capitalization over four years; allowing the Government to absorb the Capital Cost. Many would claim that Most Capital Investment is Time determinant, but a probable 70% of all Small Business can utilize up to 80% of the total value of the Tax break.

Almost all Business personnel will acclaim that these Tax Breaks must be mandated to remove undesirable aspects of Business Risk. This is not true, and Business delinquency is also protected by transference of Income across Tax Years. Business people can even get Tax Rebates to recoup losses, so as to continue future Business operations; either Capitalization of the old business, or creation Capital for a new Business. The ordinary Taxpayer faces discrimination from the current Tax laws, and must endure the real Risk of higher Taxation, simply because of their failure to start a Profits-Write-off enterprise. lgl