The Gains To Be Made From Profits
By: Doug Busselman, Executive Vice President
During the public showcases of the Nevada Legislature, convened to persuade recalcitrant members of the minority party to fold in their support for Governor Sandoval’s budget (based on not increasing tax burdens on the private sector) – the not so subtle message was hammered on that business has to open wider their wallets and do a better job of supporting state government spending. The fundamental belief of the majority party is that business enterprises have resources that they should fork over, especially those portrayed as “Big Profitable Corporations”. (The reality is that the target isn’t simply big, or profitable…or just business enterprises that are incorporated. It’s just that when you spin it this way, you’re more than likely to enlist the visceral emotions of the general public through the sloganeering of sound bites.)
While reflecting on the discussions that played out during Week 13 of the Nevada Legislature (and actually the theme of the entire political battle plan of those who are advancing the cause of higher taxes – federally and statewide – in order to facilitate the redistribution of resources through government edict)…I came across the details on profits written by Henry Hazlitt in his book “Economics In One Lesson”. In the equation of business, taxes amount to reduction in profitability. Depending on the form that taxes take – government either increases the costs of doing business or collects on the profits generated after the income-over-expenses potential has been conducted.
We are supposed to believe, if we listen to the siren proclaim of those who want to justify their entitlement to other people’s money, that business owes society (gathered through the institution of taxes). Perhaps, even more justified, the deserved portion is just a small amount from those who have lots of ability to “share”.
Hazlitt wrote that the profits of business enterprises (in his example, manufacturing) will produce social gains in one of three ways – or maybe in combination of all these ways:
The reality of the situation, with a private sector teetering on the brink of collapse because of not having sufficient profits to provide economic prosperity, seems to evade the thinking of those who believe that government is the provider. Perhaps this is due to the high percentage of those serving as our “representatives” who aren’t experienced with signing the front of paychecks – only proficient in cashing checks made out by others…
The tale of the goose which laid the golden eggs should come to mind and the take-home message of what happened when the greedy goose owner wasn’t satisfied to collect produced golden eggs. So far, too frequently, they have demonstrated with words and actions that they don’t get it…regardless of their elite level of knowing better than any of the rest of us.
During the public showcases of the Nevada Legislature, convened to persuade recalcitrant members of the minority party to fold in their support for Governor Sandoval’s budget (based on not increasing tax burdens on the private sector) – the not so subtle message was hammered on that business has to open wider their wallets and do a better job of supporting state government spending. The fundamental belief of the majority party is that business enterprises have resources that they should fork over, especially those portrayed as “Big Profitable Corporations”. (The reality is that the target isn’t simply big, or profitable…or just business enterprises that are incorporated. It’s just that when you spin it this way, you’re more than likely to enlist the visceral emotions of the general public through the sloganeering of sound bites.)
While reflecting on the discussions that played out during Week 13 of the Nevada Legislature (and actually the theme of the entire political battle plan of those who are advancing the cause of higher taxes – federally and statewide – in order to facilitate the redistribution of resources through government edict)…I came across the details on profits written by Henry Hazlitt in his book “Economics In One Lesson”. In the equation of business, taxes amount to reduction in profitability. Depending on the form that taxes take – government either increases the costs of doing business or collects on the profits generated after the income-over-expenses potential has been conducted.
We are supposed to believe, if we listen to the siren proclaim of those who want to justify their entitlement to other people’s money, that business owes society (gathered through the institution of taxes). Perhaps, even more justified, the deserved portion is just a small amount from those who have lots of ability to “share”.
Hazlitt wrote that the profits of business enterprises (in his example, manufacturing) will produce social gains in one of three ways – or maybe in combination of all these ways:
- The profits will be used to expand or otherwise be reinvested in the business, growing greater opportunities for positive business activities that benefit the employees, suppliers and others connected to the enterprise
- The profits will be used to invest in other business enterprises/industries, further expanding the scope of the gains for the general economy
- Lastly, perhaps the business owner(s) will spend the profits that have been earned, increasing consumption which benefits other business enterprises
The reality of the situation, with a private sector teetering on the brink of collapse because of not having sufficient profits to provide economic prosperity, seems to evade the thinking of those who believe that government is the provider. Perhaps this is due to the high percentage of those serving as our “representatives” who aren’t experienced with signing the front of paychecks – only proficient in cashing checks made out by others…
The tale of the goose which laid the golden eggs should come to mind and the take-home message of what happened when the greedy goose owner wasn’t satisfied to collect produced golden eggs. So far, too frequently, they have demonstrated with words and actions that they don’t get it…regardless of their elite level of knowing better than any of the rest of us.
Posted by Doug Busselman at 4/24/2011 4:21 AM 
Categories: 2011 Nevada Legislature
Tags: Nevada Budget and Taxes
Categories: 2011 Nevada Legislature
Tags: Nevada Budget and Taxes
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