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    Not to outdo pinoy, but READ THIS ONE!

    Taken off of Neal Boortz web page, this a a great story and will probably happen in many places if they intend to stay in business.

    Transcript of remarks made by Leo Carrington (who doesn't exist) to a mandatory meeting of all employees of Carrington Automotive Enterprises, Inc. (which doesn't exist either) on August 17th, 2009 at the Royal Payne Hotel (a purely imaginary place) in Norfolk, Virginia (which does, in fact, exist).

    I would like to start by thanking you for attending this meeting, though it's not like you had much of a choice. After all, attendance was mandatory. I'm also glad many of you accepted my invitation to your family members to be here as well. I have a few remarks to make to all of you, and then we'll retire to the ballroom for a great lunch and some employee awards.

    I felt that this meeting was important enough to close all 12 of our tire and automotive shops today so that you could be here. To reassure you, everybody is being paid for the day --- except me. Since our stores are closed we're making no money. That economic loss is mine to sustain. Carrington Automotive has 157 full time employees and around 30 additional part-timers. All of you are here. I thank you for that.

    When you walked into this auditorium you were handed a rather thick 78-page document. Many of you have already taken a peek. You were probably surprised to see that it's my personal tax return for 2008. Those of you who are adept at reading these tax returns will see that last year my taxable income was $534,000.00. Now I'm sure this seems rather high to many of you. So ... let's talk about this tax return.

    Carrington Automotive Enterprises is what we call a Sub-S - a Subchapter S corporation. The name comes from a particular part of our tax code. Sub-S status means that the income from all 12 of our stores is reported on my personal tax return. Businesses that report their income on the owner's personal tax return are referred to as "small businesses." So, you see now that this $534,000 is really the total taxable income - the total combined profit from all 12 of our stores. That works out to an average of a bit over $44,000 per store.

    Why did I feel it important for you to see my actual 2008 tax return? Well, there's a lot of rhetoric being thrown around today about taxes, small businesses and rich people. To the people in charge in Washington right now I'm a wealthy American making over a half-million dollars a year. Most Americans would agree: I'm just another rich guy; after all ... I had over a half-million in income last year, right? In this room we know that the reality is that I'm a small business owner who runs 12 retail establishments and employs 187 people. Now here's something that shouldn't surprise you, but it will: Just under 100 percent ... make that 99.7 percent of all employers in this countries are small businesses, just like ours. Every one of these businesses reports their income on a personal income tax return. You need to understand that small businesses like ours are responsible for about 80 percent of all private sector jobs in this country, and about 70 percent of all jobs that have been created over the past year. You also need to know that when you hear some politician talking about rich people who earn over $200,000 or $500,000 a year, they're talking about the people who create the jobs.

    The people who are now running the show in Washington have been talking for months about raising taxes on wealthy Americans. I already know that in two years my federal income taxes are going to go up by about 4.5 percent. That happens when Obama and the Democrats allow the Bush tax cuts to expire. When my taxes climb by 4.5 percent the Democrats will be on television saying that this really isn't a tax increase. They'll explain that the Bush tax cuts have expired .. nothing more. Here at Carrington we'll know that almost 5% has been taken right off of our bottom line. And that means it will be coming off your bottom line.

    Numbers are boring, I know ... but let's talk a bit more about that $534,000. That's the money that was left last year from company revenues after I paid all of the salaries and expenses of running this business. Now I could have kept every penny of that for myself, but that would have left us with nothing to grow our business, to attract new customers and to hire new employees. You're aware that we've been talking about opening new stores in Virginia Beach and Newport News. To do that I will have to buy or lease property, construct a building and purchase inventory. I also have to hire additional people to work in those stores. These people wouldn't immediately be earning their pay. So, where do you think the money for all of this comes from? Right out of our profits .. right out of that $534,000. I need to advertise to bring customers in, especially in these tough times. Where do you think that money comes from? Oh sure, I can count it as an expense when I file my next income tax return .. but for right now that comes from either current revenues or last year's profits. Revenues right now aren't all that hot ... so do the math. A good effective advertising campaign might cost us more than $300,000.

    Is this all starting to come together for you now?

    Right now the Democrats are pushing a nationalized health care plan that, depending on who's doing the talking, will add anywhere from another two percent to an additional 4.6 percent to my taxes. If I add a few more stores, which I would like to do, and if the economy improves, my taxable income ... our business income ... could go over one million dollars! If that happens the Democrats have yet another tax waiting, another five percent plus! I've really lost tract of all of the new government programs the Democrats and President Obama are proposing that they claim they will be able to finance with new taxes on what they call "wealthy Americans."

    And while we're talking about health care, let me explain something else to you. I understand that possibly your biggest complaint with our company is that we don't provide you with health insurance. That is because as your employer I believe that it is my responsibility to provide you with a safe workplace and a fair wage and to do all that I can to preserve and grow this company that provides us all with income. I no more have a responsibility to provide you with health insurance than I do with life, auto or homeowner's insurance. As you know, I have periodically invited agents for health insurance companies here to provide you with information on private health insurance plans. The Democrats are proposing to levy yet another tax against Carrington in the amount of 8 percent of my payroll as a penalty for not providing you with health insurance. You should know that if they do this I will be reducing every person's salary or hourly wage by that same 8 percent. This will not be done to put any more money in my pocket. It will be done to make sure that I don't suffer financially from the Democrat's efforts to place our healthcare under the control of the federal government. It is your health, not mine. It is your healthcare, not mine. These are your expenses, not mine. If you think I'm wrong about all this, I would sure love to hear your reasoning.

    Try to understand what I'm telling you here. Those people that Obama and the Democrats call "wealthy Americans" are, in very large part, America's small business owners. I'm one of them. You have the evidence, and surely you don't think that the owner of a bunch of tire stores is anything special. That $534,000 figure on my income tax return puts me squarely in Democrat crosshairs when it comes to tax increases.

    Let's be clear about this ... crystal clear. Any federal tax increase on me is going to cost you money, not me. Any new taxes on Carrington Automotive will be new taxes that you, or the people I don't hire to staff the new stores I won't be building, will be paying. Do you understand what I'm telling you? You've heard about things rolling downhill, right? Fine .. then you need to know that taxes, like that other stuff, roll downhill. Now you and I may understand that you are not among those that the Democrats call "wealthy Americans," but when this "tax the rich" thing comes down you are going to be standing at the bottom of the mud slide, if you get my drift. That's life in the big city, my friends ... where elections have consequences.

    You know our economy is very weak right now. I've pledged to get us through this without layoffs or cuts in your wages and benefits. It's too bad the politicians can't get us through this without attacking our profits. To insure our survival I have to take a substantial portion of that $534,000 and set it aside for unexpected expenses and a worsening economy. Trouble is, the government is eyeing that money too ... and they have the guns. If they want it, they can take it.

    I don't want to make this too long. There's a great lunch waiting for us all. But you need to understand what's happening here. I've worked hard for 23 years to create this business. There were many years where I couldn't take a penny in income because every dollar was being dedicated to expanding the business. There were tough times when it took every dollar of revenues to replenish our inventory and cover your paychecks. During those times I earned nothing. If you want to see those tax returns, just let me know.

    OK .. I know I'm repeating myself here. I don't hire stupid people, and you are probably getting it now. So let me just ramble for a few more minutes.

    Most Americans don't realize that when the Democrats talk about raising taxes on people making more than $250 thousand a year, they're talking about raising taxes on small businesses. The U.S. Treasury Department says that six out of every ten individuals in this country with incomes of more than $280,000 are actually small business owners. About one-half of the income in this country that would be subject to these increased taxes is from small businesses like ours. Depending on how many of these wonderful new taxes the Democrats manage to pass, this company could see its tax burden increase by as much as $60,000. Perhaps more.

    I know a lot of you voted for President Obama. A lot of you voted for Democrats across the board. Whether you voted out of support for some specific policies, or because you liked his slogans, you need to learn one very valuable lesson from this election. Elections have consequences. You might have thought it would be cool to have a president who looks like you; or a president who is young, has a buff bod, and speaks eloquently when there's a teleprompter in the neighborhood. Maybe you liked his promises to tax the rich. Maybe you believed his promise not to raise taxes on people earning less than a certain amount. Maybe you actually bought into his promise to cut taxes on millions of Americans who actually don't pay income taxes in the first place. Whatever the reason .. your vote had consequences; and here they are.

    Bottom line? I'm not taking this hit alone. As soon as the Democrats manage to get their tax increases on the books, I'm going to take steps to make sure that my family isn't affected. When you own the business, that is what you're allowed to do. I built this business over a period of 23 years, and I'm not going to see my family suffer because we have a president and a congress who think that wealth is distributed rather than earned. Any additional taxes, of whatever description, that President Obama and the Democrats inflict on this business will come straight out of any funds I have set aside for expansion or pay and benefit increases. Any plans I might have had to hire additional employees for new stores will be put aside. Any plans for raises for the people I now have working for me will be shelved. Year-end bonuses might well be eliminated. That may sound rough, but that's the reality.

    You're going to continue to hear a lot of anti-wealth rhetoric out there from the media and from the left. You can chose to believe what you wish .. .but when it comes to Carrington Automotive you will know the truth. The books are open to any of you at any time. I have nothing to hide. I would hope that other small business owners out there would hold meetings like this one, but I know it won't happen that often. One of the lessons to be learned here is that taxes ... all taxes ... and all regulatory costs that are placed on businesses anywhere in this country, will eventually be passed right on down to individuals; individuals such as yourself. This hasn't been about admonishing anyone and it hasn't been about issuing threats. This is part of the education you should have received in the government schools, but didn't. Class is now dismissed.

    Let's eat.

    If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

    #2
    This man definetely KNOWS what he's talking about....... it's called the "trickle down effect"............ If he has to "pay the price"...... then it's going to be passed on down to the workers (middleclass) in paycuts, lack of benefits, more work-less pay, and less employees on the payroll.

    Our government can say all they want that it will not financially affect the middleclass and poor..................

    OH YES IT WILL....................IN MANY WAYS............
    Minny

    "It's amazing the paths that our feet sometimes follow in life".

    My suggestions are from "personal experience" and research only. Do not consider this as legal advice. Each bankruptcy case is different.

    Comment


      #3
      Originally posted by Minnymouth View Post
      This man definetely KNOWS what he's talking about....... it's called the "trickle down effect"............ If he has to "pay the price"...... then it's going to be passed on down to the workers (middleclass) in paycuts, lack of benefits, more work-less pay, and less employees on the payroll.

      Our government can say all they want that it will not financially affect the middleclass and poor..................

      OH YES IT WILL....................IN MANY WAYS............
      I am afraid there will be more poor as the middle class move down (note the amount of 'newbies') and less of the rich as they decide to retire, quit when taxes overcome motivation, or move out of this Country.

      I don't know, but I believe, Neal Boortz wrote that hypothetical. 'Hub
      If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

      Comment


        #4
        Too bad it is not true. The whole point of this screed is that if you tax this year's profits that money will not be available to build the working capital of the company. But that is BS, all the things that he described are valid business expenses and if they would happen to be deductible from the next year. If there was no profit as a result the previous profits can be recovered via a loss carryback.

        Why should capital be taxed less than my own productive labor? Why are so many (and particularly on the right but not exclusively) dead set on working against their own interests and the interest of the country as a whole?

        // Climbs off soapbox...

        Comment


          #5
          Originally posted by Rahaton View Post
          Why are so many (and particularly on the right but not exclusively) dead set on working against their own interests and the interest of the country as a whole?
          I guess the same could be said for anyone who walks away from a mortgage because it's underwater.

          We all work toward the interest of the country as a whole by paying taxes, there's no reason to make the tax rate unreasonable. Just like the hypothetical author said, wealth is EARNED not DISTRIBUTED. He spent 23 years building the business and making sacrifices, so his own family is not going to suffer from Obama's socialist agenda.

          Whether you agree that it's right or not, the reality is that business owners will pass the tax burden to their employees in the form of pay cuts or layoffs. That means more people will lose their homes. More people will file bankruptcy. More banks will collapse. Less money being spent. More real estate declines. More people on government assistance, and fewer people paying taxes, which will require even more tax increases on the "rich" being passed down to the employees and consumers. And we start the whole vicious cycle over again, making more and more people dependent on government programs.

          Comment


            #6
            The is lots of sloganeering in there that really does not make sense, what does "wealth is EARNED not DISTRIBUTED" even mean? Can you define "wealth" in a way that makes that make sense?

            My problem with you second point is that your argument that the business owner will just pass the cost of taxes on to his customers or employees does not make any economic sense. Regardless of taxes he will maximize profits by paying the minimum he can for labor while charging the maximum the market will bare for his good and services. By definition (if he is keeping up his fiduciary duty that is) there is not way he should be able to charge more or pay less.

            Finally, I am not saying that taxes should not be fair. I am all for that. I just get peeved at this idea that business profits are special and that business owners are sainted. You said this is to reward the sacrifices he has made over the years by him and him and his family--I have sacrificed for my family--why is his sacrifice more worthy?

            Comment


              #7
              There are a few holes in his argument but it is true that any taxes are eventually passed on to the little guy. It is the same with minimum wage increases. Sure you make more per hour but how is the employer going to recoup the loss? He is going to increase the price of his goods/services. The dollar then buys less than before....inflation. He has the right to withhold heathcare coverage but the employees are going to take their skills elsewhere and good luck finding another skilled employee to fill the position when you are not offering healthcare and an equally good job is available that does offer healthcare. Employers need to understand that they are competing for my services as well. There needs to me a mutual respect and a trust developed in the work place. Companies used to take care of their employees and the employees would take care of their companies in turn. We have steadily seen this relationship deteriorate over the years and it is a shame. Now there is no loyalty on either side.

              Comment


                #8
                Originally posted by Kpower View Post
                There are a few holes in his argument but it is true that any taxes are eventually passed on to the little guy. It is the same with minimum wage increases. Sure you make more per hour but how is the employer going to recoup the loss?
                Because taxes are paid as a percentage of profit, there is no loss to recoup. He might not be getting the return on investment that he wanted but the only thing that is happening is the rate of return on that investment is being reduced.

                One problem with this example is that the hypothetical person above has two roles that are being mixed together and that muddies the waters. On one hand he is a manager and on the other he is an investor who has provided the capital for the enterprise. But the example is less dramatic if he says he took $200k as a salary for his management position.

                Originally posted by Kpower View Post
                He is going to increase the price of his goods/services. The dollar then buys less than before....inflation.
                As I said he would increase prices with or without taxes. A business will charge what the market will bear. In our little thought experiment here the taxes actually have a deflationary effect by removing cash from the money supply. (Once the government spends it things can change.)

                Originally posted by Kpower View Post
                He has the right to withhold heathcare coverage but the employees are going to take their skills elsewhere and good luck finding another skilled employee to fill the position when you are not offering healthcare and an equally good job is available that does offer healthcare. Employers need to understand that they are competing for my services as well. There needs to me a mutual respect and a trust developed in the work place. Companies used to take care of their employees and the employees would take care of their companies in turn. We have steadily seen this relationship deteriorate over the years and it is a shame. Now there is no loyalty on either side.
                The reason is that loyalty is expensive on both sides and when you are racing to sell the cheapest product at the cheapest price point you can't afford it.. I am certainly guilty of giving my employers too much loyalty over the years. All that unpaid overtime got me diddly squat. (Not too bitter though...)

                Comment


                  #9
                  The point is that most investors expect to see a return on their money if they don't they will sell their shares. In this case the manager is the investor and if he stops realizing a profit then he could sell his business or go bankrupt. If increased taxes eat into the profit it doesn't matter if you call it an investment or a salary, he is not making what he thinks he should and he will do what he can to correct that. In todays workplace noone wants to raise prices since the economy is down and everyone wants to encourage spending. The easy place to cut funds is to cut salaries, bonuses and benefits. This way your price point is unaffected. Companies can get away with this for now but people remember these things and will look for work when the economy improves. Companies now are alienating their employees by treating them as expendable.
                  The company I work for has laid off thousands of people in the last few years. I am on my 4th job in 5 years within the company because my positions kept getting eliminated. I am lucky enough to have needed skills but many others do not and I have seen many many friends leave. This was a company that up until a few years ago had many employees with 30 to 40 years of service. We came out on the losing end of a merger though and all of that loyalty was sold and was not valued as highly by the new owners.

                  Comment


                    #10
                    As a CPA, I can tell you that there are many, many flaws in his "argument". And I find it interesting that he stated the income but did not state the adjusted gross income or the tax he paid on that income. And the most glaring "mistake" is that advertising, etc. are all business expenses which are taken BEFORE you reach the figure of $534,000.00. And purchases of assets are capitalized and then depreciated. Basically, the picture the author is trying to paint is to further their own agenda. Any accountant will tell you (well, a good one) that you can make the same numbers tell almost opposing stories if you want. That's why there are so many rules surrounding presentation of financial statements.
                    over $100K cc debt,$20K taxes,$332K mortgages/value $190K,surrendered
                    Confirmed, $801/month 56 down,4 to go

                    Comment


                      #11
                      ...such "hypotheticals" do wonders to boost the egos of those who are defiantly and perniciously driven by a disdain for intelligent, transparent and honest discussion on issues that need to be discussed and dealt with. these types of scenarios are typical of the extremes that truly jeopardize civil discourse on important issues at hand.

                      i've been carefully following what has been going on and can't help how desperate the opposition is...to the point of actively distorting and more disturbingly, abdicating their responsibility to being a part of a reasonable solution... where is the counter offer/solution/plan that isn't just another veneer on a system that is already broken?

                      1. there is no evidence as far as i can tell that the public option is going to take away your (not directed at anyone in particular) for profit insurance policy
                      2. all of this euthanasia, forced death panel stuff is discouragingly baffling and shameful (politicians are right-out lying to their constituents and no one bothers to ask, "where does it say that in the bill?" easy question to ask... or, for many of these politicians, "didn't you support a bill similar to this at one time?" which many of these right-wingers did)
                      3. it's frustrating that the middle and left are not doing more to discredit many of these hostile and unproductive fantasies... it only helps to fuel the debate towards irreverent discussion and triviality of a subject that will affect all of our lives
                      4. tax breaks. nice huh? won't complain, but given at a time when things were going good. typical and predictable right-wing tactic, appease the masses with small tax cuts and avoid tackling the issues that will truly make a difference in the long-term; by the way, our tax dollars are paying for these tax breaks. you didn't think tax breaks were free did you?
                      5. both sides need to get serious about true reform here. starting with bring the costs down w/o spending more... the insurance companies are having a hay-day and laughing it up as this debate becomes more and more absurd- WE ALL LOSE
                      Filed: April 2009
                      341 Meeting: April 28, 2009
                      Discharge: July 1, 2009

                      Comment


                        #12
                        Originally posted by Rahaton View Post
                        The is lots of sloganeering in there that really does not make sense, what does "wealth is EARNED not DISTRIBUTED" even mean? Can you define "wealth" in a way that makes that make sense?

                        My problem with you second point is that your argument that the business owner will just pass the cost of taxes on to his customers or employees does not make any economic sense. Regardless of taxes he will maximize profits by paying the minimum he can for labor while charging the maximum the market will bare for his good and services. By definition (if he is keeping up his fiduciary duty that is) there is not way he should be able to charge more or pay less.

                        Finally, I am not saying that taxes should not be fair. I am all for that. I just get peeved at this idea that business profits are special and that business owners are sainted. You said this is to reward the sacrifices he has made over the years by him and him and his family--I have sacrificed for my family--why is his sacrifice more worthy?
                        "You will never get a job from a poor man" (author unknown) 'Hub
                        If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

                        Comment


                          #13
                          Originally posted by AngelinaCatHub View Post
                          "You will never get a job from a poor man" (author unknown) 'Hub
                          Doesn't mean if you make him richer he will give you one either. What is with all the hero worship of the boss-man? Honestly, ownership(capital) and management are important and do help generate value, but they should be rewarded in relation to what they do not because they are the magical owners. It is almost like some people need an aristocracy to make their lives whole-- that is a big part of the reason my people came to this country--to leave the aristocrats behind.

                          Comment


                            #14
                            Interesting original post but loaded to many intentional inaccuracies. These propagandist type of readings always make me chuckle.
                            The information provided is not, and should not be considered legal advice. All information provided is only informational and should be verified by a law practioner whenever possible. When confronted with legal issues contact an experienced attorney in your state who specializes in the area of law most directly called into question by your particular situation.

                            Comment


                              #15
                              Just another sell for Reaganomics which doesn't work. Hence, the widening income gap.

                              "According to the non-partisan Congressional Budget Office, income for the bottom half of American households rose six percent since 1979 but, through 2005, the income of the top one percent skyrocketed - by 228 percent."

                              That was reported by the Early Show in 2008. Also at that time, there were already 3.5 million manufacturing jobs lost as Wall Street continued to focus on "products" that weren't made by anyone and didn't really exist such as derivatives.

                              Big business will cut jobs any time they see a cost savings regardless of regulations or taxes. And, trust me, the tax loopholes are alive and well. If their taxes went up 5% that might be the ONLY tax they pay if they have the right team of accountants and investment professionals.

                              Besides, the last twenty or thirty years has seen almost nothing but deregulation especially in the financial sector and you can see what a pretty picture it has painted.

                              People still believe that the rich will give us all jobs? I worked for some very well off business owners. More often than not, they're laying off while buying their new car (for their collection, not because they need the sixth or seventh to drive). All of the belt tightening that is being done is NOT being done in their lifestyles. They'll cut the bonuses, the raises and the staff before they stop traveling to Atlantis with their families on the private jet. Reaganomics is a pretty theory but it doesn't account for greed.
                              over $100K cc debt,$20K taxes,$332K mortgages/value $190K,surrendered
                              Confirmed, $801/month 56 down,4 to go

                              Comment

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