Friday, March 13, 2009

I am not a huge Rick Perry fan, but he did the right thing, yesterday, when he refused part of The Chosen One's Stimulus plan.

Perry said that the state would be forced to raise taxes on business to continue to fund the unemployment benefits, as well as extend benefits to students, women and the elderly. I'm not sure how the state has gotten away with not giving benefits to women, but now if you retire you get unemployment? If you're a student and you attend classes and don't work you can get benefits? Why not just go all out? Pay us all not to work!

Let's say I run a business. Let's say I have monthly sales of $100,000. Let's say that I have three employees whom I pay $2000 a month. My electricity costs me $700 a month. The software vendor I use charges me $50 a month for "support". Let's say that my property taxes are $200 a month. Let's also say that the business tax is $50 a month and unemployment insurance is $1000 a month. I pay $500 a month in insurance, and since my shop is on Main Street, I pay $10,000 a month in rent (not uncommon here in Paradise). Let's further say that I'm making 40% profit, and I spend $60,000 a month replenishing my inventory and that I lose 10% to shrinkage. And let's assume that my employees don't want raises, suppliers don't raise their prices, utility rates don't go up, and that property taxes never go up. That means I gross $12,000 a month. If I pay myself $2000 a month, I still have $10,000 a month to cover incidentals like repairs, replacement equipment, and the inevitable lawsuits as well as new items for my inventory.

Suddenly a recession hits, and my sales drop by 10%. Let's say that I figure to weather the economic storm by not replacing equipment as it breaks, and cut my spending for the store by 10%. Now I have no money for incidentals. And now I have to double my unemployment insurance from $1000 to $2000 so a college student can get unemployment benefits. Now every month, I run a deficit of $1000 a month. Things start getting ugly.

So I fire employee #3, she's a 60 year old college student, so she'll be fine with unemployment insurance, hitting it three times. Now I have $1000 a month extra for incidentals. But to get it, I had to cut a job. Factor in constant increases in other expenses (insurance, taxes, utilities, salaries), and you begin to understand that business is not an infinite source of money.

If Obamessiah wants to increase unemployment benefits and triple our spending, he needs to raise taxes on everyone.

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