July 17, 2012, Rush Limbaugh on trickle down economics, Business owners paid last, IRS governments paid first, Consumers make first payment
Trickle-Down Economics “Doesn’t Work. It’s Never Worked.”…Obama December 6, 2011
“John F. Kennedy introduced the idea of a tax cut in the 1963 State of the Union address. The Johnson administration, working with congress crafted The Revenue Act of 1964. The goal was to raise personal income, increase consumption, and increase capital investments. Unemployment fell from 5.2% in 1964 to 3.8% in 1966. Tax revenues were predicted to fall but instead increased.”…Citizen Wells research
“The government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”…Ronald Reagan
I caught part of the Rush Limbaugh show a few minutes ago. He was explaining trickle down economics, a topic often distorted, and certainly not understood by the left. Rush responded to the sometimes used reply of the left that business owners get their money first. Rush explained the things that had to get paid before the owners get their money. I would like explain this a bit further.
Rush Limbaugh has done a really good job over the years of explaining that companies do not pay taxes, consumers do. That is a fact. Therefore, let us begin with the income stream and it’s trickle.
When a consumer pays for a product or a service they are immediately paying the federal, state and other taxes. It is built into the cost of the product or service. When taxes go up, as they have during Obama’s tenure, it immediately affects the consumer and job market.
From the receipt of income, the following are paid in priority sequence. This is a general representation.
1. IRS takes priority over all. Remember, the employer part of social security & FICA as well.
2. Depending on the location, some combination of state, local, property taxes and fees.
3. Lease, loan on business location(s).
5. Equipment purchase and/or lease.
6. Travel & distribution costs
7. Research & development expenses.
8. Employee salaries.
9. Employee benefits
10. Misc supplies, etc.
11. Out of the remainder, if any, the owner can receive a salary, bonus or money to reinvest.
With the bad economy and high cost of gasoline, many small business owners have been struggling. I recently heard of a small business owner whose personal income had been greatly diminished. He was trying to keep the business alive for his sons.
The business owners are the risk takers and job providers. Hard work and risk that provides jobs should be rewarded.