By Kevin Meyer
I promise to get off of this tax kick one of these days, but ignorance of the incredible influence of tax policy just burns me sometimes. And here in California it just hit again, effective today.
What would you do if your customer came to you and said they'd like a loan of 10% of what you planned on paying them for real goods and services, beginning immediately and revolving perpetually, and they'd then pay it back the following year with no interest? In effect asking you to for more cash that you then would not have available to purchase, or invest in, other essentials. What if you had no choice.
That's exactly what happened. Our state withholding just went up 10% today, but it will then just be refunded after we file returns next April. So they claim it's not a "tax increase" since over the course of the year it will balance out. This myopic travesty will bring in an extra $1.7 billion, which will then have to be paid right back out (assuming they don't start issuing IOU's again). And as with all government programs, there's no end point... next year I'll be giving them an extra 10% loan to be repaid the following year.
What would happen if you told your boss you needed to pull a few million from the corporate treasury to apply to your bottom profit line, but with the promise you would then return it the following year... when you'd ask for it again. Would anyone believe you really had higher profits? Would you still have a job? Would your margin problem ever be really fixed?
That's really the bottom line: it doesn't fix anything. Just a mask.
The accounting games politicians play. And they claim businesses are corrupt?