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Taxing Corporations More Will Not Solve the Problem of Runaway Government Spending

February 28, 2012 | Comments: 0 | Views: 248

The other day, I was talking to a gentleman who had done some research in the late 80s and early 90s with a group. In their research they had determined that the average net profit of corporations in America at that time was only 3 to 4%. Today, that number is closer to 2 to 3%. Although, recently, there have been some records set.

Anyway, after he was done telling me this little tidbit, and as we began discussing the razor thin actual net profits of corporations in America, he asked me why I thought that was? He told me he would give me a clue; it started with a "C" and then he asked if I could guess.

Now then, before I give away the answer, at least according to him, I'd like to ask you to also consider why it is that corporations make less net profit today than they did 20 years ago (generally speaking, not the latest standout records)? Personally, it would seem to me that there are many reasons why corporations don't make the level of profit they have in the past, and I would say that those reasons could start with; R, C, L, U, or P. indeed, I speak of the following;

"R" Regulations"C" Competition"L" Lawyers"U" Unions"P" Political Shakedowns

Yes, his answer was "C" which stood for "competition" and yes, that is one potential answer. He told me that with all these modern corporations and all these kids with MBAs and graduating from Yale, Harvard, Stanford, Wharton, and all these other Ivy League schools, you'd think with that expensive education, and all that knowledge, and all these computer systems able to help the process of analyzing in decision-making, that corporate profits would have increased.

Actually, productivity has increased, but because competition has also increased, the net profit when all is said and done has become a razor thin margin, and nearly half as much as in previous recent periods. Still, there are other reasons, such as taxation, overregulation, more class-action lawsuits, greater union demands, creative accounting, and political shakedowns or politicians making it tough for some companies to compete with others by un-leveling the playing field using new laws, rules, and/or regulations.

One thing that is quite interesting is when the 99% says that corporations are greedy and should pay more, perhaps they don't realize that there isn't really more to pay, these corporations have already paid by employing lawyers, regulators, and paying for all the union demands. Further, free-market competition is solving the problem which the 99 percentile wishes to enforce on the corporations, when they are already making razor thin profits, and delivering abundance to America. Indeed I hope you will please consider all this and think on.

Lance Winslow has launched a new provocative eBook on Busienss Accounting Concepts. Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank;

Source: EzineArticles
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Taxing Corporations


Solve The Problem


Runaway Government Spending


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Average Net Profit

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