The Year of Trump

Trump speaking at event in PA

Time for a review.

Say what you want about the guy but the reality is that he is doing a good job.

No, an excellent job.

OK, I cringe every time he is out giving a formal speech. He can’t read. He can’t read a speech like Obama did. Obama was a fantastic –one of the best– speech reader. Let’s make that distinction because it is important. They all read prepared speeches. Obama was a great performer. Trump sucks at it.

Well, who cares. I’ve always said I don’t care about image, I care about results. And, frankly, so far, you can’t argue with the results. Particularly now, after the passage of the tax reform bill.

Apple just announced $2,500 bonuses for their employees (I think US-only),  the repatriation of $350 BILLION dollars and a payment of $39 BILLION dollars in taxes –the largest tax payment to the Federal government in US history.  Tim Cook, CEO, is on record saying that all of this is because of tax reform.

Chrysler is moving a factory back to the US.

Other companies are announcing thousand dollar+ bonuses to employees due to the tax reform bill.

Other companies are also starting to talk about repatriating billions of dollars and growing jobs in the US.

The stock market is on fire.

Deregulation across a range of industries is starting to show results.

African American, Hispanic and Female unemployment are at historical lows.

401K plans are bursting with gains.

And now he is probably going to set his sights on getting rid of this ridiculous Obamacare that is hurting so many people.

There’s more, of course, but the above is amazing for just eleven months in office.

Let’s put it this way: Had Obama accomplished the above in his first eleven months in office he would have been elevated to saint status. He would have had entire editions of newspapers and magazines like Time dedicated to highlighting his life history and incredible accomplishments. Rapture would have filled liberal media and liberal circles. Babies and buildings would have been named after him.  It would have been the biggest party ever thrown in the history of this country.

Yet, because this is Trump we are being treated to an ever intensifying mass of attacks by all mainstream media outlets. We are experiencing otherwise intelligent people completely degenerate into some of the worst kinds of bigotry and hate speech ever seen.

Why is this happening?

I think the answer is simple: If Trump succeeds it is likely to derail liberal politics for decades. If Trump succeeds he will demonstrate that a business-minded approach to running an economy and a country might actually be better than big government, big taxes and the big one: Socialism.

If Trump succeeds the status quo is done for.

And that means both Republicans and Democrats.

That’s why this is happening. That’s why he is being attacked from every conceivable angle with never seen intensity.

Because politicians are afraid, very afraid, he will succeed.

And he is succeeding.

We just got a taste of the first year in office.

Three more to come.  Maybe even seven.

If all goes well, the political elites will, with time, no longer have the power they’ve enjoyed for decades in this country.

This is good.

California Gasoline and Diesel Taxes

Well, here we go again, California raises taxes on something.  This time it’s Gasoline and Diesel.  Here are the numbers:

Gasoline:  Increase in excise tax of 12 cents, from 29.7 to 41.7 cents per gallon.

Diesel: Increase in excise tax of 20 cents, from 16 to 36 cents per gallon and sales tax on diesel increases from 9% to 13%.

Lovely.  Yet this does not paint the entire picture.  Here are a couple of charts

that do:

 

What they say is that Californians will pay a total of $0.87 in taxes for every gallon of gasoline and just over a dollar in taxes for every gallon of diesel fuel.

What does this mean?

Well, as of this writing the average cost per gallon for gasoline in California is $3.08 and about the same for diesel.

In a few days they will move up to $3.20 for regular gasoline and about $3.30 for diesel.

Now we can start to think about what all of this means.  If we claw back taxes and fees we can calculate the rough cost of the actual fuel you would be buying:

Gasoline cost of fuel without taxes and fees: $2.33 per gallon

Diesel cost of fuel without taxes and fees: $2.28 per gallon

And so you decide to go on a family trip.  You will be driving 800 miles round trip in a car that does a reliable 30 miles per gallon on the highway.  How much will it cost in fuel to complete this trip?

800 miles / 30 miles per gallon = 26.7 gallons

26.7 gallons * $2.33 per gallon = $62.13

OK, well, that’s not too bad.  $62.13 in fuel for the trip.  That’s OK.

However, we forgot to include in our calculations the additional cost of having to pay taxes and fees.  You see, you can’t buy one dollar of fuel with a dollar, not even close.  Let’s do that again with the real costs:

26.7 gallons * $3.20 per gallon = $85.33

Ah, there you go.  For the privilege of taking your trip you send the government $24.00.  Of course, the theory is they are doing something for you with that money –which isn’t the case, they are mostly burning it on nonsense and misusing it.

Interesting enough, if you travel an average of 20 miles each way to go to work you are traveling some 800 miles per month.  Which means that, on top of all the other taxes you pay our government you are sending them an additional $85 a month when you buy gasoline.

Did you know you are paying en excess of $1,000 a year in taxes just to go to work?

Wonderful, isn’t it? And they want MORE!

A hidden effect of these taxes and fees is that your buying power, the value of your dollar is reduced.  Your dollar is devalued.  You can’t buy a dollar of gasoline with a dollar.

Impact on Business

When it comes to business these numbers become more significant because they ultimately affect your life, the entire economy and further devalue every dollar you spend.

In a hypothetical case, let’s say you buy furniture and it has to be delivered to your home from a warehouse 200 miles away.  The amazing oak table you bought takes up the entire truck.  You are not sharing transportation costs with anyone.

Trucks don’t do very well in terms of fuel economy.  Let’s assume this truck does about 10 miles per gallon of diesel.   Of course, the merchant will charge you for the round trip from the warehouse to your home and back, otherwise it would mean losing money on transportation.  This means you are paying for a 400 mile round trip.  At 10 miles per gallon this truck will need 40 gallons of diesel fuel.

Diesel, before we add taxes and various fees costs about $2.28 per gallon.  This trip, without taxes and fees, would cost:

40 gallons * $2.28 per gallon = $91.20

The merchant will probably round this up to a nice even $100 and add this to your delivery charge.

However, as we saw before, our merchant can’t buy a dollar of diesel with one dollar.  How much will she have to spend to buy the 40 gallons needed to deliver your furniture?

40 gallons * $3.30 per gallon = $132.00

Once again, the merchant is likely to round that out to $140 and add this to the cost to deliver the goods.

And so, thanks to taxes and fees it will cost you an additional $40 to have this furniture delivered.

This, again, means your dollar is devalued.  You can’t buy $100 in transportation for $100, you have to pay $140 –which sends about $40 straight to the government.

In other words:  Taxes have consequences

That’s not all folks…

You see, this table didn’t magically appear at the vendor’s warehouse.  She bought components, parts, wood, screws, fabric and other materials from other supplies, who, in turn, bought their materials from factories all over the country.

And every single one of these suppliers in the manufacturing and distribution chain have exactly the same problem you have:

They can’t buy a dollar of fuel for a dollar.  They can’t buy a dollar of transportation for a dollar. 

Every time they buy a gallon of fuel they have to send more money to the government, as much as 40% more.

Merchants and manufacturers are not in business to lose money.  They have to account for their costs or risk going out of business and laying off thousands of workers.  And so they have to price their goods based on their cost of manufacture, which, of course, includes transportation.

The end result is that table you bought is far, far more expensive than the raw components it contains because not one entity in the manufacture and transportation of all the components and services that ultimately comprise that table can actually buy a dollar of fuel for a dollar.

The cost of the table, way before you decided to buy it at the showroom, is significantly higher due to the piles and piles of taxes and fees we are forced to pay.  And then you have to pay even more taxes and fees to have it delivered.

This is one of the items at the root of the US’s inability to compete.  Merchants, in finding ways to reduce costs and compete for your business, are forced to compare buying that table directly from suppliers in China versus a supply chain based in the US.  Taxes, when layered with other costs, such as regulatory costs, become a potentially significant proportion of the cost of goods.

In the end, it turns out that packing as many tables as possible  into a container in China, to then ship them into that US, ends-up being far less costly than manufacturing the tables here and paying for all of the taxes, regulatory and other costs incurred along the way.

And that’s how your beautiful new table has a “Made in China” label on it and dozens of furniture manufacturing companies across the US are forced to either go out of business or lay off most of their workforce and shift manufacturing to China.

Next time you vote for a tax hike you need to understand that you are slicing your own throat.  You are damaging our country’s ability to compete.  You are costing us jobs, perhaps even your own job in the long run.

We need to pay taxes in order to fund a range of programs we all benefit from.  Nobody is advocating zero taxes, that would be just as dumb and crazy as high taxes.

What’s has been lacking in our process has been a demand for efficiency, honesty and results on the part of our politicians and government agencies. 

When you have government agencies throwing lavish annual parties with your tax dollars that’s jobs being sucked out of our economy.  This is, in no uncertain terms, criminal.

We ought to demand that government be the most financially efficient entity in our country.  They ought to be the example through which others are measured, not the example of the worst of the worst in terms of waste and unnecessary spending.

We have become so accustomed to everything from pencils to farts being taxed that we’ve lost a sense of proportion.  It is actually impossible to know exactly how much of your income you are surrendering to the government in the form of taxes.  From State, Federal, fuel, property, sales taxes and myriad fees, it isn’t difficult to imagine that somewhere between 40% to 60% of your income is being taken away by our government at various levels.  And yes, wasted.

And that’s an obscenity.