9 + 9 + 9 = 27

By Jake Jakubuwski

9+9+9=27.

3X9=27.

Simple — everyday math, right?

But 27% added to whatever I’m already paying in Social Security tax, state sales tax and what I lose in “deductions”; means I am gonna have to pay more money to somebody.

I hate to start an article with an apology.  In this case, I feel I have to.

You see, I am not an accountant, bookkeeper or math wizard. I’m just a guy who has operated my own business, of one kind or the other, for nearly 50 years. I figure that gives me some sort of platform to base my ideas of what constitutes profit, what makes up a loss and whether or not I’ve got enough money left over at the end of the day, week, month or year to have made it all worthwhile.

There are some things, financial, that I take as givens.

You can’t sell for less then the cost of your merchandise plus the cost of your expenses and stay in business very long.

You can’t spend your way out of debt.

And, no matter how big the pile of whatever it is that you have, if you keep taking away from it and not replacing it; one day — it will be gone.

Another thing I’ve learned is this: If you’re in financial trouble, the cure, generally speaking is not simple, sweet-tasting or fun.

That’s what leads me to believe that the economic problems this country faces (from the White House to the lowest paid laborer in a packing house) some tough choices, that will require a lot of sacrifice on everybody’s part in order to get our financial house back in order.

Those choices might be so hard to make that they prove impossible to implement.

None of them will be simple. None of them will be easy. None of them will be popular.

The politicians from the top of the heap to the wannabes are spewing mouthfuls of rhetoric that is so convoluted; it’s gibberish to the average voter. Some of it sounds so simple, and so easy, it makes you wonder why no one thought of that before. Here’s a newsflash! Someone probably has. The new group just gussied it up in flowery language, added a new twist to it and kept their fingers crossed when they delivered their solution to the voters.

I know I’m being cynical, but all of these folks running for office today remind me of what my granddaddy had to say about shirttail relatives that came seeking a handout. He said they had a mouthful of promises and a handful of gimmie. That seems to sum up all rhetoric; at least in my mind.

Specifically, I’m wondering how we’re gonna pay for all the bailouts, pork barreling, and give-a-ways that Uncle Sugar has been throwing around like we have an endless supply of money to give away.

Unless I’m not understanding the situation, Uncle seems to think that we can speed recovery by pouring bucks on top of the pile where the bankers and other financial sharks can gobble it up but when asked how we’re gonna pay for it, Uncle tells us we can cut programs to the poor and  “straighten out Social Security.” In other words, they look for the fix and sacrifices at the bottom of the pile. It might only be me, but I just don’t understand that idea.

With a new crop of presidential wannabe’s running around mouthing all kinds of promises and espousing ideas that they claim are a nearly painless way of fixin’ what’s wrong with the economy. I have to wonder if they really think Americans are actually so stupid as to believe their guff, or they figure the majority of the electorate is just so fed up with the current crop of crooks and cretins that they’ll vote for anyone who they think sounds like they know what they’re talking about.

For instance: Herman Cain has a plank in his platform that he calls, “9-9-9”. Just on the surface of it, folks seem to like the idea as a real simple roadmap to fiscal responsibility and a way to sort of make everyone pay their fair share. I don’t believe a word of it — at least not the way I’ve heard Mr. Cain talk it up.

First off, this “fair share” drum is rather tattered and worn. From what I read and understand only about 6% of the taxpayers (including Joyce Lunchbucket and Joe the Plumber) pay their full tax rate on their actual earnings. Is there anything “fair” about that?

My take on Mr. Cain’s 9-9-9 deal is that businesses will pay a 9% rate on all of their income, period.  They will not get any deductions, tax incentives, set-offs or loss carry-overs. Does that mean McDonald Corporation pays 9% on their gross income and loses any incentives, or tax breaks, to support Ronald McDonald House, their scholarship funds and deductions for all the wages they pay as well as all of the hamburger, rolls, fries and drink cups they buy?

What about Mickey D’s share of FICA (Social Security Tax) that they pay into the Treasury on behalf of their employees? Do they still have to pay that? Or is it “included” in the 9% tax?

If I understand the program, it’s going to affect General Motors, General Electric, AT&T, NBC, Sheila’s shop of Tonsorial Splendor, Mike’s Garage, Mom’s Apple Pie Shoppe and every other business inAmerica— regardless of size or income.

If a guy or gal is self-employed and are paying their own Social Security taxes, does the 9% Mr. Cain envisions cover that contribution as well, or is it in addition to it? If this “9” is just another tax that businesses of all sizes and income levels have to pay in addition to FICA, State, County and municipal taxes that they may be liable for — I don’t see the benefit. Actually I see it as regressive.

The idea of a “flat” income tax has been floating around for years. The idea has a lot of appeal because of its simplicity and the fact that it would yank half a zillion pages out of theUnited States Revenue Code. There have been at least a half a dozen variants discussed over the years without any notable success.

The next “9” is the 9% income tax that individuals would have to pay. Does that 9% pay the wage earners share of their Social Security; or is the FICA deduction in addition to the 9%? I believe that most wage earners that are currently in a 20% tax bracket probably wind up paying far less then 9% when their personal deductions, mortgage interest, child care fees and medical expenses are deducted from their gross income.

Those folks that currently fall below the poverty level are not paying any tax at all. Are they able to take a 9% hit on their already poverty-level wages?

Then comes the final “9”. The National sales tax of 9% which, as far as I understand it, is in addition to any state, county, city or municipal sales taxes. Ouch!

InNorth Carolinawe currently have a 7.5% sales tax. If Mr. Cain is elected and his 9-9-9 program is adopted, my sales tax goes to 16.5%! That also seems to mean that anything I buy to run my business: paperclips, ink cartridges, pencils, staples and a plethora of other stuff will cost me more. Those items become expenses that I can not longer deduct.

Does that same ‘sales” tax apply to GM, GE and Mickey D’s? If it does, that means cars, electric motors and hamburgers are going to cost all of us more. Which means, as far as I can see, another loss I have to absorb because I can’t claim it as a deduction.  What’s fair about that?

Another thought. If Staples buys computers from Dell, does Staples pay a 9% sales tax on them? If so, Staples is going to charge me more for the next computer I buy from them…

Why? Well, let’s say they have a computer that I can buy today for $500.00. That will change drastically under the 999 plan. If they pay Dell $375.00 for it, plus 9% Federal Sales Tax, then I pay that 9% as well. In which case, Staples will add a MINIMUM of $34.35 to that computer. So now, I will pay NC State sales tax on $534.35 at 7.5% PLUS the 9% Federal Sales Tax.

Another thing I’ve learned over the years is that if your cost of doing business increases — your selling price has to increase as well. Not simply by adding in only the extra cost but by adding in the extra cost PLUS a profit. If a business does not factor in a profit on their TOTAL costs of doing business that means they will make less gross profit at the end of the year. Doing that as a matter of course is a sure way to lose your business!

Here’s the really scary part of 999 as I see it: The first year it’s 9%. The next year, how much? Who knows?

I know something else from my years in business: Whatever Uncle Sugar does to help us out is going to cost us money because there is one immutable facet to the  Law of Financial Reality According to Jake:

“Nothing happens. Nothing gets sold. Nothing gets built, nothing gets repaired, nothing gets refurbished and nothing gets “overhauled” (Including the National Debt, the US Revenue Code, bureaucrat’s and politician’s salaries) that consumers and taxpayers don’t foot the bill for.”

 So, is Mr.Cain’s “999” idea just a catchy campaign slogan to entice voters and has no substance or value beyond that? Is “999” something he believes will work but has not given any meaningful thought to the actual impact of the program if it becomes law? Or, is it a smoke and mirror cure that that might kill the patient?

At this point, for me at least, the only thing 9+9+9 adds up to is 27% more money that will be coming out of my pocket.

PEANUT BUTTER AND PETROLEUM PRICES

 By: Jake Jakubuwski

Here’s the way I see it…

 Even with petroleum prices easing somewhat — although we’re still paying more for gas then we were last year — it’s easy to lose sight of the fact that what we pay for gasoline does not represent the full impact of steadily increasing fuel prices on our pocketbooks. When we buy gas, we tend to see only the immediate and personal shock of those prices when it costs us more to fill up our tanks today, then it did yesterday.

So what if you don’t drive, own a car or a gas-powered lawn mower? Even if you don’t buy gasoline or heating fuel — today’s petroleum prices are going to hit you square in your financial fanny! 

The higher fuel costs that cities, counties and states pay to operate their fleets, repair roads and build sewage systems, in turn, will ultimately trigger increases in property taxes, and “user fees”.

Increasing fuel costs will result in higher insurance rates for your cars, homes and businesses because the increased costs of manufactured, processed and salable commodities—including car parts and building materials—will affect the insurer’s financial risk. If it costs an insurer more to repair, replace or refurbish cars or cottages after an accident or disaster, those costs will be passed on to the policy holders!

When the higher costs of fuel inhibits travel and the motel industry suffers declining occupancies, they will not require as many maids to clean and “make-up” the rooms each day. Those unemployed maids may file for unemployment benefits which puts further strains on governmental coffers. Demands that will, in one form or another, be passed on to the consumer and taxpayer. 

Restaurants, movie theatres, pizza joints and paint stores will be affected by increased petroleum prices. The effects will be two-pronged: It will cost the businesses more to get the food, film and finishes that they sell delivered to the store —— and they will (If they are not already) suffer from declining sales because consumers who are putting more money in their gas tanks, will have less money to spend on discretionary purchases.

The peanut farmer is forced to pay more for fertilizer and tractor fuel to make their crop. When the peanuts are harvested, the crop is put on trucks and sent to co-ops, buying stations, or processors; where they might be turned into peanut butter, peanut oil or snacks. Then the jars of peanut butter and other peanut by-products are sent by rail and common carrier to wholesale distribution centers where it is loaded onto other trucks for delivery to your favorite grocery store or retail outlet. Each step in the process; from the farmer’s field to the grocery store shelf adds to the price the consumer will be required to pay because of increased petroleum prices.

At the grocery store we discover peanut butter is forty or fifty cents higher per jar then it was the last time we bought it. The maid who was laid off from the motel can’t afford the more expensive peanut butter unless she receives food stamps from a social agency. The cost of those food stamps will be borne by the consumer and taxpayer — that’s us!

Dow Jones, General Motors, Ford, lKimberly-Clark, Proctor and Gamble, Pete’s Plumbing and even the Solo Cup Company have fallen victim to higher energy costs and supply chain costs.

Obviously, nothing can be grown, manufactured, picked, processed, packaged or sold without considering and factoring in higher fuel costs—costs that are added at each successive stage of the chain from seed to sale—causing the prices of those items to escalate at an exponential rate.    

Since we, as consumers and taxpayers, are at the very end of the “supply chain”, we are stuck with the bill.

Every load of laundry, every flip of a light switch, every Big Mac and every stick of chewing gum will, and is, costing us more.

The cost of gasoline, at the pump, is only a small part of the inflationary feeding frenzy higher petroleum prices are creating. Even if you don’t drive, the peanut butter sandwich you had for lunch will cost you more: because petroleum prices are taking a bigger bite out of everyone’s wallet.

Dear Mr. President,

According to what I’ve read about your speech on job creation, one of the pivotal points seems to be lowering employee, and employer, contributions to Social Security. I can see how that might stimulate the job market and put a few bucks a week in many paychecks.

My problem is this: Since Social Security is already teetering on the verge of bankruptcy, wouldn’t a reduction in tax payments to the “plan”  hasten the demise of Social Security?

Now, Mr. President, I admit that I have some strange ideas about the economy and what is and is not good for it (Especially in light of our government’s determination to try to reduce our debt by increasing it) and I admit that I am not an economist and probably not even a good bookkeeper. So, maybe I’m missing something really important in all of this spendthrift syndrome that seems to have overtaken our entire government — starting with your office, sir.

I also readily admit that I have a hard time wrapping my mind around the concept of a Trillion Dollars. But recently, I read an analogy that I could understand. Basically, the writer said that if money was water and one dollar represented one drop of water, then an Olympic-sized swimming pool would represent a trillion dollars. Mr. President…that is a LOT of water! 

And, sir (Correct me, if I’m wrong), we  have something like THIRTEEN Olympic-sized swimming pools to fill …

So, I have to wonder, Mr. President, how does cutting income for the goverment (Reducing Social Security taxes and extending tax credits – even for only a year, or two ) help us create enough jobs and pay off the biggest National Debt we have ever faced.

Oh, one other thing I would like to know…how many jobs will your new(?) American Jobs Act actually create. I think we have lost, over the last four years or so, something like 15,000,000 jobs. If your proposal would asssure that a minimum of 5,000,000 jobs would be created, I think it might be worthwhile to consider. Otherwise, I think we will, economically, continue shooting craps with heavily loaded dice.

Unfortunately, Mr. President, in the same article about your speech, I read that ”the White House” offered no figures on the number of jobs that would be created by the American Jobs Act.

I know, sir, that it’s easy for the Rebuplicans to blame the Democrats for our financial problems – and vice-versa — but I say that  it doesn”t matter who’s to blame. What I want to know who’s gonna fix the problem — and how? 

In the meantime, Mr. President, I sit here and read all the stuff about why the economy is tanking and I have to wonder how you and all of our other ELEC TED officials can even sleep at night. I mean, most folk’s consciences would be giving them the night sweats. Oh, well that grist for other mills.

 So, Mr. President, I am looking forward to your help (helping me) understand what’s happening. By the way, sir, I don’t drink beer which would preclude meeting you on the White Hose lawn;  so I guess you”ll have to either email me your response or post your answer in my blog…

With all due respect, Mr. President, I remain

Scared witless. Not for me but for my kids, grandkids and great-grandkids … they’ll be paying off this deficit for the rest of their lives. You know trying to fill one swimming pool (one drop at a time) would take a really long time — but thirteen?

Now, Mr. President, I will point a finger because this is debt that you (In the sense that you’re the main man at this point) have created with no rational thought of where it will lead us…

On second thought maybe it’s not a good idea for you to try to explain all of this to me beccause I firmly believe that you can’t spend your way out of debt. Admittedly, that’s a concept I learned in school some 60-odd years ago, so maybe taking three away from two doesn’t give you a minus anymore.

Jake Jakubuwski (Pronounced: “JAKE-uh-bus-Key)