78-11-A4
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Economics I[edit]
Transcript[edit]We the people need more common-sense economics and a lot less demagoguery, if we're to make or support decisions affecting our welfare. I'll be right back. Early in July the leadership of the California AFL-CIO met in convention and made a few decisions that will affect the livelihood of the workers they represent. These leaders of organized labor were more than a little upset about the passage of proposition 13. Meaning no disrespect, I feel compelled to say the remedies they propose reveal that they believe too many of the economic fairy tales widespread in our land today. In the first place, they must be out of step with their own rank-and-file members, because those members voted for proposition 13 in large and enthusiastic numbers. But where the economic fairy tale shows up is in the conventions decision to battle for reimposing the property tax proposition 13 cancelled back on business and industry. They said it was a 3 and 1/2 billion dollar break for business and therefore, by their reasoning, bad for the individual citizen. If they have their way, that three and a half billion dollars will end up being paid by the very individual citizens they claim they want to help. Whether it be corporation or corner store, taxes are part of business costs, and must be recovered in the price of the product, meaning that all of us, as consumers, pay those taxes. Now, let's take the case of a corner grocer at a nice middle-class neighborhood. The storekeeper rents the building. Everyone who shops there can understand that he must charge enough to cover the wholesale cost of the things he sells, wages to helpers, and his rent, plus a fair return for himself, so he can make a living. But now, supposing he buys the building. There's no more rent, but there's interest on the mortgage and property tax instead of rent. Obviously, he can't stay in business if those costs can't be recovered in the price of the things he sells. And, just like his wage-earning customers, many of them union members, he has to make enough gross income to pay his living costs after he's paid his income tax. What this all adds up to is that government can't tax things like businesses or corporations. It can only tax people. When it says it's going to make business pay it is really saying it's going to make business help it collect taxes. Into our corner store comes a regular customer to pick up a loaf of bread on his way home. We've already covered the fact that the grocer's markup includes a share of the property tax on the store, but the truth is the wholesale price the storekeeper paid to the bakery included its taxes and more than a hundred and fifty others going all the way back to the farmer who raised the wheat. If he can't get a price for his wheat that'll cover the real estate tax in his farm, he can't stay in business either. If the trucker who hauled the wheat can't charge enough to cover his license fees and gasoline tax, he can't stay in business. Union leaders will serve the men and women they represent a lot better if they'll drop the demagoguery and take a simple course in economics. This is Ronald Reagan. Thanks for listening. |
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