Passing the Cost to the Consumer from a Business Owner's Perspective

a reply to: AugustusMasonicus

Great post OP. I currently own a retail business and understand the dilemmas that we face every day. This is my second business I've owned within the last several years. We are expanding our operation to another adjoining storefront, and recently had to hire someone for bookkeeping. Of course now I have to raise prices on some things to afford it. Growth is a great thing, it provides jobs within the community. In most cases the rising cost of products is a balancing act in order to grow or stay afloat. It is a difficult thing to accomplish.

On a side note:
I've noticed something that there are a couple of different mindsets that operate companies. One is the person who loves what they do and strives for quality in every aspect, and also likes to make money (obviously). Then there is the other type, the person who is focused strictly on making money regardless of the product and consumer, or who they step one or screw over. It seems as if I deal with the second person (suppliers/manufacturers) more often. It makes me wonder how they continue to be more and more successful. I'm a firm believer in Karma.

Double post

originally posted by: MOMof3
Here is my where my reality is going to really frustrate you. I have never minded paying my taxes.

I also do not mind paying taxes, as long as they are reasonable. They currently are very far from reasonable.

I lived and worked in good times. From 1968 to 2007. I could get a job anywhere, health insurance was offered at every job, pay my bills, buy a home and a car, take a yearly vacation. Now, people are working just to make it to the next paycheck.

The counter to your anecdotal comments are my own. I have not had an issue getting jobs that provide all of those from 2008 until now.

a reply to: AugustusMasonicus

I thought you said you did not pay taxes, that the customer does.

"Death and taxes" in Canada:

Corporate Tax
Small Business Tax
Business Payroll Tax
Capital Tax
Capital Gains Tax
Dividend Tax
Employer Health Tax
Federal Income Tax
Federal Surcharge Tax (tax on tax)
Provincial Income Tax
Provincial Surcharge Tax (tax on tax)
International Tax
Goods and Services Tax
Provincial Sales Tax
Property Tax
School Property Tax
Property Transfer Tax
Inheritance Tax
Tax on Interest Earned
Excise Tax
Import Duty Tax
Road Tax
Fuel Tax
Utility Surcharge Tax
Air Travellers' Security Tax (post 9-11)
Environmental Levy Tax
Insurance Premium Tax
Transportation Tax
Vehicle Air Conditioning Tax
Logging Tax
Mineral Tax
Mineral Property Tax
After Death Tax (yes that's right, you still pays taxes on any income earned after you die - your trustee has to pay it on your behalf)


... There are a ton more, but my fingers are getting sore from all the typing.



Since 1961, the average Canadian family’s total tax bill has increased by roughly 1,700 %.

originally posted by: MOMof3
I thought you said you did not pay taxes, that the customer does.

What are you talking about? Where did I say I do not pay taxes?

a reply to: AugustusMasonicus

Seems to me like you suggested 'Lowering Taxes to Promote Economic Growth/Activity'.
The list and lists like it, mentioned by Sponge above, could be shortened greatly to achieve those ends.

a reply to: CranialSponge

Point made, ouch!
My eyes nearly bled just reading it!

originally posted by: MOMof3
a reply to: AugustusMasonicus

I thought you said you did not pay taxes, that the customer does.

Everyone is a customer, even bosses.

All producers are consumers in the end too.

originally posted by: muzzleflash
Seems to me like you suggested 'Lowering Taxes to Promote Economic Growth/Activity'.
The list and lists like it, mentioned by Sponge above, could be shortened greatly to achieve those ends.

Agreed. But this needs to be accompanied by a complimentary shrinking of our bloated government. Both Federal, State and Local.

originally posted by: muzzleflash
Everyone is a customer, even bosses.

All producers are consumers in the end too.

Exactly.

Delivering more 16" broadsides of truth.

a reply to: muzzleflash

a reply to: CranialSponge

Point made, ouch!
My eyes nearly bled just reading it!

Sorry, I get carried away with my "torch and pitchfork" anger issues when it comes to the subject of taxes.

a reply to: AugustusMasonicus

Plenty of us understand the points you've been trying to make in this thread.

At the end of the day we all have to pay the piper.


I've been both an employee and an employer in my many-a solar revolutions on this planet.

... as a public accountant, Controller, Comptroller, CFO, and now... business consultant (a nice way of saying I spend most of my days digging in the garden).


Small businesses get taxed up the wazoo... large corporations, not so much.

By the end of this year, more than half of all of Canada's revenues will now come from personal and small business taxes. It used to be that corporations paid the larger share. This is no longer the case.

I suspect it's the same story down there in the US too.

The little people are now financing the big people.

Welcome to the new economy.

originally posted by: AugustusMasonicus
Is that so? Joe works for me part time and gets $8 per hour. Cathy works full time and gets $12. The minimum wage goes to $10.10. Joe gets an effective 20% raise and makes much closer to Cathy than he did before. You think she will not ask for a raise?

I most likely would put it towards capital improvements or expansion.

Would she deserve more? If so, why wouldn't you have raised her pay beforehand? An increase in the minimum wage forces a minimum standard. You're forced to raise Joe's wage by law if you want to keep employing him. It'd be your choice to raise Cathy's or not. Isn't that how the lie goes - that people are only paid what their skills are worth? Or are you saying raising the minimum wage creates inflation?

As for a diminished government-imposed overhead, you would not necessarily create more jobs, correct? Would you agree then that lowering taxes doesn't mean creating jobs?

originally posted by: Greven
Would she deserve more? If so, why wouldn't you have raised her pay beforehand?

Why would I have had to raise her salary prior? The new dynamic this creates would, in my opinion, cause her and anyone else in her position, that of watching other people get a 20% raise just for being there and not necessarily meriting it, ask for at least the same.

You're forced to raise Joe's wage by law if you want to keep employing him. It'd be your choice to raise Cathy's or not. Isn't that how the lie goes - that people are only paid what their skills are worth? Or are you saying raising the minimum wage creates inflation?

It does cause inflation and unemployment as evidenced by past trends. Why should someone who I feels warrant a proportionally higher salary based on their experience and/or performance have to watch that be eroded because others feel the person getting the raise somehow 'deserves' it? Pay should be based on merit, not perception.

As for a diminished government-imposed overhead, you would not necessarily create more jobs, correct? Would you agree then that lowering taxes doesn't mean creating jobs?

I think the lowering of taxes does create jobs. Business owners are more apt to use revenue for improvements or expansion and the consumer obviously has more available buying power due to the hidden tax being removed.

originally posted by: AugustusMasonicus
Why would I have had to raise her salary prior? The new dynamic this creates would, in my opinion, cause her and anyone else in her position, that of watching other people get a 20% raise just for being there and not necessarily meriting it, ask for at least the same.

It does cause inflation and unemployment as evidenced by past trends. Why should someone who I feels warrant a proportionally higher salary based on their experience and/or performance have to watch that be eroded because others feel the person getting the raise somehow 'deserves' it? Pay should be based on merit, not perception.

I think the lowering of taxes does create jobs. Business owners are more apt to use revenue for improvements or expansion and the consumer obviously has more available buying power due to the hidden tax being removed.

You write, immediately afterwards, that pay should be based on merit. Assuming you had put this into practice, you would not raise Cathy's wages, because she would already be paid wages based on her merits. Yet here, you claim a dynamic environment is at least partially responsible for wages. Interesting, no? Surely other people have gotten raises while their coworkers did not.

The historic high minimum wage was in 1968, at $1.60/hr. This is equivalent to $10.90/hr in 2014. Clearly, minimum wage cannot be the only driver of inflation. Is it a partial driver - perhaps, but how strong of one? You know how business works - you staff for how much you need. If the minimum wage went up and you hired people at minimum wage, you wouldn't cut staff - you couldn't. You'd raise prices - you've said as much. Of course, if you raise prices too much, you'll lose business and potentially even shut down. So, the only scenario where raising the minimum wage kills jobs is when it causes businesses to close.

You said it yourself, though - you wouldn't necessarily hire more employees. You might if you expand business as a result of diminished taxes/minimum wage. Or you might make capital improvements. Perhaps you would do both. If you did not hire more staff, lowering taxes did not necessarily lead to more hiring. Correct?

originally posted by: Greven
You write, immediately afterwards, that pay should be based on merit.

Yes, it should, but the artificially induced pay raise for Joe from $8 to $10.10 is not based on merit. This creates a dynamic of where the unmerited get an increase while the merited do not. If I were Cathy I would ask for a raise too.

The historic high minimum wage was in 1968, at $1.60/hr. This is equivalent to $10.90/hr in 2014. Clearly, minimum wage cannot be the only driver of inflation. Is it a partial driver - perhaps, but how strong of one?

I would not classify it as the main driver of inflation, our corpulent government is the main cause of inflation.

You know how business works - you staff for how much you need. If the minimum wage went up and you hired people at minimum wage, you wouldn't cut staff - you couldn't. You'd raise prices - you've said as much. Of course, if you raise prices too much, you'll lose business and potentially even shut down. So, the only scenario where raising the minimum wage kills jobs is when it causes businesses to close.

Which is unfair to the businesses that would close, both to the owners and the employees. They obviously had a real working arrangement that both were satisfied with. Why alter that based on perception?

You said it yourself, though - you wouldn't necessarily hire more employees. You might if you expand business as a result of diminished taxes/minimum wage. Or you might make capital improvements. Perhaps you would do both. If you did not hire more staff, lowering taxes did not necessarily lead to more hiring. Correct?

They both lead to more jobs, both directly and indirectly. If I expand I hire more people. If I affect capital improvements I need to engage and pay the appropriate persons or businesses to complete these projects and/or purchase the materials to do so myself. Either way the monies saved on taxes circulate back into the economy.

originally posted by: Greven

Would she deserve more? If so, why wouldn't you have raised her pay beforehand? An increase in the minimum wage forces a minimum standard.

Got love it when people champion a forced low standard.


So, as the low standard is forced higher, the middle to high standard will move up, thus creating an eventual wash.

Instead of someone earning the increase in pay, you want people to just have an arbitrary number assigned for what they should be paid.

originally posted by: Greven
The historic high minimum wage was in 1968, at $1.60/hr. This is equivalent to $10.90/hr in 2014. Clearly, minimum wage cannot be the only driver of inflation. Is it a partial driver - perhaps, but how strong of one? You know how business works - you staff for how much you need. If the minimum wage went up and you hired people at minimum wage, you wouldn't cut staff - you couldn't. You'd raise prices - you've said as much. Of course, if you raise prices too much, you'll lose business and potentially even shut down. So, the only scenario where raising the minimum wage kills jobs is when it causes businesses to close.

It's only 10.94 going by CPI. Going by actual purchasing power that $1.60 is closer to $21.15/hour (about 44k/year).

a reply to: muzzleflash

But this about passing the costs on to consumers. I can't pass my expenses or taxes off to someone else.

a reply to: AugustusMasonicus

But is a buisness that requires paying adults who work 40 hours a week less then it takes for an adult to support just themselves to be profitable ,truly profitable. Slavery is profitable and I'm not saying it's the same thing. But slavery is morally horrible so we don't do that. I don't think paying people less then it cost to survive for full time work is morally horrible but definatly morally questionable at best.