Sunday, May 24, 2015

Get Big or Get Out

For the last forty years, in the "get big or get out" regime, to be the biggest, you needed to move monetary assets and their derivatives overseas to avoid taxation and regulation.  Walmart, Starbucks, Amazon, you name it, they all have plaques on walls of small office buildings as their "headquarters" overseas in such places as Ireland and Luxembourg.

You name that game is over too as "conservative governments" such as the UK begin talking taxing that money.  They would never do anything popular unless it was pointless.  GE is not a political party, so it did not bother pretending giving up their financial operations was some act of piety.  the just dumped a now losing proposition.  Now that we have bad credit hyperinflation, all those overseas offices are ineffectual as a way to play USA govt policy.

In this new reverse economy, small businesses need to manage their assets to keep them out of the hands of Uncle Sam.  In fact, this will just be a replay of 1945 - 1965, a golden era of small business in USA.

First, extend credit to your customers.  Now, in deflation, the longer they take to pay, the harder the currency in which you are paid.  Also, you can manage when you book the payment, and when it is taxable.  Next as federal taxes rise, you control how much your business spends. Instead of trying to squeeze every cent out as soon as possible, you keep the money in the business.

You can still see some of the buildings constructed for small businesses in the LA fashion district, mid-century, with very cool amenities.  People usually lived elsewhere, but the business was the lifestyle, and so the facilities were very agreeable.

When taxes get back up to 90%, rejoice.  Big biz will falter more, making for a vacuum into which small business can sell.    And instead of booking $1 million profit and give $900,000 to uncle same, you will remodel your warehouse factory for $950,000 and book $50,000 profit and give Uncle Sam $45,000, not $900,000.  We been her before.

Then as the economy bottoms out, all that land will be dirt cheap... and as we swing back into the loathesome capitalism, you'll get rich off of the real estate you bought cheap.  I've seen this all before.

Your only protection is to get your free-market business going.

Feel free to forward this by email to three of your friends.


Anonymous said...

Unless Uncle Sam stop considering your lifestyle a business expense then Uncle Sam will confiscate your lifestyle as well...