Saturday, November 07, 2009

Neal Boortz and Carrington Automotive Enterprises

I've never heard talker Neal Boortz, but an interesting, not-credited story about the Carrington Automotive Enterprises employees' meeting turned up in my mailbox today. I always research these things if they have a smidgen of truth, and find that if they are travelling at the speed of light in blogdom, there's a good chance the attribution is incorrect or fictional. This one was fictional, but it came from Boortz' column where he confirms it is a story or parable told to point out a truth. Here it is, Just a little company get together
    "Carrington Automotive Enterprises is what we call a Sub-S - a Subchapter S corporation. The name comes from a particular part of our tax code. Sub-S status means that the income from all 12 of our stores is reported on my personal tax return. Businesses that report their income on the owner's personal tax return are referred to as "small businesses." So, you see now that this $534,000 is really the total taxable income - the total combined profit from all 12 of our stores. That works out to an average of a bit over $44,000 per store.

    Why did I feel it important for you to see my actual 2008 tax return? Well, there's a lot of rhetoric being thrown around today about taxes, small businesses and rich people. To the people in charge in Washington right now I'm a wealthy American making over a half-million dollars a year. Most Americans would agree: I'm just another rich guy; after all ... I had over a half-million in income last year, right? In this room we know that the reality is that I'm a small business owner who runs 12 retail establishments and employs 187 people. Now here's something that shouldn't surprise you, but it will: Just under 100 percent ... make that 99.7 percent of all employers in this country are small businesses, just like ours. Every one of these businesses reports their income on a personal income tax return. You need to understand that small businesses like ours are responsible for about 80 percent of all private sector jobs in this country, and about 70 percent of all jobs that have been created over the past year. You also need to know that when you hear some politician talking about rich people who earn over $200,000 or $500,000 a year, they're talking about the people who create the jobs." . . .

    "Right now the Democrats are pushing a nationalized health care plan that, depending on who's doing the talking, will add anywhere from another two percent to an additional 4.6 percent to my taxes. If I add a few more stores, which I would like to do, and if the economy improves, my taxable income ... our business income ... could go over one million dollars! If that happens the Democrats have yet another tax waiting, another five percent plus! I've really lost track of all of the new government programs the Democrats and President Obama are proposing that they claim they will be able to finance with new taxes on what they call "wealthy Americans."

    And while we're talking about health care, let me explain something else to you. I understand that possibly your biggest complaint with our company is that we don't provide you with health insurance. That is because as your employer I believe that it is my responsibility to provide you with a safe workplace and a fair wage and to do all that I can to preserve and grow this company that provides us all with income. I no more have a responsibility to provide you with health insurance than I do with life, auto or homeowner's insurance. As you know, I have periodically invited agents for health insurance companies here to provide you with information on private health insurance plans. The Democrats are proposing to levy yet another tax against Carrington in the amount of 8 percent of my payroll as a penalty for not providing you with health insurance. You should know that if they do this I will be reducing every person's salary or hourly wage by that same 8 percent. . . "

    "Let's be clear about this ... crystal clear. Any federal tax increase on me is going to cost you money, not me. Any new taxes on Carrington Automotive will be new taxes that you, or the people I don't hire to staff the new stores I won't be building, will be paying. Do you understand what I'm telling you? You've heard about things rolling downhill, right? Fine .. then you need to know that taxes, like that other stuff, roll downhill. . . "

    "Most Americans don't realize that when the Democrats talk about raising taxes on people making more than $250 thousand a year, they're talking about raising taxes on small businesses. The U.S. Treasury Department says that six out of every ten individuals in this country with incomes of more than $280,000 are actually small business owners. About one-half of the income in this country that would be subject to these increased taxes is from small businesses like ours. Depending on how many of these wonderful new taxes the Democrats manage to pass, this company could see its tax burden increase by as much as $60,000. Perhaps more."
Read the whole thing--truth is stranger than fiction, and in this case, fiction is truth.

HT Bill L.

I looked at Boortz's bio, and in addition to being a libertarian and a lawyer, he says this as his creds for knowing something about small business: "During his 40 years in talk radio Neal managed to find other things to do to supplement his meager talk radio income. Prior to practicing law Neal could be found working as a jewelry or carpet buyer, selling life and casualty insurance, loading trucks, slinging mail at the post office, working in an employment office, writing speeches for the Governor of Georgia and auditing the books overnight at a sleazy motel. Neal was 47 years old before he ever had less than two jobs. At his peak he had six."

26 comments:

Anonymous said...

There was a little kid in a wheelchair who wanted to play baseball. But the mayor wouldn't let him, because the mayor liked Obama, which made him bad. But another kid, whose dad was a small business owner, talked the other kids into letting the wheelchair kid play. He hit the ball, but it was a foul ball. But then a kitten nudged the ball fair, and it was a home run for the kid in the wheelchair! Everyone cried and laughed at the same time! And the kitten's name was "Second Amendment"! It proves that Barack Obama is wrong!

If conservatives in this country want to provide a legitimate alternative to the Democratic program, they need to do better than rely on silly Internet fables, whether they be "Carrington" or "Home Run Kitten".

Anonymous said...

Basically illustrating what proposed taxes and a proposed healthcare bill can effect a business that EMPLOYS people is not folly. It may be a fictional story but there are truths in the story. Spending tax dollars that we don't have on another idiotic liberal idea is silly. Look at the liberal track record, welfare (failure that has cost this country billions of dollars), medicare (failure, riddled with fraud and corruption), medicade (failure, riddled with fraud and corruption) social security (failure, if an american company took money out of their employees retirement fund to pay for expenditures of the company u sure as hell be the government would be all over them.) Try READING THE CONSTITUTION and see how many of these programs are even legal according to the constitution. Don't give me the interstate commerce clause BS either.

Anonymous said...

Yes, like the liberal idiots running Washington would ever, ever allow a GOP idea to make its way through. Good try!

Richard said...

To the first commentor (anonymous)in this blog, here is a real story for you. This is identical to what I was faced with back in the Clinton years as a communications contractor. I started a Sub-S corporation in New Orleans back in 1989. I started this company on a wing, a prayer, $1500 and one solid contract. I ultimately employed 26 technicians and two
engineers for almost 3 years. Just like Carrington Automotive I didn't have the profit margins of larger corporations to be able to offer amenities such as a company contributed health care package either. But just like him I brought in a independent group healthcare insurance provider for those that were interested. Then the largest tax increase in American history for that time was levied by the Clinton Administration in 1993 and it literally sunk my boat. I couldn’t afford to continue as a small business. I had to ultimately close my doors, let everyone go and fold $30,000 dollars in the hole after paying my vendors and creditors off. Now look... I'm sure you’re real proud of all those years you spent getting whatever education you may have obtained, but you really should have included a class in economics, too. From the breathtaking level of ignorance you have displayed writing your response, you have absolutely demonstrated you have NO IDEA what it is to make payroll for 28 people and try to grow a business out of what meager profits you may eech out. And you are obviously grossly under qualified to even attempt to offer a journalistic comment on the matter. You remind me of a line out of the show "King
of the Hill"... "Just as soon as I think you've said the stupidest thing ever... you just keep on talking". You really should keep to subject matter that you may have a clue to comment on. This certainly isn't one of them! It is called Sub-S look it up! Or better yet, start one and try to empoly someone. It will change your mind in a hurry.

Norma said...

Thanks Richard. You deserve some prime real estate and I'll probably move this to "guest blogger" territory.

Drew said...

As (formerly) self-employed person who depending on the year worked somewhere between 20 hours a week (deep recession, and I was just starting out) and 110 hours (last couple of years), I feel I've got just as much cred as the next person when it comes to talking about taxes, making ends meet, and health care. As a student now, I've been studying a lot when it comes to health care policy. So, for that matter, have a lot of other people. If solving the problem were easy it would have been done long ago.
The truth is: no health care comes cheap. Whether you're in France (which has the world's best health care system -- with a mix of public and private providers) or here in the States (which has the 40th: we pay more and get less) it all costs money.
Most of the small business owners I know would *love* to be able to provide health care to their employers. Small problem: health insurance rates have been rising so much faster than their own profits (on average 2.5% over increases in GDP per year). And, you can't put the blame on malpractice - the TOTAL premiums for malpractice represent 30 billion dollars tops (out of this, then, malpractice awards should be paid - right?). The health care spending in the U.S. is more than 2 trillion dollars. Take 30B and divide it by 2T and you get something like .6 %. So malpractice is really *not* a problem, capping it will get you almost nothing in return.
One of the biggest problems from an efficiency point of view, is paperwork: as a cost of doing business, both insurance companies and physicians are spending an increasing amount of their dollar on filing paperwork - that part's been going up about 15% per year for the past couple of years.

one thing all of these health care bills will do is streamline the paperwork aspect. (that's good).

Another thing they should do is add some transparency to the process: also good.

These items may not reduce our taxes, but they should reduce the cost of doing business on the insurance end which should, in true trickle down fashion, result in lower premiums - especially if you build in the transparency so that you can see exactly how much each insurance company pays out based on the premiums collected.

A final note: the interstate commerce clause is not baloney. It's part of our Constitution and has become increasingly important as our economy has moved from an agrarian state-by state economy in the 18th century when local goods were consumed locally to ... well ... what we have now, with people based in one state and offering services in another. If you live in North Carolina as I do, and do business with a bank based in Delaware do you really want to have to play by Delaware's rules if you have a dispute with the Delaware corp?

As applied to insurance companies: knowledge is power.

- drew

Anonymous said...

Creating a false reality to support a preconceived narrative, to advance a political point of view is never a good idea.
It is dishonest and discredits your argument when it is exposed.
If you like parables, may I suggest Humpty Dumpty !

Anonymous said...

"Creating a false reality to support a preconceived narrative, to advance a political point of view is never a good idea."

This sounds exactly like what Obama did when he was campaigning. How many promises has he kept?

Anonymous said...

I am a small business owner. I have read the story about Carrington Automotive and it rings true. The one thing that continues to amaze me is that liberals are only tolerant and compassionate when it comes to their ideas. When questioned or debated they become defensive, caustic and embittered. They attack the person and don't attempt to debate the idea. Their seems to be a disconnect between their position and their actions.

Drew said...

Just curious...to the people who have been running small businesses... such as the last poster: what have your experiences been in terms of providing health insurance (would you have provided it if you could, did you opt for the 'carrington' solution of bringing in someone to sell individual policies, did you start off offering insurance as a benefit and then drop it...)

Do your actions reflect the market necessity or an underlying personal philosophy?

thx.

Drew.

Auto Professionals said...

They have started doing this in Australia as well, someone has to pick up the shortfall and it certainly isn't going to be the Government.

Anonymous said...

I have read the story about Carrington Automotive and it rings true. The one thing that continues to amaze me is that liberals are only tolerant and compassionate when it comes to their ideas. When questioned or debated they become defensive, caustic and embittered. They attack the person and don't attempt to debate the idea. Their seems to be a disconnect between their position and their actions.

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Norma said...

Actually, I'm not amazed. I used to be a liberal--know the process and disconnect intimately. Most liberals I know have a big heart, and an open mind--for everything except seeing the unintended consequences of many of their great ideas. Often they mean well, but have moved on to the next grandiose idea before they ever examine the failures of the last one.

Unknown said...

Yes, like the liberal idiots running Washington would ever, ever allow a GOP idea to make its way through. Good try!

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I have read the story about Carrington Automotive and it rings true. The one thing that continues to amaze me is that liberals are only tolerant and compassionate when it comes to their ideas. When questioned or debated they become defensive, caustic and embittered. They attack the person and don't attempt to debate the idea. Their seems to be a disconnect between their position and their actions.

Drew said...

as an unabashed liberal, I take issue with the liberal bashing. I also cannot tell you the number of right-wing smear-e-mails I receive from my father in-law, a true fiscal conservative (he forwards them to me in the hopes of educating me about what the other side says, and perhaps because he knows it irritates me). In any case, these screeds do nothing to further the debate and serve only to misinform and enrage (Can you say 'death panels'? What about Pelosi arguing that we need to tax the rich because there are too many unemployed illegal aliens who need help? My all time favorite is about Obama's luxury prison built in Cook county! --- and if you think any of these are true, please do a bit of research). I urge you all to take a step back before name calling.

Have a good weekend everyone.

Norma said...

Drew, I've looked through the comments (quickly) and don't see name calling, although I do see attribution. If your father-in-law sends you viral e-mails, you need to talk to him, not complain to me. But remember, honoring your parents, even if you don't agree with them, is a Biblical commandment, even for liberals. And Nancy Pelosi really did say we'd need to wait until it was enacted to find out what was in the health care bill.

Drew said...

To me, words like "liberal idiots" or statements like "liberals are only tolerant and compassionate when it comes to their ideas. When questioned or debated they become defensive, caustic and embittered. They attack the person and don't attempt to debate the idea." --- count as name calling and curiously, get away from the point that the person who wrote was trying to get to which is this: debating the ideas. i brought up the misleading e-mails more to point out that there is a whole group of people out there who get a kick out of stirring things up, and getting away from the real meat of the matter. For the record: my F-i-l is a wonderful man who has put a lot of people to work in his lifetime and done a lot of good, what we usually come up against is differences about competing goods, i.e. finding 2 things that are of value, and then having to choose one over the other.

The debate over how best to pay for health care is a very good example of this process. That's why I am so interested in the experiences of other people who had/have built businesses ...

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Anonymous said...

I'm a little late to the table. I apologize. But, for some reason, I archived both Leo Carrington's screed against the horrors of our socialistic tax/financial system (there is no Carrington's Automotive) and the fabulous, biting, on-point response by...well, it was quite on point, but unsigned. Anyway, the rebuff shows what a fraud these right-wing propagandists are. They send out into the blogosphere false claims, innuendo, lies, and cheap shots, wrap it in the flag of no-tax patriotism and hope that Rush Limbaugh rails against The Man all day long. Is there any hope for a reasonable America?

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