Tuesday, July 13, 2010

Taxburgers and Fee Fries

English: A cheeseburger.Image via Wikipedia
by T.H. Mannis

I'll serve the burgers in a moment. First, let me say that taxes are sadly misunderstood by Democrats and their liberal-progressive sycophants. It's ironic that the Party of Higher Taxes is so ignorant about the effects and unintended consequences of taxation. It's been proven over and over that net tax revenues rise when taxation levels are lowered.

It's counterintuitive, but makes perfect sense: Lower the taxes and suddenly more people can afford to buy more things. From the sales tax on a pack of gum, a washing machine or a condominium, part of the cost is taxes. Your real income is less because it, too, is taxed. When you raise taxes, people have less disposable income. They buy less or go to a neighboring city, county or state where the sales taxes are lower, or move there because the income tax is friendlier. This is simple, basic economics. Any kid running a lemonade understands that higher prices result in fewer sales.

Still don't get it? Okay, then, let's get to the hamburgers.

Let's say there are two hamburger joints on the same block. Right Burgers and Lefty Burgers are directly across the street from each other. They serve equally delicious burgers and fries, and their menus are identical. Both restaurants are clean and pleasant. Their prices are identical. Both, for example, charge $4.00 for a cheeseburger. Regular customers like both burger joints, and so each gets an equal share of the local lunch business. There's trouble on the horizon, however...

Tomboy's chili-cheeseburger with friesImage via Wikipedia
One day, the owner of Lefty Burgers decides that he can make more money if he raises the price of his burgers. He rewrites his menu with new pricing, and will now charge $5.00 for a cheeseburger. All of his other prices are raised, too. As he puts his new menu out, he smiles to himself in anticipation of higher revenues.

Lefty Burgers does make more money - temporarily. The owner is happy, but soon more and more people become aware of his higher burger price. Once-loyal customers stop coming in, realizing that the same burger is still available across the street, for less money, at Right Burgers. After two weeks, Lefty Burgers has lost all of its regular customers to Right Burgers. The only business he gets now is the occasional person passing through the neighborhood. Each burger joint used to sell about 200 cheeseburgers each per day.

Suddenly, however, Right Burgers is selling around 380 cheeseburgers per day and Lefty Burgers is selling about 20 per day. The result: Lefty Burgers is making less money, even though its prices are higher. Lefty Burgers lays of three of his six employees. Realizing that he's making less money than before, Lefty decides to raise his prices yet again. After all, shouldn't charging more result in higher revenues?

Right Burgers, fully aware of the situation, decides to put a big new sign out front advertising his newly lowered prices. A month later, Lefty Burgers lays off his remaining three employees and files for bankruptcy. Right Burgers hires all six former Lefty employees and makes plans to remodel and add a new patio.

This is how taxation works, too. If you can cross the county line or state line and get the same burger - or cigarettes, automobile, lawn mower, or anything else - for less money, you do. If you can get the same lifestyle in another county or state for less money, you will do. If you can hold your convention in another city, county or state for less money, you will. If you can open a business in another state for less money, you will. And so on.

Democrats, generally, just don't understand this simple reality. Geniuses like Illinois Governor Pat Quinn, and his fellow Democrats in the state legislature, look at the budgetary situation in the same way that Lefty Burgers looked at his and act in the same way.

It's no wonder, then, that more people are deciding to get their proverbial cheeseburgers in a state other than Illinois. Pat Quinn and Company are engaging in actions that will soon cause this state to file for bankruptcy unless action is taken. They show no willingness to take that action. You ask what that action is? Lower all taxes across the board in Illinois. They won't, however, because ideology and myth always trumps reality for Democrats, liberals and progressives. Don't ask them for fries with that cheeseburger. They'll charge you extra.

Copyright 2010 T.H.Mannis - All Rights Reserved
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