3 Things 10-11
10/11/2021 Although MAS is a financial services company, not everything published herein will be about numbers or investing. But no matter the topic, we hope for three things: 1) That you find the time you spend engaged worthwhile. 2) That you’ll reach out to us for help in any of our areas of expertise if something we discuss creates an urging in you to do so. 3) That you’ll share this with somebody new each time you read it. Thing One After The Shutdown Congress agreed late last week to temporary measures to avoid a government shutdown. They only kicked the can to December though so there could still be a disruption in the operations of the federal government if legislation isn’t passed allowing the debt limit to be raised. With that in mind, we share the following information from Investopedia about what has happened to the market following past government shutdowns. As it turns out, things haven’t been that bad. Of course, that doesn’t mean we should hope for a shutdown or that there’s a guarantee things will turn out for the best if we have one in December. Where we are now, after all, is not where we were. Still, it’s interesting. See the excerpt and the table below:
Thing Two TCPAOS “Virtually the entire global economy has decided to end the race to the bottom on corporate taxation. Rather than competing on our ability to offer low corporate rates, America will now compete on the skills of our workers and our capacity to innovate, which is a race we can win.” The above statement was made by Janet Yellen, the current Secretary of the Treasury and former Chairwoman of the Federal Reserve. That makes the deceptions packed into the statement all the more concerning. Deception number one. The statement makes it sound like there was some kind of global referendum on this initiative. There wasn’t. Neither the citizens of the world nor the world’s corporations cast a vote to decide on a minimum level tax. The world’s “treasury secretarys”, at the urging of ours, all signed a tax pact which the US delegation hopes will lead to higher and stable corporate tax rates worldwide. Deception number two. The statement suggests that the basis for competition today is solely taxes. We are supposed to believe that America isn’t winning and can’t win playing that game. And we are supposed to believe that innovation and workmanship are not currently a part of the competitive equation when they have been for a long time. In fact, those things are the price of admission in a global economy and the participants all know that. But what is it that many of us do not know or seem to forget from time to time? Well, that brings us to the final deception. Deception number three. In America, for sure, but in other countries with a propensity toward heavy-handed governance as well, this is a license to raise taxes on corporations with less fear that those corporations will make decisions to move their operations elsewhere. This is not a win for anybody but those elites who might take pleasure in getting to decide what to spend the additional tax revenue on. In fact, it’s a loss for the rest of us. Please allow me an extra few sentences to tell a brief story to help make the point. In the first company I worked for, the CEO, if he happened by an empty desk where the phone was ringing, would answer quickly and get someone – anyone - in the vicinity to help whoever was on the other end. He would later explain to us that he did that because it might have been a customer on the other end of the phone. He boiled his behavior down to an acronym: TCPAOS – The Customer Pays All Our Salaries. And he spent all his time making sure we all understood that idea and behaved in a manner consistent with our understanding. In this time of heightened partisanship, political bickering, and false solution pedaling, we would all do well to remind ourselves and those around us that TCPATATI – The Consumer Pays All Taxes And Tax Increases.
Thing Three Just A Thought “ “You can’t tax business. Business doesn’t pay taxes. It collects taxes.” ― Ronald Reagan