No politician has the will to resolve the problem

April 13, 2011|By STEVE ETTIEN

You can have extensive formal education from impressive sounding universities but none of that means a thing without experience.

Experience is an aspect of a person’s life that can only be achieved by living. Four years ago, I started a company and it has taught me a lot about business. This experience has separated theory from reality. Running a company takes common sense, determination, drive, and an unfailing belief in yourself. While it can be complex, there are four basic areas to consider, production, research and development (R&D), finance, and sales. Each of these areas is interdependent on the other and balancing each one is a challenge all companies face; a change in one area requires a tradeoff in another area. College business majors are taught this in their first year.

Here is another basic business rule; a company that does not make more money then it spends will go out of business. All businesses have to make money above their operational costs in order to stay in business so, no matter what status they claim (nonprofit or for-profit) all companies are in business to make a profit. Profit allows a company to expand the business, increase salaries, give bonuses, and to hire more people so operations can be expanded.

Controlling and predicting costs are important to companies. When companies have cost overruns they cannot just print more money, they have to cut costs.    

To a certain extent and under normal circumstances, costs are controllable and predictable. If one area of the company has excessive costs, you find ways to reduce them.

Keeping costs down is imperative for a company to stay in business. The company passes all costs to the customer by adding them into the final price of the product; this is the cost of doing business. Taxes are one cost that a company cannot control or reduce, and they significantly increase the price of everything you purchase.

When the government imposes and then increases taxes on a business, the business has to absorb this cost into its operations. A business has to make up this unnecessary cost by passing this expense through to you the consumer. The cost of the product goes up and you the customer pay the increased price. All costs end up in the final price. Remember, the company is there to make money, so, when people say, “Tax the “rich” corporations” in reality, people are just driving up the prices on themselves. Tax increases elevate costs, hurt businesses and reduce jobs or drives them overseas.    

Taxes affect everyone. The following is a partial list of taxes  that did not exist 100 years ago; some you pay directly and others indirectly: Accounts receivable tax, building permit tax, CDL license (tax), cigarette tax, corporate income tax (passed onto the buyer), pet license tax, excise taxes, federal income tax, federal unemployment tax (FUTA), fishing license tax, food license tax, fuel permit tax, gasoline tax (currently 37.2 cents per gallon for Pa.), gross receipts tax, hunting license tax, inheritance tax (the death tax), inventory tax, IRS interest charges IRS penalties (tax on top of tax), liquor tax, Johnstown Flood tax (part of Pa. liquor tax), luxury taxes, marriage license tax, medicare tax, personal property tax, property tax, real estate tax, service charge tax, Social Security tax, road usage tax, recreational vehicle tax, sales tax, school tax, state income tax, state unemployment tax (SUTA), telephone federal excise tax, telephone federal universal service fee tax, telephone federal, state and local surcharge taxes, telephone minimum usage surcharge tax, telephone recurring and nonrecurring charges tax, telephone state and local tax, telephone usage charge tax, utility taxes, vehicle license registration tax, vehicle sales tax, watercraft registration tax, well permit tax, and workers compensation tax, highway access tax, IRA rollover tax, sewer and water tax, and tire recycling fee (tax).      

Common sense, experience, and education are a great combination for running a business and for that matter the local, state, or federal governments. However, some things cannot be taught at an ivy league university and having real life experience is the greatest teacher. What most politicians at all levels of government deny and what many people fail to realize is that taxes are inversely proportional to the economy.

Here is an undeniable fact: High taxes, slow economy, low taxes, booming economy. Sadly, no politician has the political will to resolve a simple business problem that any business major college freshman could fix. Reduce expenses (taxes) and watch the business (economy) quickly grow and recover.      

Steve Ettien, the president of Diamondback Technology Solutions, is a retired Marine, and lives in Richland. He can be reached at or 814-244-8240.

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