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RANT Laid off will get $2,400 per month on top of 100% of wages - WTF?

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Kak

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I'd get rid of tax write offs for corporations
This just shows a complete lack of economic literacy.

Let's take a thin margin business like a supermarket or Walmart for instance. Most seem to think that the average margins are less than 5% at these companies.

For every billion dollars that company sells they have 950 million dollars worth of expenses (AKA write offs)

If you made them pay 10 percent taxes with no write offs they would be paying $100 million in tax on that $50 million in income. A 200% tax on actual income.

You should know more about the world if you are going to act like you do. Equal is equal access to the marketplace, not equal results thereafter.
 

Kak

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then as a tax paying citizen - you, along with every other tax paying citizen would have the option to vote for this legislation.
Too bad it isn't just the "taxpaying" citizens that are doing the voting.

Just because the majority of people vote for it doesn't make it not theft.

"Enough" of the people in Germany supported a genocidal psychopath once upon a time too. The holocaust was legal. It doesn't make it not murder.

31582
 

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biophase

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Read it. $600 per week ONTOP of full unemployment pay
Exactly. What is your definition of full unemployment pay.

19789999.jpg


Your weekly Unemployment Insurance Benefit Amount (WBA) is calculated on wages you earned from employers who paid Unemployment Tax to the State of Arizona. The WBA is 4% of the wages paid in the highest quarter of your base period. The current maximum WBA is $240.
 

JScott

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The reason the government does their best to bail out corporations is because the corporations are part of the national infrastructure and they provide jobs to thousands of people. Imagine a company like Boeing they have been struggling for years now for making faulty airplanes. Obviously there's a flaw somewhere that's causing this airplanes to fail so much. It's easier to find the flaw than to let the company sink. If you let Boeing go down many people will be laid off, it has to go through the legal system to change ownership and whatnot.
But, that's not the way capitalism works...

In a capitalist structure, if Boeing can't figure out how to stay solvent, the government lets them fail, the company sells off its assets to recoup as much as it can for shareholders, another person/company comes in and pays market value for those assets (potentially pennies on the dollar) and does their best to structure the company in a way that it *can* be profitable.

If they fail, that process repeats. And it continues to repeat until someone has the ability to run the company profitably, or until everyone realizes that the company can't be run profitably, and no one is willing to try any longer. Which will typically only happen if the demand for the company's product doesn't warrant the cost designing, manufacturing and selling their product/service.

Sadly, we don't have capitalism in the US -- we have crony capitalism. That's a structure where if a company fails, but has the ability to benefit those in government who can bail it out, it will be bailed out. And it will continue to be bailed out for as long as the company can provide personal value to those bailing it out.
 
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kelvinfernandezm

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Yep. Equal society = better societies.

Just look at Scandinavian nations like Norway, Sweden and Finland and compare it to poop holes likes South Africa, Mexico and America. No offence.
Wh
Yep. Equal society = better societies.

Just look at Scandinavian nations like Norway, Sweden and Finland and compare it to poop holes likes South Africa, Mexico and America. No offence.
Can you send me cash on PayPal please I really need it.
 

JScott

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This just shows a complete lack of economic literacy.

Let's take a thin margin business like a supermarket or Walmart for instance. Most seem to think that the average margins are less than 5% at these companies.

For every billion dollars that company sells they have 950 million dollars worth of expenses (AKA write offs)

If you made them pay 10 percent taxes with no write offs they would be paying $100 million in tax on that $50 million in income. A 200% tax on actual income.

You should know more about the world if you are going to act like you do. Equal is equal access to the marketplace, not equal results thereafter.
That's actually not right either...

For every $1B that Walmart makes, about $760M is COGS. (Gross margins for Walmart are right about 24%.)

Of the remaining, $260M in gross profit, about $197M is expenses, and $63M is EBITDA. (Operating margins for Walmart are about 6.3%.)

So, assuming no expense write-offs and a 10% tax on gross profits, Walmart would pay about $26M in taxes, which would be about 41% of EBITDA.

That's a bit higher than the corporate tax rate prior to the 2017 Jobs Act (which was 35%), and about double what it is today, with the Jobs Act in place (now at 21%).
 

James Klymus

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Free k-9 education, free college, free vocational/technical studies, free health care or HEAVILY subsidized health care.
I don't mean that people should get free money for doing nothing.
So we should give everyone free everything but money! But not money though! Thats where we draw the line.

Also:

Free tax payer funded k-9 education, free tax payer funded college, free tax payer funded vocational/technical studies, free tax payer funded health care or HEAVILY subsidized health care.
There fixed it for ya.

I really cant tell if this is a troll, but if it's not, I suggest you do your research on these topics. Because it sounds cute when politicians say it and every one cheers in the crowd, but 5 minutes of critical thought would lead you to the conclusion that money and funding has to come from somewhere, and the government isn't some benevolent entity that is selfless, they steal collect that money from you in the form of taxes to fund all this "free" shit.

The government doesn't give a F*ck about you. The government doesn't have your best interests in mind. Politicians only have their own interests in mind.


You can ignore the parts about corona virus, but the message about the Chinese vs the US healthcare system is still relevant.
 

Kak

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That's actually not right either...

For every $1B that Walmart makes, about $760M is COGS. (Gross margins for Walmart are right about 24%.)

Of the remaining, $260M in gross profit, about $197M is expenses, and $63M is EBITDA. (Operating margins for Walmart are about 6.3%.)

So, assuming no expense write-offs and a 10% tax on gross profits, Walmart would pay about $26M in taxes, which would be about 41% of EBITDA.

That's a bit higher than the corporate tax rate prior to the 2017 Jobs Act (which was 35%), and about double what it is today, with the Jobs Act in place (now at 21%).
Oh my god dude, it was simplified for the sake of argument. Why do you have to go around nitpicking everyone and pissing in everyone’s cheerios?

COGS are an expense that is typically considered by basically everyone ever as “written off.”

I didn’t consider annual inventory turnover or fixed expenses like labor and property either... I could have, but then my post would have looked like yours and it wouldn’t have clearly explained the point I was trying to make. Which WAS, if you eliminate being able to write off expenses, companies are screwed.

I found your new avatar:
3BC9315F-58A5-444F-AF4D-7F88739C3B16.png
 
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JScott

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Oh my god dude, it was simplified for the sake of argument. Why do you have to go around nitpicking everyone and pissing in everyone’s cheerios?
You included calculations in your post. Your calculations were off by literally an order of magnitude, leading you to a conclusion that was patently false:

A 200% tax on actual income.
If your conclusion were correct, a business literally could not survive under the model proposed. They'd be paying more in taxes than they earned, which doesn't make sense.

But, had you done the calculations correctly, you would have found that not only could the business survive, but that it would be paying taxes at about the same rate as three years ago!

Sorry (not sorry), but that's not nitpicking. That's your entire premise not being supported because you did the math wrong.

(And btw, I actually agree with you that the model proposed by the OP is horrible, but I don't agree with you based on your math. There are other reasons why I don't believe that model would work well.)


I didn’t consider annual inventory turnover or fixed expenses like labor and property. I could have, but then my post would have looked like yours and it wouldn’t have clearly explained the point I was trying to make.
Well, your ignoring literally 76% of the the businesses costs led you to making a point that was patently wrong -- you came to the conclusion that the business was going to pay more than it earned in taxes. Which, if true, was a refutation of the OP.

But, it turns out that the amount of taxes wasn't only less than it earned, but about the same as the business was paying a couple years ago. Which, in itself, is not a refutation of the OP.

In other words, the point you were making simply wasn't true.
 
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xmartel

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Canada, eh!
Businesses try to write everything they can off.... spend $50k taking clients out to fancy dinner at upscale restaurants or the super-bowl.... They find a way to write that off. Just things like that.

I'd basically get rid of all the tax loopholes.... just pay your goddamn 10% ... no write offs on ANYTHING.
What do you mean by anything. I mean ANYTHING and EVERYTHING that corporations can write off today to lower their tax liabilities.


Increase ? From what 0? Most of these giant corporations find creative ways to pay almost NOTHING in corporation tax. I think a 10% tax on all profits (perhaps turnover) is reasonable.

Also private people should not be able to write anything off either (i.e no tax deductibles for paying your mortgage or donating something to a charity).

It might not have such a big impact as you think... things might just cost you 20% more... BUT you don't need to worry about paying $400/month on health care plans, or having to go into debt to send your kids to college. We'd all be better off.

This:

View: https://www.youtube.com/watch?v=j0Z_fODM5gE


Beats this:

View: https://www.youtube.com/watch?v=DCCIY0JVeUQ


View: https://www.youtube.com/watch?v=KHquXGiTRTU


Again, I direct you guys to scandinavian nations - that somehow manage to give FREE health care, free dental, free maternity leave, free k-9 and free college/university/technical college/vocational schooling to its citizens WITHOUT it turning into Venezuela as some of you fear.

In fact many of those nations are doing much better, are way more equal and the people are much happier than in nations where those things don't exists - despite people & corporations having to pay a little bit more in taxes.


False dichotomy. I never said anything about 80% in taxes. I said 10-15% taxes - without write offs / loopholes for corporations or private citizens.

Also, if you are the government and you believe that will work - then you have the right to implement that if your voters want it, but if the system doesn't work then you'll be forced to change things because the voters will demand it or the tax revenues will demand it.

Point is, there's a way to make it work (i.e Scandinavian nations - not that they are perfect). But let's not pretend that America's system is perfect and it can't be improved upon. I'm trying to find ways to improve on it and I was just sharing some of my suggestions based on what I know. Nothing less, nothing more.



I guess I'm a bit of a dreamer.

View: https://www.youtube.com/watch?v=9-ZB2O8azI8
The easy solution to your concerns about what companies can write off and what they can't, is to just not have a corporate income tax at all. That's right, what socialists consider such an evil idea. A 0% tax rate.

What most people fail to understand, including yourself, is that corporations already don't pay any tax. Individuals pay tax. Tax is an expense that is passed along to the consumer. If you eliminate the corporate tax, that's an extra 20% (not the real number, just for example, depends on your country) you have to work with.

We live in a competitive economy. If I suddenly have an extra 20%, I'm going to lower the cost of my good or service, or increase worker pay to attract better talent, or spend more on R&D to improve my good or service, or invent new products or or or. All benefiting the consumer, in order to beat my competition.

Corporate tax income would obviously drop to nothing, but sales tax and individual income tax income for the government would go up.

This also doesn't even touch on the massive savings in tax compliance costs that companies would experience that they can also now invest in reduced good or service pricing, better products, higher wages, etc.

The reason socialists are so against this idea is because it'll leave more money in the hands of corporations, which they think will hoard the money. They ignore the fact that, as I said above, we live in a competitive landscape. A company that hoards the extra cash and doesn't invest it, is going to lose to the companies that do.

But let's just say that the do hoard the money, and give big bonuses to their owners and executives, who also hoard this money, and when they do spend it, only spend it on yachts and Lambo's. This is still a good thing for the economy.

You have to remember that the people building those yachts and Lambo's are regular employed people. Rich people making ostentatious purchases creates employment and wealth for regular people.

And when people or corporations do hoard money. Where do you think they hoard it? In their mattress? No. It's sitting in banks and the stock market. When it's in a bank, what do you think the bank does with it? It loans it out for people to buy stuff and start new businesses. When it's in the market, the money has been transferred to other people that will use it to buy stuff or start new businesses. Or put it in the bank and "hoard" it, or invest in the market, repeating the cycle.

For the record, corporate bailouts are evil. I think any true capitalist should be against them. It's an inefficient use of capital. The market is smart and efficient. If your business is failing, it's the market telling you you're doing a crappy job and using the capital inefficiently. Fix your business on your own, no matter how big or small it is, or die. If you die, the capital doesn't disappear, it will flow to someone else that can use it more efficiently, which in the end creates more wealth and jobs than what was lost.

The efficient use of money will always produce more for the people and the economy than the inefficient use of money. Period.

Also you, and everyone, should read Equal Is Unfair by Don Watkins.
The basic premise is there should be complete political equality, (which there currently isn't) but we should never try to control outcomes after that point. Such as pulling lazy people up by dragging ambitious people down.
 

biophase

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Not sure if anyone was watching this, but the stimulus bill the Senate just passed last night for the Coronavirus included a provision that unemployment filers will get their full pay PLUS $600 a WEEK.

Thats right. They will be making $2,400 a month PLUS unemployment. If you live in a federal min wage state, a full time unemployed min wage worker will be raking in $22 an hour or $3,500 a month, for 4 months.

I think they mean full unemployment pay, which is not equal to their regular pay. Unemployment payments are a percentage of their previous salary.
 

1step

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Read it. $600 per week ONTOP of full unemployment pay
The point was “full unemployment” does not equal their “full pay.” “Full unemployment” equals 60-70% of their full pay approximately
 

GPM

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You all forget the power of the printing press (aka some guy on a computer hitting buttons, who needs ink!). They can just print all the money they need to get through this and then worry about the currency later.

Also taxation IS theft. If you think we need taxes or not is beside the point. It is straight theft of your money, backed up by armed forces and threat of confinement.
 

biophase

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Yes. A thin margin, high volume, business that gets no write offs (informal yet widely accepted use of the phrase) would be screwed badly at any tax rate.

Unless you count zero, which knowing you and your nitpicking, you probably will.
I’m still confused as to what a write off is.

I certainly don’t count expenses or COGS as a write off? I also don’t know what @100k meant in his original statement about businesses shouldn’t be in business if they can’t write off stuff.

View: https://youtu.be/rCZRqH7sRyA
 

100k

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Good. Spread the wealth a bit. With the wealth more equally distributed there will be less social problems in society (violent robberies, break-ins, lootings and such).

A shame giant corporations are getting bailouts when they don't need the money and have access to really great loan terms already.
 

Kak

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You included calculations in your post. Your calculations were off by literally an order of magnitude, leading you to a conclusion that was patently false:



If your conclusion were correct, a business literally could not survive under the model proposed.

But, had you done the calculations correctly, you would have found that not only could the business survive, but that it would be paying taxes at about the same rate as three years ago!

That's not nitpicking. That's one of us being right and the other being wrong.

Much like the last thread where you were wrong and got angry at me for pointing it out, let me suggest you simply act like a grown up and admit you made a mistake.



Well, your ignoring literally 76% of the the businesses costs led you to making a point that was patently wrong -- you came to the conclusion that the business was going to pay more than it earned in taxes. Which, if true, was a refutation of the OP.

But, it turns out that the amount of taxes wasn't only less than it earned, but about the same as the business was paying a couple years ago.

In other words, the point you were making simply wasn't true.
Do you write off COGS @JScott ?

When you put nice new floors and cabinets in a flip house do you write those off against the top line margin you make on the house? Of course you do.

So what you did here was take numbers, created new assumptions just for the hell of it and and then proceeded to decide what was and wasn’t considered write off just to say “actually... you’re wrong kak.”
 

Kak

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I ran the numbers for Walmart using their 4Q19 financial data above, and got a result that indicated they would be paying about the same amount of taxes as they did prior to 2017. Which, given that Walmart seemed to be doing okay back then, saying that this wouldn't "screw" them.

Can you point out where my numbers were wrong?
Walmart is honestly inconsequential to the discussion at hand. For the sake of discussion, I laid out a set of assumptions and named it Walmart. I didn’t go looking for their financials. I didn’t run an analysis. I just said for the sake of discussion let’s assume thin 5% margins. The 95% includes everything expense wise. A simple revenue minus expense equals profit discussion. I was close too! You came up with 6.3%!

Since I was operating under the very well accepted assumption that “write off,” in most people’s mind (including the op) equals deductible expenses. Earning a billion dollars and having no ability to deduct any expenses whatsoever creates a tax on the top line when the company in question (doesn’t really have to be Walmart) only really profited 5%.

In fact, under the OPs plan... Some companies, those that run in the red, would be taxed without making a before tax profit at all!

I guess my apologies again for naming it Walmart. For crying out loud. You had to see where I was going with this. You are a smart guy. This is ridiculous man. You and I have had our scuffles over the years and I have always thought there was some level of mutual respect; but this is absurd. You know I’m not posting out of my a$$ when I post. I have experience and education. This isn’t my first rodeo. I’m not intentionally misleading and your treating me as such pisses me off.

This is from turbotax.com:

B8951D6E-3869-47DE-85FE-7F622DAC7E78.jpeg

In my example at your 6.3% they have a before tax profit of 63 million and still pay 100-150 million in taxes at OPs 10-15% tax rate. An effective tax rate of over 100%.

Claiming I am “off by an order of magnitude” and “patently false“ was ridiculous and completely incorrect. My blindfolded guess on assumptions was 1.3% away from Walmart’s real numbers. This begs the question... Why did you do this? Did you go looking for a fight? Who the hell doesn’t know what a write off is?

Even the guy we are talking about knows what a write off is... And he is still wrong...

Businesses try to write everything they can off.... spend $50k taking clients out to fancy dinner at upscale restaurants or the super-bowl.... They find a way to write that off. Just things like that.

I'd basically get rid of all the tax loopholes.... just pay your goddamn 10% ... no write offs on ANYTHING.
What do you mean by anything. I mean ANYTHING and EVERYTHING that corporations can write off today to lower their tax liabilities.
My point so obviously proven I don’t know what else to say.
 
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amp0193

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Again, I direct you guys to scandinavian nations
I love the culture/system they have in place. I've spent 2 summers there and you can see the impact it has on quality of life.

I don't know enough about their taxation policies, etc. to contribute to the argument here.

Just saying that I like the end result for society.


I also don't mind the government sending out checks right now. It'll make a real difference to families in this wild and rapid unemployment scenario, and prevent civil unrest.
 

Kak

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It's rather interesting to see people wish for drastic changes that would basically make many industries almost entirely inoperable...at least in their current state.
Exactly. A corp shouldn’t pay income taxes at all. It literally exists to pay owners and employees who are already taxed.

A company should be allowed to save earned capital. Eventually that money would get taxed at the personal level one day anyway.
 

minivanman

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Yep. Equal society = better societies.

Just look at Scandinavian nations like Norway, Sweden and Finland and compare it to poop holes likes South Africa, Mexico and America. No offence.

I only ever watched 5 minutes of the show and it was probably the best 5 minutes of the show, luckily it had this line in it.......

You're not from around here are ya boy? :wideyed: :rofl:
 

Kevin88660

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Yep. Equal society = better societies.

Just look at Scandinavian nations like Norway, Sweden and Finland and compare it to poop holes likes South Africa, Mexico and America. No offence.
Yes and no. I am somewhere in the middle on this opinion. Scandinavian countries have went through waves of deregulation and have a flexible labor market. People on the left like to talk abt their tax and redistribution without talking about their other areas of pro business policies.

It is hard to do business where everyone is broke. Most billionaire make billions through selling to the average man. When things get too bad there will be pressure from all wealth spectrum for reforms and redistribution.
 

100k

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Yes and no. I am somewhere in the middle on this opinion. Scandinavian countries have went through waves of deregulation and have a flexible labor market. People on the left like to talk abt their tax and redistribution without talking about their other areas of pro business policies.

It is hard to do business where everyone is broke. Most billionaire make billions through selling to the average man. When things get too bad there will be pressure from all wealth spectrum for reforms and redistribution.
I'm not necessarily on the left. And I hear what you're saying, but those on the right should NOT support corporate bailouts if they are sooooo anti-government intervention and "socialism".

Otherwise save me the hypocrisy and let's bail out average joe that needs it more than the billion/million dollar corporations that go out of their way to not pay taxes.

Norway is subsidized by oil dude.
Sweden, Denmark, Finland aren't.

It doesn't take away anything from my point. The US has had a TON of oil, minerals and other natural resources.

Wh

Can you send me cash on PayPal please I really need it.
If you needed it, and you were paying me taxes - then as a tax paying citizen - you, along with every other tax paying citizen would have the option to vote for this legislation.

Why use taxpayers money bailout corporations and go to war, but not help out its citizens when they need it?!

I only ever watched 5 minutes of the show and it was probably the best 5 minutes of the show, luckily it had this line in it.......

You're not from around here are ya boy? :wideyed: :rofl:
Nope, I'm in UK. I have lived in Sweden and DK and visited a few other nations in EU and also America.
 

JScott

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You all forget the power of the printing press (aka some guy on a computer hitting buttons, who needs ink!). They can just print all the money they need to get through this and then worry about the currency later.
The currency printing press is actually a pretty reasonable tool in times like this...

Now that people are familiar with the idea of "flattening the curve," you can think of quantitative easing as essentially flattening the curve of economic contraction.

Without printing money right now, the economy would drop straight down, and may not recover in a reasonable period of time. With printing money right now, the economy is propped up, that massive drop can be avoided (or reduced), and that hit to the economy can be spread over a much longer time period during which the Fed -- HOPEFULLY! -- sells off assets and contracts the money supply.
 

GPM

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If you can't operate a business profitably without write offs, then you'll just have to close shop and start another type of venture... The market will correct it self.
I am the government, and I say that business taxes need to be 80% so that we can have universal basic income? I also mandate a minimum wage for your employees, regardless of what they do or what you make. Oh whats that, you can't operate a business profitably with those requirements? Well we are the government so we need it anyways, go start something that you can be profitable with.
 

Kak

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No, I don't "write off" COGS, and I don't know too many finance people who would talk about "writing off" COGS. The only time you write off COGS is when you are writing down inventory because it's damaged or otherwise unsold.

Write offs are typically in reference to reducing the value of an asset. But, when the term is more widely used to reference an accounting liability that reduces taxable income, it's is almost certainly meant to connote operating expenses (which again, COGS is not one).

Also note that COGS are accounted for in the Income section of the Income Statement, not the Expense section.

Here's a random image I found on Google of a template Income Statement (though they all look pretty much just like this):

View attachment 31591

To quote the condescending comment you made to the OP in your original post:
It was an assumption based argument where I determined the assumptions before the scenario was figuratively played out.

MOST PEOPLE consider all deductible expenses a “write off” although it may be the informal treatment of the phrase “write off“ in reality. The op was most certainly using it in the informal sense. He OBVIOSULY wasn’t talking about “reducing the value of an asset.” I’m glad you can use google to find the root origin of the phrase to smugly correct all of us peasants though.

Using the widely accepted albeit informal meaning of the phrase “write off,” my example was correct.
 
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