YOUR VIEW: Economics 101 Under President Joe Biden Administration
By Ilene Davis, CFP // December 10, 2020
jobs for millions of unskilled and semi-skilled Americans could disappear in the next year
Could jobs for millions of unskilled and semi-skilled Americans disappear in the next year in the face of Biden administration tax increases and progressive labor policies?
Take into serious consideration a simple basic fact for most business owners: If they can’t make a profit, or at least be able to withdraw enough money from the business to finance their personal lifestyle and hopefully build wealth for the future, they have no reason to take on the headaches of running a business and having to deal with potential changes in taxes, labor laws, etc.
Next, consider how a person who wants to succeed in business might generally come up with a price for his/her product or service.
They would consider the costs of labor, including not just wages but any benefits such as sick leave, vacation time and payroll taxes; the cost of overhead, including the cost of providing tools, employee workspace and possibly vehicles; the cost of materials needed to produce the product or provide the service; the cost of income taxes for the business; and, of course, hopefully, a profit margin.
That is labor costs + material costs + overhead costs + taxes + profit = price of product/service.
If federal/state tax rates increase, at least one of the other costs must be cut in order to maintain profits. In most cases, material and overhead costs will likely go up because those companies are dealing with the same tax increases and burdensome labor laws.
Overhead may be cut, but again, not easily. So, that leaves labor costs. Maybe it will be benefits that are cut, or maybe hours or perhaps total employees.
Just something to keep in mind as it looks like both business and personal income taxes are going to increase, and a $15/hour minimum wage may be mandated nationally under a Biden administration dominated by onerous progressive tax, economic and labor policies.
ABOUT THE AUTHOR
Ilene Davis, a resident of Brevard County since 1971, is a Certified Financial Planner with a bachelor’s degree in Mathematics from the University of Michigan, a bachelor’s degree in Accounting from Rollins College, and a Masters in Business Administration from Webster University.
Davis became a stockbroker in 1982, earned her designation as a Certified Financial Planner in 1984, and with a desire to serve clients more on her own terms, opened her own financial consultant office in Cocoa Village in 1986.
She has combined her professional and personal experience with keen financial insight and instinct into her first book, Wealthy By Choice: Choosing Your Way To A Wealthier Future, which was recently published by Tablet Publications of Cocoa Beach and is now available on Amazon.com, BarnesandNoble.com, TabletPublications.com and ChoosingWealth.com
She is committed to helping each client create their own “Financial Freedom Fund,” and believes strongly in free-market capitalism and a “hand up rather than a hand-out” as the best path to prosperity.