Tax Day
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It's Tax Day!!!!
At least in the US, income taxes are due today. Hopefully you DBAs out there don't have too big a tax bill, but then again, maybe it's not a bad thing if you do. That would mean that your income is doing well.
I have a pretty big tax bill due today, probably the biggest ever, so I'll be heading to the post office tonight at 11:30 or so to drop off my check. Kind of silly, especially according to my wife, but on the few occasions that I have had to pay, I get a little satisfaction from not doing so until the last minute.
Don't get me wrong. I'm not trying to get out of paying taxes. In my opinion, I live in the greatest country in the world and the price for doing that is paying some taxes to keep to government afloat. I also think our government does some good for people with my tax dollars. They also have waste, but if I look at my budget and where we spend money, we waste a pretty good amount as well. I'm sure most of you aren't much different and since we're all human, with our flaws and frailties, I can handle a bit of waste.
I went to see my accountant yesterday to get my return and talk about what to do for this next year. Being self-employed means that I have some good freedoms with respect to expenses, but it also means I take on a slightly greater tax burden than when I worked for someone else. It tends to all work out in the end, but it does mean more paperwork for me. Since this was the first year I went to a CPA, we examined my return and talked about where I might find some other expenses that I'm missing.
It's funny, but in talking to him, he started to say my marginal rate, with state taxes and such, is about 50%, so as I earn more money, every dollar gets split. Half to me and half to the US government. I'm listening and I can appreciate what he's saying, but in my mind, I'm still $0.50 better off with each dollar I earn than I was before I earned it.
You see, my focus my whole career has been on finding ways to increase the top half of my income statement. Generating more revenue, or in my case, salary. I've tended to focus on that and let the expenses fall where they may. My philosophy has been to focus on the top line and let the bottom line take care of itself, at least in my personal finances. Now you do have to keep overall expenses below income, but in terms of the tax expenses, I've never worried about them very much.
You see, the time I spend worrying about what tax expenses I can track is less time I have to spend worrying about generating more income. And that's where I see many corporations falling down these days. They worry more about expenses than revenue. Trimming expenses is all right, but the only way to grow a business is increase the revenues. Anything else is a short term fix.
And I don't know about you, but I plan on running my business (my life) for the long term.
Steve Jones
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You are absolutely right-on Steve, when you say that corporations spend far too much time on reducing expenses rather than growing revenue.
Case in point that affects us DBAs as well as anyone in an IT position: what is usually considered to be a “luxury” expense and the first candidate for cuts? IT, of course. In reality, if we were to return to the days of green eyeshades and sleeve garters, it would take a very large army of clerks to maintain the financial data of today’s corporations. When one considers the cost of an employee with benefits, IT expenditures quickly become a bargain. After all, one of the original selling points was the ability of computers to accomplish many times the work of humans at less cost. But in our headlong rush to reduce expenses instead of concentrating on increasing revenue, IT is one of the first to feel the ax.
When I was in school (admittedly a long time ago), we were taught that the only methods of increasing revenue were to expand the customer base or to increase sales. This can be accomplished through acquisition of other businesses (we are all familiar with this method) or by providing products or services that customers actually want (novel idea) and are willing to pay for.
To my thinking, it is far better to cultivate long-term relationships with customers by providing needed products and services than it is to concentrate on growth through acquisition. Acquisition based growth is usually also a short-term fix to the revenue stream that results (usually) in elimination of jobs, thereby contributing to a higher unemployment rate.
Don’t misunderstand, expenses must be controlled. Controlled but not eliminated entirely which seems to be the ultimate goal of corporate America today.
I too, will gladly pay more taxes on a rising income so long as I can deduct reasonable expenses incurred with creating the income.
I'm sure that many will disagree with me but this is my philosophy and I'm stickin' to it!
Dan
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I always find it interesting when people think of taxes as the "Government's" money.
It's our money! They take from us and should be accountable for spending. They don't make it, they take it.
It's not okay to waste it. If I ran your accounts and "wasted" some of your money, I would go to jail.
As the saying goes, (I think it was Tipp O'Neil who said something like this), "it's only pork when it doesn't go to your State or benefit you...". I wasn't born stupid - I had to study.
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Intersting concept. My co-worker onced told me that he would love to pay a million dollar in tax because that mean he has at least a million dollar after tax providing that state and fed takes 50% of what he makes. That's because I was complaning about my tax bill.
Now I learn to live with less, putting max 401k contribution and just let them take maximum tax from our pay check we haven't been paying tax on april 15. We actually got a small sum of tax return every year and that's the way I hope to have it.
mom
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Is it the "Government's" money, or is it "our money"?
I suppose it depends whether you think the Government is "them", or the Government is "us"
I think the Government is "us". The people who run it are placed there by us. We elect them. We can reject them. (and if you are not active in the election process, then that is your choice, but don't complain that you didn't have the opportunity)
So the Government is "us". To say "It is not the Government's money, it is our money" is to repeat a political slogan that makes no sense, since "us" and the Goverment are really one and the same thing. The United States is nothing but the people that live here.
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Steve, I thoroughly disagree with your attitude on expenses.
If an individual or coporation is in a competitive marketplace the available revenue is relatively fixed. And we are all in a competive market.
Individuals are in a competitive job market, we are competing with other candidates locally and globally.
There is a limited number of customers (therefore a limited amount of revenue) available to corporations in any industry.
In a competitive market with limited potential for increasing sales or market share or finding better employment the only way to increase income is by reducing expenses, especially when there is "a bit of waste". The reduced expenses contribute directly to increased profits and/or savings. This means more money available to the individual or corporation for reinvestment.
Work smarter, not harder. - DJM
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This is exactly the type of short-sighted approach that stiffles growth. Accepting the status quo translates to failure to seek or recognize new opportunities to increase revenue. We are not in a limited marketplace unless you consider the entire population of earth to be a limit. Today's technology gives each of us the ability to reach a global marketplace. It is up to us to make the first step in reaching that marketplace.
Focusing solely on reducing expenses and not even attempting to grow the revenue stream creates a stagnant economy.
Your income can remain stagnant if you choose, but I for one, prefer for mine to grow steadily.
Dan
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Have you looked at any appropriations bills lately? They are wieghed down with lots of extras. I did not vote for this..., did you?
It is a Representative Government and the wonderful politicians who have their jobs make sure they keep their jobs, (reference the McCain-Fiengold bill in which politicians or the public can't voice their opposition so many months prior to an election).
It is nice to think of it as "our" money, but you may want to check sometime to see how "we" are spending it....
I vote, I support candidates, I get involved..., but I have yet to reject anyone who holds a Federal job or gets free Federal stuff...
I wasn't born stupid - I had to study.
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"They also have waste, but if I look at my budget and where we spend money, we waste a pretty good amount as well. I'm sure most of you aren't much different and since we're all human, with our flaws and frailties, I can handle a bit of waste."
Waste in government is not acceptable. I earned the money and they take it from me. And yes, I realize government needs some to operate. That's a fact of life. However, every dollar of my money they waste, is a dollar I could have spent. Sure, I waste money. But it's my money and I can spend (waste) it how I choose. Government has no authority to waste what I have entrusted them with.
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set libertarian_rant on
It's MY money, not the government's. The money I have earned is forced from me by the govt, and I see practically none of it back. That money goes to people sitting around and living off the govt and other social programs that are not needed if people would remember this thing called "personal responsibility". Yes, I realize I'm speaking to no one here that is on a professional SQL Server site, but some people seem to have fallen for the Democrat / Liberal pile of *$^@.
set libertarian_rant off
go
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I like that function! Did that come with SQL Server 2005?
I wasn't born stupid - I had to study.
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Unfortunately not!
What I also find fascinating is those people who say, "hey mon, actually, I didn't have to pay any taxes... I got some back!"!!! Hellllloooooooo!!!! Take a nice look at your pay stub every week and get a grip. This would be ZERO with the Fair Tax. OK, I'm calming down now. Sorry Steve, but you hit a sore spot on this one. I read your column each & every day and enjoy 99.99999% of them, but when you go political, you're going to have your responses like mine and others on here :>
-Vic
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LOL...when I was a kid I remember many times when Dad was asked what we did while we were on vacation, he would quip "Oh, we went to Washington to visit our money!"
A lot of the points made here are right on. Unfortunately I've seen too many situations where cost-cutting has been so heavily ingrained into the corporate structure to the point whree increasing the revenue base is rarely even considered or discussed. And don't even talk about waste. What's really important is showing a profit and unfortunately this is the easiest way to do it. And who profits from this? Only top management in my experience. And they usually don't stick around long enough to care about the long term.
What's usually the first thing to go when costs are cut? Travel and education budgets. And that's another thing that makes this type of thinking so short sighted. How can you expect to provide cutting edge, out of the box customer service when your staff is not trained on the latest technologies? Or when they're so busy supporting old technologies because your capital budget has been slashed for three years running and your stuck with stuff that should have been mothballed years ago. Or you're stuck doing the work of 3 people because in order to 'cut costs' management decided not to replace positions when people got fed up and left? And while you do the work of 3 people, your manager gets a bonus because he/she held the line on salary expense. So where's your cut?
And as far as the government goes, forget it. If you think it's 'your' money, just try going up to DC and asking for a refund because you think the government is doing a lousy job. Or try filing 50% of what they say you owe on your tax return because you don't think they've acted in your best interests more than half of the time. Yes government should have an obligation to be a custodian of the public trust but honestly, in practice how often does this really happen?
Me, cynical world view? Nah...
My hovercraft is full of eels.
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Boy, we forget the 90's quick. I worked for one company that threw the most lavish parties you have ever seen! Now they are down to less than 1/3 their size.
Management 101 - forget the long run, just "look good" in the short term.
"... it's a bloody rabbit!" "He'll bite your head off!"
I wasn't born stupid - I had to study.
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