How To Apply Stimulus!

As a business owner, most understand investment in your livelihood to increase there bottom line. When you purchase equipment, it either aids you do your service more efficiently, or opens the door to additional service. This often provides opportunity, increasing your labor force and raising your income.

Say you had an auto repair facility. You went out on a limb and decided you're going to expand into front end alignments ,and the tire business. You invest in a front end machine, a tire changing machine, and a tire balancer. This new equipment will need additional employees trained in their use, another expense. So you hire two more people, advertise the service and build a reputation for having fair prices and great service. The new addition becomes popular, and you have to hire two more employees, economic growth! The machines and new personnel contribute more income through out the life of the equipment. This is the proper use of economic stimulus, creating residual income.

Now imagine your an elected official, with no business experience. Your faced with a sagging economy that needs a boost. So you invest in that economy, apply a stimulus package. Not understanding residual income you invest the money to save existing jobs, say teachers or other service personnel. While you've maintained your tax base, (the income tax you collect), you've not increased your bottom line to pay for the investment. Worse yet, you've only funded the jobs for one year, with no hope of recouping your investment. The next fiscal cycle arrives and there is no money to support the jobs you saved. Not only have you not increased your tax base, you've put a time limit on the return, and haven't supplied yourself with reoccurring income.

Take that same money, build a road or a bridge, put up a toll booth, and you have something. You've created short term jobs, building a once non existent income producer that supplies a toll tax base. You've also created jobs that weren't there that supply income tax revenue, staffing the facility, and you've created something that keeps on paying you back through tolls collected.

Better yet, take that same investment and use it as a tax incentive for a private corporation to build a facility. Your investment has supplied a future property tax, offered jobs to the area, and created an income tax residual that didn't exist before. I'll also submit there will be additional neighborhood economic growth as those newly working employees will need housing, groceries, and services. Pssst, their kids will need school teachers, firemen, and police as well, saving and paying for those jobs long term.

This my friends is how you properly support and raise up a faltering economy. But then how would you expect someone without practical business experience to know that? Theories create ideas, but experience creates results. Those that can, do...Those that can't teach, (or referee).

God Bless!
Capt. Bill