Supply Chain issues

[American123]

Appreciate your post. But I'm not clear about how inventory is "taxed". It is clear that money which is tied up in excess inventory certainly could be used for better purposes if that level of inventory can be reduced to some minimum level by freeing up working capital for other purposes. And hence the inducement for JIT principles.

But I think if there is any government "tax" on just holding inventory, it would be inconsequential.

I want you to imagine you are a business owner and whether you make a profit that year, or have net losses, the government will still tax you on all the inventory you have at your business regardless.

If you think that tax burden is "inconsequential" I don't think you understand the costs of running a business and how much taxes affect businesses.

Does Your State Tax Business Inventory?

Nine states (Arkansas, Kentucky, Louisiana, Maryland, Mississippi, Oklahoma, Texas, Virginia, and West Virginia) fully tax business inventory, while five additional states (Alaska, Georgia, Massachusetts, Michigan, and Vermont) levy partial taxes on business inventory.

taxfoundation.org

 

[Diamondback]

We have been living in the age of what I call the "pump and jump" CEO. These CEO's are focused on short-term profits at the expense of long-term prosperity. They want to create a jump in stock price (which is used as a measure of their success) in order to make their resume look better. They have no long-term connection to the current employer, and are always looking to jump up the ladder to another company that will make their resume look better. After they jump, they do the same sort of short-term actions and repeat the process.

For some reason, they are not held accountable for the problems they leave behind for their successors. Corporate boards seem to be rubber stamps for the executives, and all drink from the same batch of tainted Kool-Aid!

This reminds me of a joke we used to tell in my Road to MBA days...

A CEO is leaving a company after displeasing the shareholders and Board with his poor management. His successor comes in, and he tells the new guy "There are three envelopes stacked in the top right drawer with everything you'll need to know--if you ever find yourself in trouble with the Board open the top envelope."

Soon enough, he's in hot water and opens the top envelope. He finds a note saying, "Blame your predecessor." He does, and everything settles down... for a while.

Then it's time to open Envelope #2, bearing this advice: "Announce a reorganization." This, too, works... for a time.

He opens Envelope #3, and finds this pearl of wisdom: "Prepare three envelopes."

 

[Mono1]

I want you to imagine you are a business owner and whether you make a profit that year, or have net losses, the government will still tax you on all the inventory you have at your business regardless.

If you think that tax burden is "inconsequential" I don't think you understand the costs of running a business and how much taxes affect businesses.

Does Your State Tax Business Inventory?

Nine states (Arkansas, Kentucky, Louisiana, Maryland, Mississippi, Oklahoma, Texas, Virginia, and West Virginia) fully tax business inventory, while five additional states (Alaska, Georgia, Massachusetts, Michigan, and Vermont) levy partial taxes on business inventory.

taxfoundation.org

So, in Washington, Oregon, Idaho and Kali its *zero* tax and thus "inconsequential" No?

Sorry Bro' but I have been a Financial Analyst for 40 years, so I *DO* understand the "costs of running a business".

Again, I appreciate your post and agree that ANY Taxation is a *Byotch* and certainly a disincentive to production.

But any tax on inventory no matter where the locale, is certainly inconsequential relative to the tax on Net Income.

Best Regards, my friend.

 

[American123]

So, in Washington, Oregon, Idaho and Kali its *zero* tax and thus "inconsequential" No?

Sorry Bro' but I have been a Financial Analyst for 40 years, so I *DO* understand the "costs of running a business".

Again, I appreciate your post and agree that ANY Taxation is a *Byotch* and certainly a disincentive to production.

But any tax on inventory no matter where the locale, is certainly inconsequential relative to the tax on Net Income.

Best Regards, my friend.

I forgot there aren't businesses in those states where those taxes exist…

Remember we are talking about the supply chain and why items are out of stock or why businesses are incentivized to operate with JIT supply chains. Tax on net income isn't why shelves are empty. In order to be taxed on net income a business has to first have a product to sell which necessitates having inventory to have on the shelf in the first place (assuming we are talking about merchants).

We could expand this conversation further to talk about property taxes. Businesses have to store their excess inventory somewhere. Warehouses take up space, buildings are taxed, buildings require workers, which are also taxed (payroll). There is a tax on every part/piece/interaction of a business. Those all add up and incentivize a business to reduce them as much as possible which has the resulting effect of reducing stock in inventory to what is going to be used/bought until the next shipment arrives. Businesses can't cut their tax burden on net income the same way they can cut their tax burden on inventory. So I get what you are saying, that one tax is more than the other, but that is irrelevant because businesses can't avoid income tax with JIT supply chains, but they can avoid taxes related to having lots of inventory with JIT supply chains.

I don't have 40 years of experience as a financial analyst…. But it doesn't seem to matter for what we are talking about.

 

[Diamondback]

WA has worse... a Gross Receipts (aka "Business & Occupation") Tax. State Dept of Revenue demands its 8% right off the top even before you write your first check to pay any other bill including Federal taxes and if they don't leave enough to pay your Federal taxes Sux2BU.

GRT's are evil and should die in a fire, ditto all who support them.

 

[American123]

WA has worse... a Gross Receipts (aka "Business & Occupation") Tax. State Dept of Revenue demands its 8% right off the top even before you write your first check to pay any other bill including Federal taxes and if they don't leave enough to pay your Federal taxes Sux2BU.

GRT's are evil and should die in a fire, ditto all who support them.

Yep - government is always sitting there with their hand out, going, "some of what you have is mine, pay me now."

 

[Diamondback]

Taking a cut of NET receipts would at least be more tolerable--the bills are paid, the economy stimulated by money to vendors, subcontractors, employees and so forth. Seems to me in a sane world you'd want to ENCOURAGE businesses to generate more "churn" in the economy, because more productivity means more economic activity downstream of that and thus more tax revenue...

 

[American123]

Taking a cut of NET receipts would at least be more tolerable--the bills are paid, the economy stimulated by money to vendors, subcontractors, employees and so forth. Seems to me in a sane world you'd want to ENCOURAGE businesses to generate more "churn" in the economy, because more productivity means more economic activity downstream of that and thus more tax revenue...

Most people in politics have never ran a business and it shows.

 

[The Heretic]

Most people in politics have never ran a business and it shows.

What shows is they don't care - unless they get a bribe

 

[arakboss]

What shows is they don't care - unless they get a bribe

It is a safe bet there are a lot of military industrial complex dollars floating around DC these days (more than usual).

 

[Barefootdog]

In other news...

On Jan 1, 2021 diesel was $2.19 per gallon.

Yesterday, diesel in Springfield was $6.19 to $6.39 per gallon.

Thought I would break into my stash of Wuhan Flu stimulus dollars and headed north to The Point in Sweet Home for a nice prime rib lunch. Diesel up in Sweet Home and Brownsville was a bargain at $5.89 per gallon.

You guys have to get your heads right, quit your carping and figure out how to save a few bucks.

 

[Mikej]

You guys have to get your heads right, quit your carping and figure out how to save a few bucks.

Maybe people like you need to just say NO! Stay home and make a tuna sandwich instead? Cancel the Vacation?

I wish I really meant what I said. And could do that myself. Through the whole rona thing, driving/short road trips became our form of out of the house recreation. Much better than strapping on the face rag to go anywhere indoors. Now those bastards have screwed that up for us too. With the added SUCK of everything else we buy going way up in price.
FJB

 

[Barefootdog]

I do eat tuna fish....Winco has oil packed chunk light Bumble Bee for $.88 per can. Talk about living large.....At Winco a guy can spurge and get a can of Nalley Jalapeno Hot Chili for a measly $.98...!!

Wanted to get back down to the house in Ormond Beach for a couple of weeks.....Air fare was $1100 US for a United flight with an 8 hour lay over in Denver. Car rental in Orlando was right at $1200.

Yep....I settled for tuna fish, a head of lettuce and a new to me Dan Wesson Valor.

In other news......there's a guy in another forums' classified section who's selling a Springfield Professional 1911 to fund an engagement ring.....Even Jasper D. Canine was flummoxed by this thought process and he's a whole bunch smarter than me.....I just quietly slipped into my PTSD....

FJB indeed...

 

[Mono1]

At Winco a guy can spurge and get a can of Nalley Jalapeno Hot Chili for a measly $.98...!!

Niiiice!....much better than $1.68 at Wally World.

 

[Bam]

So what happened to Senile Joe fixing the gas supply problem that existed before russia invaded ukraine?

Oh yeah, he raided the us strategic oil reserve which did nothing to lower prices and only made us weaker. Now that they can blame russia for oil prices and enough idiots believe it, they wont do anything and just let things get worse

We will see $6/gal by the end of July.

Diesel should hit $7 at this rate. Can't wait to see how high grocery prices get.

 

[BrentN]

So what happened to Senile Joe fixing the gas supply problem that existed before russia invaded ukraine?

Oh yeah, he raided the us strategic oil reserve which did nothing to lower prices and only made us weaker. Now that they can blame russia for oil prices and enough idiots believe it, they wont do anything and just let things get worse

We will see $6/gal by the end of July.

Diesel should hit $7 at this rate. Can't wait to see how high grocery prices get.

Sounds like it's nearing time to bribe the humans within our borders with another stimulus check. Be sure to get those checks out by mid-October.
Okay, that was supposed to be funny, not prophetic. Laugh dang it. (About 3.9 trillion should do the trick.)

 

[Xaevian]

Sounds like it's nearing time to bribe the humans within our borders with another stimulus check. Be sure to get those checks out by mid-October.
Okay, that was supposed to be funny, not prophetic. Laugh dang it. (About 3.9 trillion should do the trick.)

That would not surprise me one bit, along with a federal gas tax holiday around the same time. But shiz is gonna get real before then unless some major change in direction isn't done.

 

[arakboss]

Global food prices are soaring. Rice could be next

Food prices and export bans have been on the rise. Rice, a staple food in much of Asia, could be next, industry watchers say.

www.cnbc.com

 

[albin25]

So…What did they think would happen?
Did they think Rice would use its "white privilege" to keep its own price low?

 

[OldBroad44]

The federal government taxes inventory. When they started doing that, it made a huge difference to publishing. Publishers used to have more leeway to order larger print runs. This matters for a couple of reasons. One is that the price of the printer setting up to print a book is high. So smaller print runs means very expensive books. More expensive books usually curtail sales and make it harder for a new book to catch on. The other is demand for a specific book is variable and unpredictable. If a major good review or mention of your book by the right tv talk show host happens, the sales of your book may skyrocket...if the publisher has the inventory. If they dont, by the time they can go back to the printer and get more, the demand has crumbled and the opportunity for your book to go to the next level is lost, perhaps permenently. The inventory tax means most books are given smaller print runs than they would have otherwise.