That’s truly great and I hope it continues to succeed. But you’re talking about a 3-5% profit margin industry as well. Of course that would make any new capital investment come with a particularly asymmetric return. But compared with graphic printing companies with 8 figure rev or custom boat manufacturers with a couple hundred million in revenue family owned that make 15-20% EBITDA margins who started out at zero or with one contract where they were looking at growing in their market or beyond and they only really seem to consider tax implications of their growth plans as something to be managed but not a variable in the decision to buy new equipment to take on bigger contracts for example. They’re looking at their business scaling and raw numbers usually. As in were now xx revenue and y profit nominally.old salt wrote: ↑Thu Dec 24, 2020 1:28 pmI'm just reflecting on the discussions I had with my dad & brother over the years before each decision to knock out a wall & expand the grocery store business, then to eventually build a small strip mall to house our larger grocery "market" & lease the adjoining store front to a drug store/pharmacy.Farfromgeneva wrote: ↑Thu Dec 24, 2020 1:04 pm Business owners have a ton of arb opportunities to minimize the tax nut. I watched it at a firm I worked for that sold to a Philly based shop in 2019 for years. $5mm in gtd pmts to specifies owners, founders and a few others on top of other income, accelerated depreciation at times, strange mixing of cash and accrual accounting (this was a firm that sold for less than $50mm at 1-1.25x trailing 12mo revenues, about 8x capital/retained earnings in the firm. I know because I had the operating agreement and financials.
I just haven’t encountered business owners making that kind of money who think about stopping expansion or other growth investment opportunities ever pass over taxes. And that is including many non financial business owners. They either have the risk profile and confidence in their operation along with the opportunity to move full steam ahead and manage the financial statements for tax purposes afterwards or they don’t have that motivation inside them. Maybe you know some different. But an all in north of 50% hasn’t seemed to stop those folks in the past. I agree when you start pushing above maybe 55-60% it becomes more of a consideration but 50% all inclusive seems low.
Might not have had a problem with the SALT cap if it hadn’t clearly been implemented as a weapon against perceived political enemies. I’d also like it either eliminated altogether or a bit higher or scaled to assessment area. They adjust max loan amounts for Fan/Fred and Va/FHA/HUD based on area. It’s not hard for a $500-$750k (the 20% down check I wrote in a nice Atlanta neighborhood is more than I’ll get for my mother’s home in Binghamton by about $20k). home in a lot of cities which qualifies as solidly middle class these days would be north of $10K in property taxes. The last 20% in home prices can almost completely be explained by mortgage rates holding under 4-4.5% for a number of years now. So yeh government has lowered rates partly in effort to make homeownership more affordable and then they turn around and make it more expensive on the other side which is counterproductive.
The tax incentives that Reagan introduced, prompted them to pull the trigger & enabled them to pay off the mortgage in a few years.
They were cautious & couldn't afford to make a mistake & start over. The chains, then big boxes were always snuffing around, some made offers. So far, they've all backed off & stayed away. My brother recently celebrated the 100th year anniversary of a 3rd generation family owned independent grocery business.
I believed we needed to come down pre Regan, so no real qualms with those cuts. There might’ve been some room in the Bush cuts but the cap gains drop was a mistake and we’ve gone from playing with house money to start thinking about putting the deed on the table territory since the financial crisis (or perhaps even a littler earlier)