She is the daughter of a Marxist professor, and it shows.
The reason socialists often win at the polls is not because socialism is better, but because the message is more popular: “The government will take money from the rich and give it to you,” or “You will no longer have to work for an evil capitalist; the government will take care of you.”
Socialists believe that extreme taxation and government transfer programs are necessary to address income inequality.
The capitalist message is less popular. Capitalist candidates say they will address racism by ensuring companies hire based on merit, not race, and they will address income inequality by encouraging people to improve their skills and get better jobs.
Hard work, investment, delayed gratification, and other forms of discipline just do not resonate with socialists.
Kamala attacks companies for making high profits.
First off, the profits she criticizes are largely nominal, inflated by the very policies she and Joe enacted—shutting down the economy for two years while printing and giving away free money, which caused inflation.
She and other socialists believe companies should give profits to workers rather than shareholders.
But this raises the question: why would anyone buy shares if they couldn’t receive a distribution of profits?
McDonald’s stock costs $288 a share right now. People buy these shares to earn a return on their investment. If the company gave the profits to the workers rather than the shareholders, there would be no incentive to buy shares or invest in companies anymore.
Additionally, there are legal concerns: the company has a legal contract with workers to pay them a certain wage, not the wage plus all profits.
At the same time, the company has a legal obligation to act in the best interest of shareholders and maximize their value.
Legally, the profits belong to the shareholders. If the CEO decided to give the profits to someone else, that would be stealing.
Another issue with Kamalaites and socialists is that they focus on gross profits because they want to show a big, scary number to prove how evil and greedy the company is.
Gross profit is the revenue minus the cost of goods sold, but it doesn’t account for other expenses like taxes, interest, and operational costs.
All of these expenses must be paid, or the company would be in legal violation, facing lawsuits, and its assets could be seized by banks, creditors, contractors, suppliers, service providers, and employees.
Once all expenses are paid, what’s left is net profit, which is much smaller than gross profit.
The board of directors then decides how to allocate this net profit, determining how much to reinvest in the company and how much to distribute as dividends to shareholders.
Reinvesting might involve opening new locations, expanding existing ones, or buying new technology, machinery, or vehicles—investments that help the company earn more in the future.
Whether the company holds onto this cash or reinvests it, it remains an asset and doesn’t decrease the stock price.
However, giving it all away would reduce the company’s assets, negatively impact the current share price, and decrease future profitability, as there would be no funds for purchasing new equipment or expanding operations—both of which are crucial for achieving economies of scale and lowering per-unit costs.
Usually, the board strikes a balance between reinvestment and distributions to shareholders through dividends or stock buybacks.
If socialists had their way and the board decided to give all net profits to employees, the company wouldn’t be able to reinvest or expand, which would halt job creation. Shareholders would receive nothing, causing the stock price to plummet.
Without profit incentives, there would be no future shareholders.
Any loans secured by stock or future profits would become risky, likely leading to defaults. With no stock to sell off, and no cash reserves or retained earnings, the company would most likely go bankrupt.
Claims that Kamala would be better for the deficit and national debt than Trump overlook the fact that she would be giving away billions of dollars, wrecking the economy, and incentivizing more people to live on government handouts.
Supporters argue that these policies have a lesser impact on the deficit because she would couple them with egregious taxes, such as taxing unrealized capital gains. This would mean paying taxes every time your home, retirement account, or Bitcoin increases in value on paper, whether you cash out or not.
Forcing companies to distribute all of their net profits as compensation to employees would reduce government tax revenue to zero.
If the distribution is classified as compensation, it would be treated as a cost, reducing the company’s net profit to zero, regardless of when it was calculated.
This means the distribution would be deducted from revenue as an operating expense, effectively reducing taxable income to zero. Consequently, there would be no profit left to tax, and the company would not owe corporate income taxes.
All of Kamala’s Marxist policies will incentivize government dependence while stifling investment, crippling the economy, and reducing job creation. But the message of taking from “evil, greedy” companies and giving to “good, hard-working” people is easier to sell.
The post Socialist ‘Comrade’ Kamala Must Realize Profits Can’t All Go to Workers appeared first on The Gateway Pundit.
