Alberta Politics Thread

[Kjesse]

Originally Posted by Flash Walken

There are 32 Humpty's locations in Alberta, so this is adding roughly 1000 to the cost of doing g business for each location over the course of a year. Honestly I am surprised it is that low.

I wonder how this compares to the locations outside Alberta like in BC that already have tougher wage standards and a carbon tax. Did those locations shut down? I honestly don't know.

This is wrong. Those are almost all franchise locations. He's only talking about the corporate stores, of which I am aware of only one, the one by the dome, but he could be also including the one that is the diner further to the south. Their revenue from the other locations come by way of franchise royalties and I'm sure those stores will suffer similar problems.

[iggy_oi]

Originally Posted by Delgar

There's no need to respond to his mindless drivel, and I won't be responding, but this is pretty good.

If anyone read the letter you will see he claims to have also had a significant drop in revenue. In other words, they're hurting with the economy and the government is piling on costs.

If you don't want to respond that's fine but why not have the class to not call an opinion that is different than yours "mindless drivel". My point is valid and relevant, the owner went into very specific numbers when came to what it will cost him, but gave no indication of how those numbers will impact his business' ability to maintain operations. Other than to say it's gonna cost him money. Yup stuff costs money, I could say my property tax went up by $500 a year, that really doesn't tell you anything about what the overall impact of it will be on my household. All it says is I will be out $500 more a year. If my taxes were $5000 before it's a 10% increase, if they were $1000 it's 50%. What's my income? Is it $50k or $500k? These factors are relevant in how badly the $500 tax increase would impact me.

[Kjesse]

Also, the Humpty's expansion into BC 10 to 15 years ago was a disaster. There's only one left.

[Flash Walken]

Originally Posted by Delgar

Also, the Humpty's expansion into BC 10 to 15 years ago was a disaster. There's only one left.

I wonder why. BC has never been friendlier to business than in the last 15 years.

[iggy_oi]

Originally Posted by Slava

I think that the fact that he is facing significant decreases in business and increasing costs is probably enough to realise that its a terrible time to increase his costs.

Would you not be able to have a more informed opinion if you knew instead of assumed?

[Ozy_Flame]

Originally Posted by Bownesian

Most of those are franchises, likely, so the costs may well need to be multiplied across a bunch of small businesses rather than divided like you've done.

Doesn't that mean that they drop from a 3% small business tax rate to 2%?

I would think the tax rate is applied to Humpty's parent company not the individual franchises? Maybe I'm wrong.

[Kjesse]

Originally Posted by iggy_oi

If you don't want to respond that's fine but why not have the class to not call an opinion that is different than yours "mindless drivel". My point is valid and relevant, the owner went into very specific numbers when came to what it will cost him, but gave no indication of how those numbers will impact his business' ability to maintain operations. Other than to say it's gonna cost him money. Yup stuff costs money, I could say my property tax went up by $500 a year, that really doesn't tell you anything about what the overall impact of it will be on my household. All it says is I will be out $500 more a year. If my taxes were $5000 before it's a 10% increase, if they were $1000 it's 50%. What's my income? Is it $50k or $500k? These factors are relevant in how badly the $500 tax increase would impact me.

I call your posts mindless drivel because you consistently demonstrate a failure to understand how business needs to operate to be successful. Businesses being successful helps everyone but you view them as something to distrust and keep down via taxes. You invariably come from the point of view that business should only be allowed to earn so much, and that the market doesn't really matter. You never take into account the amount of capital they have tied up to make those profits. You discount the risk they take and that many years, especially lately, they actually are incurring losses and are into bank loans to try to stay afloat to pay their workers.

So yeah, its mindless drivel. Its not even Marxism (which is not mindless, just it doesn't work) its just anti-capitalism. I disagree your arguments have any validity whatsoever.

[IliketoPuck]

Originally Posted by iggy_oi

Actually he forgot to mention any of his businesses earnings. Wow he's going to have to pay this much more for stuff, how much does he currently pay overall? How badly does this cut into his profits? So really the only picture he painted was that of a business owner telling us what he wanted us to hear and hoping no one was smart enough to question it.

I'm not going to get into this with you any further than this post. It's quite clear that there is gap in understanding of how business works.

A key point you miss continually with your "well what’s the difference between making $100 of profit and making $60 of profit, he's still making money" is this:

Capital (money) is fungible. It moves to where it can receive the highest return. It does not care about the people or lives it affects when it moves. Return is all that matters.

To attract capital, you need to create a jurisdiction that provides the proper incentives for investment. I.e. "the Alberta Advantage" which used to mean a business friendly investment environment. It is no accident that so many corporate head offices are located in Calgary/Edmonton. They are here as a direct result of policies created by previous governments to attract them.

Further, an executive of a public company owes a fiduciary duty to shareholders to optimize capital allocation. If the choice is $100 of profit in one jurisdiction and $60 of profit in the other for the same amount of investment and risk, the higher return is chosen. Every. Single. Time. Otherwise you are out of a job.

This doesn't apply only to public companies, either. It is how business works.

An operation like Don's exists to maximize profit. He isn't in business out of the goodness of his heart. If he can no longer make the profits he needs to remain in Alberta, he will close shop and choose to make more money in a different jurisdiction. The cascading impact of that is staggering; his direct employees are out of work, his suppliers no longer have a customer, his cleaning service loses a customer, etc. etc. etc. etc.

You act like a minimal increase in costs is no big deal. What you fail to realize is that every single policy change (even if it is initially small) has an incremental and multiplicative effect on the broader economy.

The NDP government has made massive mistake after massive mistake by universally reducing the competitiveness of Alberta to attract capital in the midst of the worst downturn on record. Their policy decisions are inexcusable.

Before you go to the predictable "well the PC's left us in this mess" response, save the time. It is a tired and uninspired argument. The NDP need to stand on their own merits at this point.

Their decisions continue to reflect a stance of ideology over practicality. They refuse to reduce expenses, and are determined to tax their way out of the worst recession on record. You seriously can't make this level of incompetence up.

The NDP have the ability to choose what policy they implement. They can choose to take actions that assist businesses to weather the downturn, thereby assisting them in providing employment to everyday Albertans. Instead, they have chosen poorly and exacerbated the worst recession on record.

Good governance is knowing when the time is right to implement changes in the system, and having the humility to admit when you have erred.

The NDP do not have the ability to divorce themselves from party ideology, nor do they have the requisite experience or the business wherewithal to effectively govern this province.

[IliketoPuck]

Originally Posted by Delgar

There's no need to respond to his mindless drivel, and I won't be responding, but this is pretty good.

If anyone read the letter you will see he claims to have also had a significant drop in revenue. In other words, they're hurting with the economy and the government is piling on costs.

Just one response from me, and then I'm done.

[Bownesian]

I'm gonna say from his other letters to the editor that (unsurprisingly) his margins are small.

http://www.calgarysun.com/2016/07/09...r-july-10-2016

Since January of this year, we have had to close three locations that employed 22 employees. This decision by the government plus other expenses coming (carbon tax) plus the economy will result in our company laying off nearly 40% (130 employees) of our employees in the next 15 months.

It's true to say that he leaves out his pre-cost-increase profit margins, but we can know from them shuttering locations that the tax increases (combined with other factors - economic downturn and minimum wage) are causing a number of his franchises to shift from marginally profitable to marginally unprofitable.

[Bownesian]

Originally Posted by Ozy_Flame

Doesn't that mean that they drop from a 3% small business tax rate to 2%?

I would think the tax rate is applied to Humpty's parent company not the individual franchises? Maybe I'm wrong.

That would be on profits.

If there are no profits because costs have gone up at the same time that revenues have gone down, the tax rate doesn't matter.

[Locke]

Originally Posted by Parallex

Taxes had to go up. Who was going to raise them?... WR? PCAA? Whatever mutant party Jason Kenney envisions? Yes, the timing isn't optimal but it was either do this needed thing now when it's possible but not optimal or try to wait until it's optimal but potentially not possible.

Spending has to come down as well (and like raising taxes right now is not the optimal time to do that) but to be frank I have no more faith in any other party then I do in the NDP to do that at the optimal time (that being when the economy has recovered).

Politicians generally make terrible economists.

And I'd agree with you on the premise that taxes had to go up and spending has to come down.

This is where the criticism of the NDP stems:

They've done one. They've raised taxes, albeit in my opinion more than was prudent at this particular moment in time.

And then they've gone the opposite way on the other and started spending more.

You see where this equation fails?

[Ozy_Flame]

Originally Posted by Bownesian

That would be on profits.

If there are no profits because costs have gone up at the same time that revenues have gone down, the tax rate doesn't matter.

Well technically if they are doing their accounting as separate small businesses, then it is even harder to ascertain performance on a store-to-store basis, outside of some sort of franchise fee to the head office being based on revenue generation or something similar.

[Bownesian]

One last thing...

Franchise turnkey costs are $690,000.
https://www.humptys.com/franchise-in...nchising-faqs/

These decisions to shut a location are not being taken lightly and reflect some people losing their life savings as they are forced to sell for pennies on the dollar at the bottom of the market rather than dump more of their savings (mortgage) out the door.

Maybe that doesn't matter as much to some because they are business owners and the assumption from the iggy's of this province is that we can all afford it anyway. Never mind that my companies like mine have an ownership group is half unemployed now, the others are making <1/5th of their former incomes and we all have kids and mortgages, or are former refugees, or are close to but not as close as they thought to retirement.

[Locke]

Originally Posted by Bownesian

One last thing...

Franchise turnkey costs are $690,000.
https://www.humptys.com/franchise-in...nchising-faqs/

These decisions to shut a location are not being taken lightly and reflect some people losing their life savings as they are forced to sell for pennies on the dollar at the bottom of the market rather than dump more of their savings (mortgage) out the door.

Maybe that doesn't matter as much to some because they are business owners and the assumption from the iggy's of this province is that we can all afford it anyway. Never mind that my companies like mine have an ownership group is half unemployed now, the others are making <1/5th of their former incomes and we all have kids and mortgages, or are former refugees, or are close to but not as close as they thought to retirement.

See, and this is the crazy thing. I've got Companies where management, the owners, are working for free. They arent collecting one thin dime right now in order to keep their employees paid.

But that only lasts so long, eventually they wont be able to continue to do that.

This is the part of business that they dont tell you about in Business school or at the local Union meeting.

When times are good employers can make some money, but sometimes they have to make hard sacrifices as well.

But all people look at is small snapshots in time. Like never actually watching a hockey game but just the post-game Highlight Reel.

[Locke]

Originally Posted by iggy_oi

What is your alternative solution? Wait it out? Even if that means until this government is potentially out of power? And then just hope that the wild rose or PCs implement it when(if?) the economy recovers?

Originally Posted by IliketoPuck

I'm not going to get into this with you any further than this post. It's quite clear that there is gap in understanding of how business works.

A key point you miss continually with your "well what’s the difference between making $100 of profit and making $60 of profit, he's still making money" is this:

Capital (money) is fungible. It moves to where it can receive the highest return. It does not care about the people or lives it affects when it moves. Return is all that matters.

To attract capital, you need to create a jurisdiction that provides the proper incentives for investment. I.e. "the Alberta Advantage" which used to mean a business friendly investment environment. It is no accident that so many corporate head offices are located in Calgary/Edmonton. They are here as a direct result of policies created by previous governments to attract them.

Further, an executive of a public company owes a fiduciary duty to shareholders to optimize capital allocation. If the choice is $100 of profit in one jurisdiction and $60 of profit in the other for the same amount of investment and risk, the higher return is chosen. Every. Single. Time. Otherwise you are out of a job.

This doesn't apply only to public companies, either. It is how business works.

An operation like Don's exists to maximize profit. He isn't in business out of the goodness of his heart. If he can no longer make the profits he needs to remain in Alberta, he will close shop and choose to make more money in a different jurisdiction. The cascading impact of that is staggering; his direct employees are out of work, his suppliers no longer have a customer, his cleaning service loses a customer, etc. etc. etc. etc.

You act like a minimal increase in costs is no big deal. What you fail to realize is that every single policy change (even if it is initially small) has an incremental and multiplicative effect on the broader economy.

The NDP government has made massive mistake after massive mistake by universally reducing the competitiveness of Alberta to attract capital in the midst of the worst downturn on record. Their policy decisions are inexcusable.

Before you go to the predictable "well the PC's left us in this mess" response, save the time. It is a tired and uninspired argument. The NDP need to stand on their own merits at this point.

Their decisions continue to reflect a stance of ideology over practicality. They refuse to reduce expenses, and are determined to tax their way out of the worst recession on record. You seriously can't make this level of incompetence up.

The NDP have the ability to choose what policy they implement. They can choose to take actions that assist businesses to weather the downturn, thereby assisting them in providing employment to everyday Albertans. Instead, they have chosen poorly and exacerbated the worst recession on record.

Good governance is knowing when the time is right to implement changes in the system, and having the humility to admit when you have erred.

The NDP do not have the ability to divorce themselves from party ideology, nor do they have the requisite experience or the business wherewithal to effectively govern this province.

That pretty much sums 'er up.

Its not 'waiting it out' like they're sitting on their hands doing nothing.

Do what you can with what you have. Make the situation better as well as you can.

We need our Politicians to take the Hippocratic Oath.

"First, Do No Harm."

[GGG]

I disagree I think this recession is the best time to implement change in taxation policy. The general terribleness of the economy provides the political cover to do it. It's much harder to justify tax increases when your posting surpluses and piling money into the heritage fund.

We should also be doing the service cuts now as well as in boom times the built in excuse of keeping up with the boom leads to waste.

The simple fact is that the last 10 years of tax level and services were subsidized by a unsustainable commodity price. it needs to be fixed, now is the to do it.

[iggy_oi]

Originally Posted by Delgar

I call your posts mindless drivel because you consistently demonstrate a failure to understand how business needs to operate to be successful.

I'd say you call them mindless drivel more so because you disagree with them other than because they demonstrate any lack of understanding. There are basic fundamentals in running a business. Then there are the variables that go along with that, you aren't talking about how a business needs to operate, you're expressing how you'd prefer they are able to operate.

Businesses being successful helps everyone but you view them as something to distrust and keep down via taxes.

The first portion I agree with in principle, but I don't believe inprioritizing them to the detriment of the majority. Why would I want to punish a business? People don't work without employers, but that doesn't mean I think it's a good idea to give them a free ride we all pay for. The last part of what you wrote is an unfounded assumption, a business is just as trustworthy as an employee, I would expect full facts from either before making a judgement on what they are saying/doing. Keep them down via taxes? If that's what you believe my stance is does that mean by default you feel we should be keeping workers down via taxes? No one should be held down by taxes, but taxes need to be divided up in a manor that has a balance, to ensure the advancement or inflation of one class doesn't exponentially outpace another, not suggesting they need to all be the same, but when you look at how out of sync the inflation of the middle class vs the upper class is, it's not hard to figure out the long term consequences of that.

You invariably come from the point of view that business should only be allowed to earn so much, and that the market doesn't really matter.

I believe businesses should be able to make as much as they can and want, workers too for that matter. I have never suggested a cap on earnings or profits, are you suggesting they should have their taxes capped because they've done enough? Economies need regulation in order to maintain stability, I believe that both sides are better off working together to ensure economic prosperity. You act as though I'm suggesting only businesses should need to pay the carbon tax.

You never take into account the amount of capital they have tied up to make those profits. You discount the risk they take and that many years, especially lately, they actually are incurring losses and are into bank loans to try to stay afloat to pay their workers.

Again you are making assumptions, I don't discount what employers put in to making their businesses successful, it's just that I also don't discount what their employees put into it as well. Businesses make plans and put up money to start up an enterprise, the plan usually doesn't work without workers, regardless of how much money you put into it and how good your plan is. Workers don't usually get a paycheque without someone putting up the money and making the plan first either. So if you take either out of the equation nobody makes any money. That's why neither sides contribution should be taken for granted, I'm not saying the owner and all employees should split all the profits equally, you often here about reduced hours, reduces pay or even layoffs in a slowdown, so it's not as if businesses are the only ones feeling the pinch. Employees really only go as far as their company can bring them and vice versa. Employees can take on debt when they take a pay cut to help their company stay afloat, it's not an employer only issue.

So yeah, its mindless drivel. Its not even Marxism (which is not mindless, just it doesn't work) its just anti-capitalism. I disagree your arguments have any validity whatsoever.

I'm sorry you can't see far enough past your own assumptions to consider listening to someone else's opinion or views objectively without bias. Your argument here appears to be "here's what I think you think, and I don't agree with what I think you think so what you think and what you are saying don't matter". To try and disregard or invalidate the initial post of mine that you were commenting on which was simply alluding to the FACT that the letter from Humpty Dumpty didn't contain any specific financial details related to how much money the business was making or how big of a percentage these costs would add to his operating costs overall, really makes me question whether or not you should be counted on to decide what is and isn't "mindless drivel".

[iggy_oi]

Originally Posted by Locke

That pretty much sums 'er up.

Its not 'waiting it out' like they're sitting on their hands doing nothing.

Do what you can with what you have. Make the situation better as well as you can.

So what do you suggest? You've really just dodged the question with this response. I hope your next response isn't simply "that's up to them to figure out"

We need our Politicians to take the Hippocratic Oath.

"First, Do No Harm."

So what do they say when someone says taxing me harms me?

[Parallex]

Originally Posted by Locke

You see where this equation fails?

No. Because you should be increasing spending during an economic downturn (not cutting it). Then when the economy recovers you should cut spending so that you can pay back the debt you incur when you spend in the downturn. The opposite holds true for taxes (cut during downturn and raise during upturn) but during the last boom the PCAA did the opposite.

I don't trust the WR or PCAA to either raise or even just stand pat on taxes if they're in charge during the next boom nor would I trust them to cut spending during a boom.

Is it optimal that the they're raising taxes now? No, but they have to do it now because the other guys won't do it later and they can't take for granted that they'll be in power later. Is it optimal that they're spending now? Yes, will they cut spending later? Hopefully, but probably not. So they're at least getting it half right... which is half more right then the other guys got it.