This was originally forwarded to me as an email. I Googled it and came up with this, slightly more complete, version. It is fake. It is a parable or an allegory or an example. The truths contained in its message are real. Do not make comments about this being a fake speech, I am fully aware of that. I repost it only to get it out there to more people in the hope that more people will see the folly in wishing injury to the "rich" job providers. They are the producers of wealth. They are the movers. Without them we all fall. It is in our best interest to wish them the best, to wish them greater wealth and prosperity, to wish them greater rewards. It is they who have worked and soiled their hands for their empire. We should wish to see it grow. This is not about pitting democrats against republicans, both parties are flawed. It is about the people and the ability to create wealth that is being squelched on the front page of every newspaper. It is about the general attitude that creating wealth is evil. It is about the belief that we are somehow entitled to something we did not earn. Man up. Be a mover not a moocher. Be a producer not a looter. Be a man who provides not a "man" who demands.

Without further ado:

Transcript of remarks made by Leo Carrington (who doesn’t exist) to a mandatory meeting of all employees of Carrington Automotive Enterprises, Inc. (which doesn’t exist either) on August 17th, 2009 at the Royal Payne Hotel (a purely imaginary place) in Norfolk, Virginia (which does, in fact, exist).

I would like to start by thanking you for attending this meeting, though it’s not like you had much of a choice. After all, attendance was mandatory. I’m also glad many of you accepted my invitation to your family members to be here as well. I have a few remarks to make to all of you, and then we’ll retire to the ballroom for a great lunch and some employee awards.


I felt that this meeting was important enough to close all 12 of our tire and automotive shops today so that you could be here. To reassure you, everybody is being paid for the day --- except me. Since our stores are closed we’re making no money. That economic loss is mine to sustain. Carrington Automotive has 157 full time employees and around 30 additional part-timers. All of you are here. I thank you for that.
When you walked into this auditorium you were handed a rather thick 78-page document. Many of you have already taken a peek. You were probably surprised to see that it’s my personal tax return for 2008. Those of you who are adept at reading these tax returns will see that last year my taxable income was $534,000.00. Now I’m sure this seems rather high to many of you. So … let’s talk about this tax return.
Carrington Automotive Enterprises is what we call a Sub-S – a Subchapter S corporation. The name comes from a particular part of our tax code. Sub-S status means that the income from all 12 of our stores is reported on my personal tax return. Businesses that report their income on the owner’s personal tax return are referred to as “small businesses.” So, you see now that this $534,000 is really the total taxable income – the total combined profit from all 12 of our stores. That works out to an average of a bit over $44,000 per store.
Why did I feel it important for you to see my actual 2008 tax return? Well, there’s a lot of rhetoric being thrown around today about taxes, small businesses and rich people. To the people in charge in Washington right now I’m a wealthy American making over a half-million dollars a year. Most Americans would agree: I’m just another rich guy; after all … I had over a half-million in income last year, right? In this room we know that the reality is that I’m a small business owner who runs 12 retail establishments and employs 187 people. Now here’s something that shouldn’t surprise you, but it will: Just under 100 percent … make that 99.7 percent of all employers in this country are small businesses, just like ours. Every one of these businesses reports their income on a personal income tax return. You need to understand that small businesses like ours are responsible for about 80 percent of all private sector jobs in this country, and about 70 percent of all jobs that have been created over the past year. You also need to know that when you hear some politician talking about rich people who earn over $200,000 or $500,000 a year, they’re talking about the people who create the jobs.
The people who are now running the show in Washington have been talking for months about raising taxes on wealthy Americans. I already know that in two years my federal income taxes are going to go up by about 4.5 percent. That happens when Obama and the Democrats allow the Bush tax cuts to expire. When my taxes climb by 4.5 percent the Democrats will be on television saying that this really isn’t a tax increase. They’ll explain that the Bush tax cuts have expired .. nothing more. Here at Carrington we’ll know that almost 5% has been taken right off of our bottom line. And that means it will be coming off your bottom line.
Numbers are boring, I know … but let’s talk a bit more about that $534,000. That’s the money that was left last year from company revenues after I paid all of the salaries and expenses of running this business. Now I could have kept every penny of that for myself, but that would have left us with nothing to grow our business, to attract new customers and to hire new employees. You’re aware that we’ve been talking about opening new stores in Virginia Beach and Newport News. To do that I will have to buy or lease property, construct a building and purchase inventory. I also have to hire additional people to work in those stores. These people wouldn’t immediately be earning their pay. So, where do you think the money for all of this comes from? Right out of our profits .. right out of that $534,000. I need to advertise to bring customers in, especially in these tough times. Where do you think that money comes from? Oh sure, I can count it as an expense when I file my next income tax return .. but for right now that comes from either current revenues or last year’s profits. Revenues right now aren’t all that hot … so do the math. A good effective advertising campaign might cost us more than $300,000.
Is this all starting to come together for you now?
Right now the Democrats are pushing a nationalized health care plan that, depending on who’s doing the talking, will add anywhere from another two percent to an additional 4.6 percent to my taxes. If I add a few more stores, which I would like to do, and if the economy improves, my taxable income … our business income … could go over one million dollars! If that happens the Democrats have yet another tax waiting, another five percent plus! I’ve really lost tract of all of the new government programs the Democrats and President Obama are proposing that they claim they will be able to finance with new taxes on what they call “wealthy Americans.”
And while we’re talking about health care, let me explain something else to you. I understand that possibly your biggest complaint with our company is that we don’t provide you with health insurance. That is because as your employer I believe that it is my responsibility to provide you with a safe workplace and a fair wage and to do all that I can to preserve and grow this company that provides us all with income. I no more have a responsibility to provide you with health insurance than I do with life, auto or homeowner’s insurance. As you know, I have periodically invited agents for health insurance companies here to provide you with information on private health insurance plans. The Democrats are proposing to levy yet another tax against Carrington in the amount of 8 percent of my payroll as a penalty for not providing you with health insurance. You should know that if they do this I will be reducing every person’s salary or hourly wage by that same 8 percent. This will not be done to put any more money in my pocket. It will be done to make sure that I don’t suffer financially from the Democrat’s efforts to place our healthcare under the control of the federal government. It is your health, not mine. It is your healthcare, not mine. These are your expenses, not mine. If you think I’m wrong about all this, I would sure love to hear your reasoning.
Try to understand what I’m telling you here. Those people that Obama and the Democrats call “wealthy Americans” are, in very large part, America’s small business owners. I’m one of them. You have the evidence, and surely you don’t think that the owner of a bunch of tire stores is anything special. That $534,000 figure on my income tax return puts me squarely in Democrat crosshairs when it comes to tax increases.
Let’s be clear about this … crystal clear. Any federal tax increase on me is going to cost you money, not me. Any new taxes on Carrington Automotive will be new taxes that you, or the people I don’t hire to staff the new stores I won’t be building, will be paying. Do you understand what I’m telling you? You’ve heard about things rolling downhill, right? Fine .. then you need to know that taxes, like that other stuff, roll downhill. Now you and I may understand that you are not among those that the Democrats call “wealthy Americans,” but when this “tax the rich” thing comes down you are going to be standing at the bottom of the mud slide, if you get my drift. That’s life in the big city, my friends … where elections have consequences.
You know our economy is very weak right now. I’ve pledged to get us through this without layoffs or cuts in your wages and benefits. It’s too bad the politicians can’t get us through this without attacking our profits. To insure our survival I have to take a substantial portion of that $534,000 and set it aside for unexpected expenses and a worsening economy. Trouble is, the government is eyeing that money too … and they have the guns. If they want it, they can take it.
I don’t want to make this too long. There’s a great lunch waiting for us all. But you need to understand what’s happening here. I’ve worked hard for 23 years to create this business. There were many years where I couldn’t take a penny in income because every dollar was being dedicated to expanding the business. There were tough times when it took every dollar of revenues to replenish our inventory and cover your paychecks. During those times I earned nothing. If you want to see those tax returns, just let me know.
OK .. I know I’m repeating myself here. I don’t hire stupid people, and you are probably getting it now. So let me just ramble for a few more minutes.
Most Americans don’t realize that when the Democrats talk about raising taxes on people making more than $250 thousand a year, they’re talking about raising taxes on small businesses. The U.S. Treasury Department says that six out of every ten individuals in this country with incomes of more than $280,000 are actually small business owners. About one-half of the income in this country that would be subject to these increased taxes is from small businesses like ours. Depending on how many of these wonderful new taxes the Democrats manage to pass, this company could see its tax burden increase by as much as $60,000. Perhaps more.
I know a lot of you voted for President Obama. A lot of you voted for Democrats across the board. Whether you voted out of support for some specific policies, or because you liked his slogans, you need to learn one very valuable lesson from this election. Elections have consequences. You might have thought it would be cool to have a president who looks like you; or a president who is young, has a buff bod, and speaks eloquently when there’s a teleprompter in the neighborhood. Maybe you liked his promises to tax the rich. Maybe you believed his promise not to raise taxes on people earning less than a certain amount. Maybe you actually bought into his promise to cut taxes on millions of Americans who actually don’t pay income taxes in the first place. Whatever the reason .. your vote had consequences; and here they are.
Bottom line? I’m not taking this hit alone. As soon as the Democrats manage to get their tax increases on the books, I’m going to take steps to make sure that my family isn’t affected. When you own the business, that is what you’re allowed to do. I built this business over a period of 23 years, and I’m not going to see my family suffer because we have a president and a congress who think that wealth is distributed rather than earned. Any additional taxes, of whatever description, that President Obama and the Democrats inflict on this business will come straight out of any funds I have set aside for expansion or pay and benefit increases. Any plans I might have had to hire additional employees for new stores will be put aside. Any plans for raises for the people I now have working for me will be shelved. Year-end bonuses might well be eliminated. That may sound rough, but that’s the reality.
You’re going to continue to hear a lot of anti-wealth rhetoric out there from the media and from the left. You can chose to believe what you wish .. .but when it comes to Carrington Automotive you will know the truth. The books are open to any of you at any time. I have nothing to hide. I would hope that other small business owners out there would hold meetings like this one, but I know it won’t happen that often. This hasn’t been about admonishing anyone and it hasn’t been about issuing threats. This is part of the education you should have received in the government schools, but didn’t. Class is now dismissed.
Let’s eat.

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Tags: Atlas, Shrugged, automotive, care, carrington, class, economics, envy, ethic, government, More…health, incentive, poor, redistribution, rich, taxes, wages, wealth, work, working

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Comment by Tanner on December 18, 2009 at 4:07am
Here's another thought for the dissenters: In the example above, there are 157 full-time employees of Carrington Automotive and 30 part-time employees. Let's say that the average full-time employee salary is $30k/year. That's about $14.40/hr for a 40 hour work week. There will be some managers that are paid more according to their value to the company and some newer/younger guys who are paid less according to their lower skill set. We'll say that the part-time employees make $15k/year average. Some will be seasonal, some only work a few hours, and some working for the government-mandated and artificially-inflated minimum wage. I think these are pretty good assumptions and are not overly exaggerated in either direction.
Now it's just simple math based on the above assumptions:
Mr. Carrington's yearly payroll is a total of $5.16mil. (As a side note, Mr. Carrington writes paychecks that total nearly ten times his personal income or bottom line. I call that true philanthropy)
If his employees are taxed at average rate of 10%, the total income taxes generated by Carrington's employees is $516,000 per year.
If Mr. Carrington himself is taxed at double that rate, his yearly taxes are $106,800.
If his taxes are raised by 8% (average from the story) his total tax burden would be $149,520.
The "collective" would see an increase in tax revenues of $42,720.

In the story, Mr. Carrington has plans to open two new stores. Now, let's say he is able to keep enough of his own money to open those stores and, using averages from the story, hires 13 more full time employees and 3 more part-timers. The total increase in tax revenue from those employees is $43,500 per year.
In addition to that, after taking the additional revenue from the stores into account, (assuming they are profitable) Mr Carrington's personal tax burden would increase by $17,600 at the original 20% tax rate.

Total increase in tax revenue for "the collective" if Mr. Carrington's personal income taxes are increased by 8%: $42,720.
Total increase in tax revenue for "the collective" if Mr. Carrington is allowed to keep his money and open up two more stores: $61,100.
That is a 43% increase in tax dollars going to fulfill his "social contract" if this business is allowed to be run by it's owner.

Then consider the fact the Mr. Carrington will hire contractors to build those new stores or renovate the buildings he will purchase and their families will be fed; he will likely buy advertising for the grand openings of the new locations and the advertising company will pay its employees; he will be hiring 16 new people to operate the new stores and those people will either leave a lower paying job or come off of unemployment when they are hired, both of which benefit society as a whole; he will hire a landscaper and an asphalt guy and buy new tools and inventory and equipment and furniture, etc, etc...

It just works. It simply, logically, and undeniably works. It satisfies the "social contract" and it allows for unfettered creation of wealth that is distributed by monetary contract not by mandated coercion, by freedom not by force, by the exchange of labor and skills for dollars not by the extortion of legislation and stolen at gun point.
Comment by Tanner on December 16, 2009 at 8:17pm
That is a fantastic quote, thanks for sharing.
Comment by Tanner on December 16, 2009 at 3:29pm
Thanks for joining the discussion LShieldes, albeit for the wrong side...tic ;P
Comment by Steve Dallas on December 16, 2009 at 2:46pm
Topher, if I haven't said it before, I really cannot appreciate enough on the way you answer these questions. It is the same as I believe and have learned through my reading, I just cannot bring it into words nearly as well. Thank you.
Comment by Tanner on December 16, 2009 at 2:37pm
Topher, I don't own a business, I don't own a "cake" but so I am not the business owner in this discussion. My dog in the fight is the guy who owns the businesses we work for. I want him to be as successful as he possibly can so I can trade my skills for dollars.

The gift from the business owner to society is the creation of wealth and jobs and economic stability for countless individuals and families. It is his hard work that created those opportunities that others take advantage of. In reality, if anyone should pay taxes it should be us, the laborers, paying a portion back to the business owners because they will use that revenue to create more wealth of which we are the beneficiaries. That is what tax breaks are for. It is the return of wealth to those who create it so they can do what they do best. The government does nothing but mooch and loot and leach off of those capable of creating wealth. Even when giving a "tax break" the government skims off what they see fit.

The problem with your viewpoint is that it allows for government sanctioned and executed theft based on some arbitrary definition of what is acceptable for a producer to profit from his venture. If left to his own devices, a business owner will only benefit society by creating jobs within his own company as well as creating economic opportunity with his personal spending and investing.

Socialism, communism, whatever you want to call you ideology, has never worked because it is a culture of death. The only result is dead economies, dead businesses, and dead people in the streets. It won't work. It never has.
Comment by Tanner on December 16, 2009 at 1:17pm
Thanks Nicky.

Good luck to you Liam, I wish you all the success you can earn. :)
Comment by Liam Strain on December 16, 2009 at 1:11pm
I see your point Tanner.

Even so, I think we're both looking at extreme and polarized examples. The truth is somewhere in the middle.

I am also a smaller business owner (on top of my dayjob). I have no desire to be punished for any success I can eke from it. :)
Comment by Tanner on December 16, 2009 at 12:56pm
Topher, your history lesson is meaningless and condescending. Secondly, if I build a "cake" (to continue using your cliche), who but me has the right to decide whether or not I give it away? What I can do is choose to give slices of it away in exchange for labor, i.e. wages. The labor exchanged for cake slices will in turn allow me to build a larger cake thus having a greater number of slices to exchange for more labor. But the bottom line is, it would be my cake, my risk, my reward and my decision what to do with it. If I want to eat all of my cake, I can choose to fire my employees, pay off my debts and eat what is left. That would be truly selfish. The unselfish thing to do, would be to work towards owning the largest cake possible so that I have the most number of slices that I can exchange for labor. At the end of the day, if I am successful and wish to keep 10% of the cake for myself, that is my prerogative, not yours.

Liam, thanks for the clarification. My point is this: if a man is "rich'" he pays a higher percentage in taxes and is therefore punished for no other reason than the fact that he owns more. It is a deterrent to the pursuit of wealth and results in a general attitude of greed by the middle class for things they did not earn. It is not greedy to desire to keep what is already yours, it is greedy to desire to take by force what is not yours. That higher tax rate doesn't take into account the years spent working towards that end and the risk involved. If he chooses to use what you call "loopholes" to expand his business, he will be providing a greater good to the working class in the way of increased job opportunities and increased wages which equal more money spent providing for families. Let's say he chooses to pay the taxes and use the surplus to buy a house in Palm Springs, many would call that a purely selfish thing for a rich man to do. The realtor gets a commission from the home sale, he buys airline tickets to fly down there and the flight attendants, pilots, and security guards have jobs, while he's there on vacation he goes out to eat and the servers, cooks, and restaurant owners have jobs and earn tips, he buys a car to keep at his vacation home and the salesman and maintenance men get paid, he has television and internet and home furnishings that are purchased and those employees take some of his money home to their families. It all works.

I work in sales for a large company and have pretty good understanding of how business margins work. Let me put a few numbers out there for you guys to consider. Most businesses, like the one I am involved in, place about 2% of their total gross revenue to the bottom line on an average year. Many years (like this one for us) it is much less than that, some years it is higher than that but this is an average example. That is after paying employees, rent, loan payments, maintenance, inventory costs, suppliers, etc. Using this number, each of the 12 Carrington automotive stores grosses about $2.2mil per year. That's $26.4mil total for the 12 locations. Mr. Carrington, on a yearly basis, assumes a risk in the neighborhood of $26.4mil. If everything went sideways and his business went under, that risk is his to bear, not his employees. In the example above, the bottom line profit added up to the $534,000 that shows up on his personal income taxes. That is, lo and behold, about %2 of his total risk. Out of that 2% bottom line comes all the opportunity for expansion, raises, bonuses, benefits, etc, for current and future employees.

Does that make better sense? you guys are focusing on the $534K like it's an astronomical number and failing to see the huge risk that this guy, and every other business owner, assumes every day in striving toward the end of the year in the hopes of making a profit. Not so they can keep every penny but so they can grow and expand and employ more people and have the chances a greater profit and then do it all over again.

Please don't argue with me over the details and specific numbers in my example. I've sat through enough P&L meetings at the $30mil branch location I work for and the $12Bil corporation we are part of to know how things realistically shake out at the end of the year.

Nicky, I agree, thanks for posting.
Comment by Liam Strain on December 16, 2009 at 8:36am
Tanner - I think you misread what I said.

I'm not bemoaning my state (I realize it came off that way, my second post was meant to clarify) or suggesting I should be paid more than I've earned. But I do pay my full taxes, and he does not - not do many of the very wealthy. There are too many loopholes and shelters in place that those with means can take advantage of so that the "higher percentage" they are nominally charged, is almost never what they actually pay.
Comment by Tanner on December 15, 2009 at 11:44pm
So get a different job. Make yourself more valuable. Your CEO makes more than you because he is more necessary to the company than you. I work for a very large international corporation, I make a decent living but our CEO makes much more than 20 times what I do. I would never trade him positions because I would be rewarded for work I didn't do. He is there because he worked towards that end. I choose not to.

If you advocate the theft of one man's wealth for the simple reason that he has more than you, then you do mean to be a dick. Your use of cliches does nothing for your argument by the way.

Your entire argument comes from a victim's position. You believe the rich should "share," at gun point, the wealth they created. They already lose a higher percentage of their income in taxes, that is a cost that detracts from their ability to expand their businesses. That is wrong. They are punished for creating the wealth they enjoy. That punishment, whether you choose to acknowledge it or not, results in a punishment to middle class in the way of lower overall pay and fewer jobs.

You are so mired by self pity that you cannot understand the simple, central point of this little story. Taxes come from wealth and wealth must first be created. In this fictional example, there are 187 people paying taxes and feeding families because one man had the balls to start a company and build it up to that point. He plans to expand that business. That would mean more taxpayers and more families supported and more money spent...more wealth created so that it can taxed.

The irony of all this, is that you and the rest of the looters wish to punish this fictional man for making "too much money." Who defines that? You? How would you know how to define what level of wealth is too much? You've admitted you struggle month to month. You don't have the credentials to make that decision for someone else. The money he has he made. He did not need your permission to start his business. You weren't there when he was slinging tires in his first store. Why does he need your permission to keep his own money?

This fictional man "has the means" because he created them. You have chosen not to. You have no right to punish a man for succeeding in something you have not.

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