WHAT I LEARNED FROM MY FRIEND'S FATHER
Mr. Smith owns a food processing equipment manufacturer. His company makes specialty products used by restaurants and regional grocery stores. (I can't get into more detail than that.) He started working for the company when he was still in college (he paid for his tuition). It was a really small company at the time and he knew the owners. He worked his way up the management ladder and was careful to save money. He also worked on the weekends at a grocery store to save up some more money. The owners had some sort of family emergency and had to sell the company. He scrounged up the money with some other partners and bought them out. He became a co-president.
He also said that he didn't care about social issues too much. (I'll leave out the curse words.) He said the only thing he really cared about was how the government affected his money. He told me to write this down: "People can vote for whatever f--- reason they want. But my checkbook is a lot more important to me than The Constitution." And he said while he agreed more with conservatives on social issues, all of that was just "noise in the background" to him compared to anything involving his bank account.
While co-president, he managed to reconfigure some of their existing machinery to the point where he was able to obtain a patent. He also did this for two other machines the company had, too. He had a bitter falling out with his co-president (who he said was lazy) and ended up forcing him out and bought up his shares. He eventually bought out the other partners, too, and is now the sole owner.
The company currently has one facility in an industrial park. He has about 200 employees. The company assembles the machinery they make on site. He also has his sales and administrative offices there, too.
He might sell the company in 10 years. He's had offers from bigger competitors to do so, but he wants to wait for his son (my friend) to get some experience first. Then, he might keep it in the family tree or sell it. I didn't ask what he could sell it for, but he volunteered and said it could be somewhere between $8 and $12 million.
This blew my mind. He told me a little bit about how his income is set up -- draw accounts and the like, but that was a little over my head and not that interesting. But he's a straight-up millionaire and my friend has a very lucky life. Their house is really nice (a lot bigger than mine) and obviously they have some expensive stuff. But it's not some giant mansion. He said he bought the house cheap and paid off his debt to it as quickly as he could.
He then talked me through some of his Bernie points:
1) He said that most of his employees, even entry level ones, are fairly skilled and start off above $15/hour. But they sometimes might need temporary help, and some of those employees make minimum wage or below $15/hour. He said there was no way he could justify paying someone $15/hour "to shuffle some papers around if one of the secretaries takes off" or for someone to sweep up the floors.
He then said the worst part about a $15/hr minimum wage was that it keeps people from getting their first jobs. And this keeps people from getting experience. And, also, people make higher wages as work longer. He also said that he was going to put it bluntly, but a lot of people "stuck" working minimum wage jobs really don't have much of a choice of what they make anyways. A lot don't speak English, have criminal histories or related problems, or are just flat-out not capable of having any form of meaningful employment. He has a friend who owns a few Burger King franchises and it's apparently a big problem just to get people to do things like calling into the manager when they're out sick. He said that, unless there wasn't a rule in place, a lot of minimum wage workers would make way less than what they make now.
And he said that at $15/hour, no one in their right mind would keep staffing levels where they're at now. And every actual restaurant he said would also run into a lot of problems, too.
2) He said that he's in the highest tax bracket right now (no crap). He said that being in the highest bracket was $400,000 and he paid about 40% of his income in taxes already. (I had no idea.) He said his income tax would go up under Bernie's plan by a few percentage points, depending on how his business did and how his accountant handled things.
He then talked to me about his cigars. He said he knew something like that was a big luxury, along with his Escalade. And golf club membership. But he said he enjoys nice things, and sees nothing wrong with it. Cutting into his income means less of those. And he said in theory that sounds fine. But he told me that someone owns the cigar shop and the guy who works at the car dealership works on a commission. He told me to quote him on this: "No matter what anyone says, rich people buy things. And those things give people jobs."
He then said that raising taxes or whatever so people could go to college for free sounded fine, but then there wouldn't really be any incentive for kids to do well. There's no point in trying to get scholarships or the like if you're just going to go to college on another person's dime.
3) He said health care was way too complex to get into. His company actually pays another company to deal with health care because he couldn't make sense of it. And he said that while free health care sounded good on paper, that our country had 300 million people and there's no way nationalized health care would ever, ever work. And he said what his business pays for health care costs has gone up under Obamacare and he had to lay people off. But he said it wasn't just the health care costs, it was more the complex things associated with it now that whatever department handles that sort of stuff does became overwhelmed by it. So money he could have used to pay salaries or invest in his company is now going to some other company. And he said the single worst part about owning a business was health insurance, because he spent more time worrying about health care for his employees than he did actually running his company.
4) He also said his company has to waste all this other time because of other insurance problems. Like everyone has to do a mandatory once-a-year sexual harassment workshop. He said the easiest way to prevent stuff like that from happening is for him to scare everyone at the office in to not talking unless it was work related. (And, yes, he is that scary. Big dude)
5) And he also talked to me about Wall Street. He said he lost a decent amount in The Great Recession, but was smart enough to move a lot of his investments into safer things. But he said his business really suffered because of the recession. He thinks the Wall Street bankers got off really easy, and they straight up ripped people off. But he said he didn't have a lot of sympathy for people getting mortgages "who couldn't even spell the word." And he said the government was even more at fault with their different programs. He said the only people he really felt bad for in the whole thing were people who rented and all of sudden they got shut off because their landord messed up.
But he said adding on dividends taxes was a bad mistake. He said all that would do as take more of his money away. He said he puts in the time to find good companies to research and buys into them, particularly if they generate dividends. All that tax, he aid, would mean he'd have to stop investing if it wasn't worth it. Because spending money to invest is how companies grow.
I will post more tomorrow about what i learned.
