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"We're so clever taking Morgan and Morgan's money to buy guns hur dur hur!"
Yes, you can spend that money on guns despite their backing hard core anti-gun politicians.
You might be telling yourself that you've cost them something.
You have not.
Advertising is a business expense.
It's written off.
Net cost to Morgan and Morgan: $0.
If you, after buying your guns, manage to convince even one person to hire Morgan and Morgan and that leads to a win in court or a settlement, you just made the people who support banning you owning that gun a profit.
Aid and comfort to the enemy.
I don't understand.
ReplyDeleteJust because advertising is an expense that is written off, doesn't mean that money wasn't spent.
It appears in the expense column, which means that it doesn't appear in the profit column.
I'm pretty sure that means that it cost the company something - maybe not a lot, but something nonetheless.
There may well be tax advantages which work to reduce the "cost" of the expense, but they don't make it zero. (unless the government is playing loose with tax law again to push an agenda, such as allowing 150% deductions for charitable donations or some other sh*t)
It's an expense that doesn't cost when the ledger is balanced at tax time.
DeleteMoney spent on advertising offsets taxes on income.
If the US tax system works anything like that in Oz, the expenditure would be offset against EARNINGS.
ReplyDeleteThat reduces the tax payable, sure, but only by the amount of tax that would have been paid if that money was classified as earnings. Here that would be ~30%.
It isn't a no cost arrangement.
I have tried to find the words to make this clearer several times and I just can't find the combination that doesn't muddy it more.
DeleteThe real point is Admin, and now Donut Operator, shilling for the people who support ending civilian gun ownership. Any personal benefit they get will be more than offset by politicians Morgan and Morgan get elected.
Considering they're both ex-cops, I wonder if they think they're still special and won't be affected by the consequences of their advocacy.
I don't disagree that the advocacy is foolish - taking money to support your opponents' position is traitorous.
DeleteIt seems to be happening a lot - companies and organisations are adopting positions that make the directors/owners feel good, but that the shareholders and much of the general public (ie reasonable people) HATE.
I am only saying that I believe that the contribution from Morgan & Morgan is not cost free to Morgan & Morgan.
By analogy:
I buy 1000 widgets for $1 each - COSTS = $1000
I sell 1000 widgets for $2 each - EARNINGS = $2000
PROFIT = EARNINGS - COSTS = $1000
TAX PAYABLE = x% of PROFIT, say 30% = $300
NETT PROFIT = $700
Now, I decide to pay you $100 to advertise my widgets, hoping to increase sales.
I buy 1000 widgets for $1 each - COSTS = $1000
I pay $100 to advertise with McThag - COSTS = $1000 + $100 = $1100
I sell 1000 widgets for $2 each - EARNINGS = $2000
PROFIT = EARNINGS - COSTS = $900
TAX PAYABLE = x% of PROFIT, say 30% = $270
NETT PROFIT = $630
Contrasting those two NETT PROFIT numbers shows that the impact to my bottom line is less than I spent on advertising, but it is not zero.
Of course, the advertising may actually increase sales, but that doesn't change the fact that the direct cost of said advertising is never zero - it is only lessened by the marginal tax rate that would have been payable on the money if unspent.
As an aside, if the government decides that advertising with certain organisations (those owned by ex-cops, vets, minorities, etc) needs to be encouraged, and allows direct deduction from tax payable for those expenditures, the figures fall apart.
Don't laugh, the Oz government has done very similar things when trying to twist our economy into the shape they think it should be.
Pretty sure I conceded your point in "Clarity".
DeletePossibly, probably even, I sometimes have issues with hyper-focus. :)
Delete