I started with $2,000 I had earned working in a machine shop, which I gave to a leasing company to take over payments on Vertical CNC Machining Center. When I told a friend I worked with that I only had to make payments of $2,200 a month for five years to pay for this used machine, he looked at me with incredulity and said, “Jim, your house payment is only $1,500 a month!”
Since I didn’t get the memo that said business plans are supposed to be well thought out, I had to work 20 hours a day, seven days a week. I slept in the industrial building I was renting on a concrete floor and drove home 65 miles once a week for a shower. I did this diligently five months straight until I had earned enough money to move the little machine shop closer to my home.
For my effort, my little business grew and increased its revenue by 30 percent or more each year for the next five years. I hired a few people, and for that privilege got to pay a 7.65% payroll tax on every penny they earned.
After five years of solid growth, my business was decimated by Chinese competition. Overnight I lost half of my business revenue. Perhaps those road builders I am so indebted to ought to shift their focus to trade policy.
Fearing the loss of my whole business and struggling to get enough work to pay the bills, I ventured from tool building to plastic processing to try and save the little enterprise I had built. (I couldn’t use the well-maintained bridge down the road to make my rent or machinery payments.)
I got one existing customer to promise enough extra work to make ends meet, but I had to run my plant 24 hours a day, six days a week. Since I didn’t really know the plastic business and couldn’t afford any competent managers to help, I again found myself staying at work all day and all night. I slept in my office (by now I could afford a couch) just in case one of my operators needed assistance. This schedule lasted for a couple of years, but I am thankful city workers kept the asphalt in front of my building in decent shape.
My customer’s customers — large companies like Motorola, Ford and Dell Computer — pinched us for pennies, driving our profits below 10 percent and stretching out our payables by more than 120 days.
Disenchanted with the sort of service business where I was dependent on the loyalty of customers who were only loyal to us as long as we had the lowest prices, I used every extra minute and every extra dollar I had to develop my own product and build a business that might be secure into the future. Today, Mr. President, my company is one of only two in the state of California that manufactures pistols. For the privilege, I pay a 10% excise tax on every gun we make.
As this new enterprise has begun to succeed, I have expanded into another building and purchased more equipment. For the privilege, we pay 1-3% property tax, not only on real estate, but also on each piece of equipment we purchase.
In addition, California charges 7.75% on any purchases we make. We invest hundreds of thousands of dollars in capital equipment, so these charges are a significant expense.
If I manage to get through all of these tax landmines and still earn a profit, I will have to send 5-10% of my income to Sacramento and 20-30% to Washington.