Over the last three decades, there has been a significant change to the functionality of businesses. However the view and mentality of the business leaders have not shifted accordingly. Today, understanding government funding for business growth is essential: the government needs you to access these dollars to help drive industry expansion, counter outside influences and support sustainable revenue streams.
Debunking Tax Strategies: From Loopholes to Smart Funding
Over the years we have heard of accountants “finding loopholes“, “pushing the boundaries” of deductions on our taxes and flat out ‘”keeping it quiet“, as a modality to effectively sidestep the taxation footprint of operation.
Today, we now understand that none of this is necessary.
The government needs us to get the money. They need to fund industry growth to counteract outside influences and to ensure more dollars in their funding needs.
Why Governments Invest: The Economic Cycle of Public Funding
To understand this, we must identify why governments give these funds and credits in the first place.
Governments don’t want to increase taxes, as it is the single easiest way to alienate their electorate. The idea of raising taxes is tantamount to taking food out of your child’s mouth. The government would rather keep the tax rate where it is.
However, increase the funds that come from the source by increasing income and spending across the board.
Leyton has secured over $500 Million in Tax relief in the last year for their clients.
We know that when a business wants to increase its bottom line, they will look to enhance the sales of an existing product or product line, will endeavor to increase the marketing or branding or will increase where the product is sold, ie. Internationally or even to different states.
All of these require extra funds in training, hiring, marketing and purchase of raw materials & equipment to fulfill those sales.
Each State has its own programs. Explore what’s available in your area by visiting your state’s incentives page.
The government does not generally deal in sales. They are there to collect taxes and render services (medical coverage, military protection, welfare of children and the elderly)…
The Political Reality Behind Government Funding
Now comes the question of, how do they get more money? How can the government, year in and year out, increase their budget and continue funding everything that is necessary for its citizenry?
The simple answer is that the government invests in industry.
When the government sets aside an amount for an industry, they want those funds to be taken and used by that industry fully. They do not want one dollar remaining in their coffers for what it has been assigned for.
If it doesn’t use all the funds, then it is not successful in its mission.
The Ripple Effect: How Government Funding Drives Economic Growth
The Personal Impact: More Funds, More Opportunities
Let’s assume the income tax rate is 21% and the sales tax rate is 10%. If an employee is paid $70,000 USD, then $55,300 is the net salary.
If the expenses to run their household is $4500 per month, including vehicle, mortgage, food.. that leaves only $1300 per year for disposable income.
Nobody is buying a new car, a new house, a boat, going to a restaurant or in any way contributing to the economy because they have no money to spend. Thus there is no sales tax being collected.
The federal government also needs more than the $14,700 it gets from your income to cover base spending in military, health, Social Security…
So the government says that they are going to put $500 Million in your industry.
Your company gets the funds coordinated and identified by Leyton and they receive $200,000.
With these funds a decision is made to give you a $15,000 USD raise. And they decide to hire 2 new people at that rate as well. In so doing the three employees have a combined income of $255,000 and their net income combined is $201,450 USD.
The federal government has now received $53,500 of income tax from that one employer, and the average has increased to $17,850 per person.
Furthermore, the disposable income per person is now $13,150 USD. So now we are looking at spending money in the economy and go to restaurants, movies… This cycle continues to multiple avenues of spending and buying.
From Budget Bills to Industry Growth
Thus the government announces $500 million in spending, but in the budget bill, it is to create and inject an extra Billion dollars. So it, for example, expects a 100% return.
This is hypothetical, however this is why governments give credits and funds through Grants. It is their revenue generating modality.
If a program is perpetually not taking all the funds in their sector and there is no growth in the sector, the funds will be reallocated to a different sector, or new initiative in a different sector that has or will show the returns necessary to fund all other projects and needs within each separate department.
Final Thoughts: Seize the Opportunity
The bottom line is that the Government wants and needs you to take these funds and Credits. It is necessary for an economy to innovate and grow or else economic stagnation is what halts movement and leads to inflation, recession, then depression.
Everyone needs to make more and spend more in a capitalist society.
Both employee and employers’ liquidity are crucial for an economic upturn and dare we say, prosperity.
Ready to explore your government funding options?
