From: Steve Grammont (islander@midmaine.com)
Date: Tue Jan 21 2003 - 11:58:53 PST
Hi Ed,
> You site an example of somebody making a 4X profit on
>something, and paint all the dealers with the same
>brush.
I didn't intend to. In other places I said specifically that I think
dealers are a GOOD thing to have and I would gladly pay a reasonable
premium to purchase something from one of them instead of GL directly for
adding value to that vehicle/item.
Having said that, I do not agree that all items sold out through GL are
maximized. I also think that dealers have the right to be unscrupulous
as long as I have the right to point out that they are gouging.
Fortunately I have seen very little of this in my 4 years of collecting
and USUALLY the gouging comes from small time operations with a "get rich
quick" mentality.
> If some guy wants a certain truck, usually the best
>one, he will out bid the dealers. The dealers bid the
>same amount on all the trucks in the row, and get
>what's left over after the spot bidders. After taking
>the good parts off the scrap trucks, to fix the other
>trucks, all you get is scrap metal price for what is
>left, less then what you bid. The dealer needs to make
>something so he can bid again, make a living, and pay
>the help.
Correct. This is all fine when it works correctly. That includes GL
getting max income in relation to market value.
> All these people pay taxes, so the IRS gets their
>share without getting their hands dirty.
You obviously don't know the reality of tax codes like I do :-) But that
isn't the point. For the sake of argument let us say some dealer sells a
vehicle for $45k off of a $10k auction item in which he added only $1000
worth of value (basically, he did the paperwork and towed it home). That
means the dealer got $34k in profit before taxes. Let us just say that
when all is said and done he has to pay 40% on that profit (which would
mean this was his ONLY sale that year) in accumulate taxes. He is
therefore left with $20.4k after tax profit. The Government gets the $5k
+ $13.6k in taxes, for a total of $18.6k.
Now, if the Government had sold the vehicle for $40k with the rest the
same, the dealer winds up making a $4k profit, the Government gets $1.6k
in taxes + $40k, which is a total of $41.6. The dealer still makes out
handsomely and the end buyer is out the same amount of money. The big
difference is that the Government walks away with the lion's share of the
profit. And that is the way it should be in a correctly functioning
Capitalist system.
Steve
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