wa dave:
wiseguy:
Any specific examples? Something that makes you slap your head like Homer and yell “DOH”!!!
You are absolutely bloody right there.
The term “Fool’s Tax” came from Nick Sissy, oops I mean Sasso in an earlier post from me about paying too much for a business.
I mentioned that I got ripped off with shonky equipment, bad electrical wiring, understated expenses and other things that made me say much worse than “DOH” !!!
Basically, Nicole, oops I mean Nick, came back with the term “everyone pays their “fools tax” if you don’t do careful due dilligence” or something very close to that.
Yup. It is the difference between what we thought was a great price and what something is actually worth to someone who knows better and did their homework.
EXAMPLE: Buying a restaurant for the $185K asking price when the current owner describes how he pays the labor costs in unreported cash, really does 25% higher sales than he reported on his tax returns, has 12% labor costs, brings home a $50,000 profit on $300,000 in gross annual sales. FOOLS TAX: approx. $160,000
EXAMPLE: Saving money on operating expenses by not carrying third party driver insurance. You hire 21 year old without checking MVR to see the DUI and prior suspended license history. He runs stop sign with your car topper on his car, and totals a brand new $20,000 motorcycle sending rider to emergency room. FOOLS TAX: ask the jury when they sell your business to pay the award amount.
Fools try to get something for a great price, ignore their intuition to look behind the curtain at the man with the levers and microphone (Wizard of Oz reference) and forge right ahead to spend that money figuring that they just couldn’t loose this time.
Synonyms: Learning tax; idiot tax; price of the lesson; “D@mn it, they got me!”
