Autobiography - The Galindo Group

Ram Galindo THE MAKING OF AN AMERICAN Page 141
active former student. It pains me to admit that my hurt was so deep that my
enthusiasm to continue bolstering TAMU diminished greatly afterwards.
The question of tax exemption to favored organizations that claim altruistic purposes
related to church, education, civic, research or charity work often vexes the efforts of tax
paying small businesses that have to compete with them. I think a majority of taxpayers
would support with glee tax exemptions that benefit the truly needed if a clear definition
of true need were available. Reality shows that most of these so-called public purpose
organizations wind up spending the majority of their revenues in advertising their
mission, which covertly aims at paying their staffs salaries and benefits that small
business cannot afford. Savings in property, sales, franchise, severance and income
taxes in Texas represent approximately a 35 % cost advantage, which is partly used to
provide enhanced personnel benefits. Such affluency allows these privileged
organizations to hire very well qualified personnel who in turn increase their competitive
edge even more. Thus, the gap between them and struggling small businesses widens
further. I provide more evidence for these statements in Tax Favoritism (Chapter 5).
Tax exemptions are one of the major unpredicted fallouts of the 16 th Amendment
authorizing the federal government to tax incomes. The imbalances they create have to
be dealt with practically one at a time. This makes the judgment of the arbiter of the day
subject to second-guessing by other parties and therefore no final understanding can be
easily achieved. The surest way to eliminate this vexing imbalance would be to repeal
the 16 th Amendment and fund all governments principally by taxing consumption, not
production. This is just one more argument to support the cause of important initiatives
to repeal the income tax that are floated from time to time but seldom given serious
consideration by elected politicians and the establishment’s lobby.
While some truly great Americans are spending their money and efforts to show
politicians and public opinion the advantages of consumption-based taxation, the rest of
us, unable to help at their level, must continue the struggle for survival. Unfortunately,
this struggle sometimes includes the partition of dying businesses killed by lopsided
competition. I had to taste the bitter flavor of such an experience.
One of the affected health fitness clubs that could not continue operations in the wake
of the opening of Texas A&M’s gigantic Rec Center was Royal Oaks Racquet Club, in
Bryan. It owned significant real estate assets. This unproductive capital investment
exacerbated the loss. The owner approached us with an attractive lease-purchase
contract for the business that included the attached real estate and adjacent flood-prone
tract. We signed a contract on March 1, 1996, providing for a two-year trial period
before any options were triggered. After a successful two-year management effort, on
March 1, 1998, Cid and I exercised the option to buy the club with the real estate it
occupied. The seller provided all the financing for the purchase but we agreed to make
a cash investment for additional improvements.
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