reply to post by dbloch7986
Don't be surprised if these tax increases get deferred should the republicans win control over one house of congress in November, at least we can
hope so. Based on the current refusal to pass extended unemployment benefits with out corresponding spending cuts can give us some hope that they
will hold firm here.
These tax increases make no sense, like tax increases in general. Look for the markets to get hammered as folks take gains at lower rates, defer
income and then subsequent federal programs for which there is no money to compensate people who can't afford the basics based on the new tax burden.
Jobs will be lost by the thousands, requiring more government spending and the vicious cycle will continue.
Its really easy to support taxes - sounds good, "only the rich pay the higher taxes", etc. Tell that to the person living a basic life on his 401K
who will see not only the value of that account get hammered, but also the capital gains on the sale of secutities he need to execute to supply him
The law of unintended consequences.
It is counter-intuitive to suggest that lower taxes increases receipts to the government, but that is the way it works. Create incentives to make
money and folks will make more money and pump more into the system. Remove the incentive and folks will pull back and less money flows into the
government despite the fact that the tax rates will go higher.
We learned this lesson before. The emotional appeal of raising taxes is too great and the political power of "taxing the rich" is too easy.
We'll all find out that the "rich" impacted by these tax increases are not that "rich" at all. The wealthy folks will simply pull their money
out of the equity markets and put it into cash. Will they earn less of a return? Sure, but they will do what they can to preserve their wealth.
If you have cash or cash equivalents, you will get rich in the next 5 years. At some point the government is going to have to suck the money
they're printing out of the system and to do that, they will have to raise interest rates. Sure inflation will be a factor, but throwing money into
a 10+% tax free bond is a good deal, if you have the cash. Face it, as much as the socialists like it, the rich will be in cash by the end of the
year and they will exploit the folly of our current economic policy in the coming years. Its the person who is living on marginal investment income
who can not afford to live on 2% interest income and dividends that these cash instruments deliver, both subject to increased taxes that gets
hammered, not the person with several $million or more. Look for real estate to get hammered again as well.
Be interesting to take a look at the "blind" trusts held by Herb Kohl and John Kerry, two of the gents pounding the table for higher taxes. Where
will their $billions be by the end of the year? It will be in cash. They are not going to ride the equity markets and their investment managers
would likely be subject to criminal charges if they did not move their assets into safer, tax sensitive instruments.
All this is is and underscoring of the lack of courage of our political leaders to take on the challenges that confront us.