Friday, April 25, 2008

Mike's View on Taxes and the Economy

Guess what? The economic stimulus rebate checks are coming a week early!! Oh, happy day!!! Is this a good thing? Not really, in my opinion. What will most of this money do? I'd be willing to wager that credit card companies are salivating right now. This money will put off the inevitable.

Let me explain. Credit card companies (or any industry that grants credit, think real estate) gave way too much credit. Especially to those who really shouldn't have it. Before the meteoric rises in the cost of living the past 12 months, these people were already financially maxed out. Now the government wants to take my money to bail them out. What do I get out of it?

So these handouts are arriving soon. Really, what can $600 do? Most people will pay bills, which won't help the economy. Those services are already used and the producers of said services have already laid out their money, so no one wins. If you're on the ragged edge with your credit cards, you'l get what, a month's reprieve? If we all take our money and go buy something new, that would help the economy. Give the consumer the power to spend and the economy picks up.

This brings me to another issue. I hear people saying the price of gas is too high, and the government should do something about it. Newsflash!! They already have in many areas, and it's called mass transit. I propose a mass transit tax that would be levied on any vehicle that can't get over 18mpg for it's average mileage. Not highway. I can get 36mpg with my 98 Accord, but usually my mileage per tank is about 26 because of around the town driving. If you drive a gas swilling truck or SUV, you have two chioces. Pay up or sell your car. Your amount of tax could be offset if you choose mass transit. A whole prorated table could be devised.

I keep reading the cronies saying if gas were cheaper, the economy could recover. Maybe, or maybe it's time to realize we need to be more efficient. Alternative energy sources are sorely needed, but please don't bring up windmills. Talk about ugly, and if they're in the flightpath of migratory birds, it can be disatrous. Bats have problems, too. The current solution is to drive more efficient cars. Just drove a Smartcar yesterday around the work lot. Impressive.

We can always raise minimum wage, right? HAHAHA!!!!! All that does is make the cost of living go up quicker. Imagine if we made minimum wage $9.50/hr? Well, the value meal at McDonald's would be about $12. I doubt all of us making more than minimum wage wold get raises...think about it.

Back to the whole oil issue. Why not drill on the north slope in Alaska? It's in a protected wilderness. What's funny is the argument against it is that it'll spoil the beauty. Well, guess what? You and I, as normal citizens of the US, aren't allowed to go in there legally anyway, so why not build a road or railroad and utilize a resource we have? Don't get me wrong, I love animals, and I don't want them to lose their homes and feeding grounds. But if it's done responsibly (look at how things are done in the Adirondack Park) it can work.

Finally, back to taxes. Yes this is a circular post, but it's been over a few hours I keep coming back to it. I firmly believe that the upper class pay enough taxes. Why should they pay even more? Do you know the current tax code for federal taxes? Let's just say this. If you make 1 million dollars a year and are single, you pay $524,164.00. Don't forget state taxes if you have them. And FICA, etc. Is that fair? You can argue they make more money, so they don't feel it as much.

Why be punished for being successful? Married filers for the same amount pay $517,296.00. Of course deductions come into play, but you get the idea. If you make $50,000.00 a year, you get to pay $22,461.00 as a single person. Married it would be $30,763.00. The lovely marriage penalty.

These are rough figures on very basic tables, but you get the idea. Yes, lower income brackets don't have as much money to spare. But when a majority of the nation's taxes are paid by the top few percent of taxpayers, who's getting the deal? Let's just taxe everyone at 44%. No refunds, etc. That would make it more fair, right? Or a value aded tax on goods at 23%. Works for Europe.

No one has all the answers. Too bad our presidential candidates can't admit it.


David Amulet said...

I'm with you on almost all of this. Your simple explanation of our byzantine tax system is great.

The exception is the mass transit "solution." Many, many jobs aren't accessible via mass transit, so while it can help a great deal it isn't as simple of you say.

On taxes, you might be a fan of the "fair tax" proposal that has picked up some steam. It would be much more rational than what we have.

I still don't understand how so many supposedly smart people can support a continued increase of taxing "the rich"--which now apparently includes any couple making more than about $100,000--without realizing the consequences for those they say they care about.

Who starts the businesses, expanding the economy and hiring more employees? Who invests in companies via stock, providing those companies with capital to expand and hire more employees? It's the people with money ... and if you take that money away by continuing to raise taxes on them, guess what? Slow growth and fewer opportunities for all.

Simple, isn't it?

Mike said...

I should have been more clear on mass transit. It does depend largely where you live. Growing up in the Hudson Valley 10 miles north of NYC I feel a commute of 1hr48mins by train plus 25-35mins from the train to home is acceptable. Of course, if you live in Wyoming, mass transit is the SUV with three guys in it. They should be able to get a tax deduction somehow since they have no hope of ever seeing mass transit. Kindof like us in the 30yr range and social security. there I go again...

David Amulet said...

I hear ya. It depends on where you live.

And I have little respect for the libertarians today now that Bob Barr is seeking the party's nomination ...