Archive for the 'taxes' Category

You Were Right to be Worried

My son just came up to me and told me he hurt his bum.  He wanted me to kiss it better.  Does anyone else feel like this is what we have done for the banks?  Why would we do something that doesn’t seem to be making the banks feel any better and seems to be making us about 700 Billion poorer.

I don’t know if anyone else has taken a look at the situation, but the market is getting crushed again today.  I remember the happy days when 3% was a steep decline.  The S&P, the broadest measurement, is down over 9%.  That isn’t a steep decline.  That is falling off a damn cliff.  It is carrying the senior citizens down with it. The suicides are starting up.  It is tragic, and I can see it getting worse.  The news today was that retail sales took a massive dip.  This is not the time to be working at the Buckle.

Everyone is looking for the big event around the corner, be it rising unemployment, more welfare for the banks, more welfare for everybody.  Mccain and Obama are going to have a real treat when they are done with the campaigning.  The prize is to be at the helm of of a ship that is on the rocks.   I know that my retirement funds have dwindled down to pitiful levels.  I am 29, and it is not a huge problem.  But this could be the end of free enterprise as we know it.

The time has finally come for the US to pay the piper.  It is going to be tough for the baby boomers, and there are only so many Walmart greeter jobs out there.  The next 5 years are going to show massive changes to welfare.  I hope we can handle the increase in tax rates.

National Sales Tax is Double Taxation For Some

First of all, I like the idea of a national sales tax.  It will be fantastic for people to go to the stores and realize how much the government consumes.  When money is taken out of the paycheck in chunks, it isn’t to bad.  Lets see, a few percent for social security (that’s a nice program), a few for medicare (on great financial footing), some comes out as income tax.  When all is said and done, the average tax rate for your average  American is about 25% from the paycheck.  This doesn’t include 5 kazillion other little taxes that build up before you can spend your money.  That’s just for the feds.

Fair tax proposals suggest we generate all the revenue from a sales tax to avoid evasion and to avoid having to file our taxes.  The system really sounds pretty slick.  The fact is, to duplicate a 25% tax on a paycheck, you could have to charge closer to 30% sales tax, assuming all of the paycheck was spent.    This is based on 25% of a slightly larger number (total paycheck, which includes taxes) is the same as 30% of a smaller ( cost of an item, which doesn’t include taxes).

Now here is where I really like the plan.  People are going to be paying 30% federal taxes and 10-15% local taxes (state income tax will most probably be rolled into sales tax also.  That will suck.  People will be ticked.  They will be reminded every day that they are paying for inefficient ethanol production, illegal immigrant education, a DMV that treats us like crap.  All the sudden, people will be demanding the government watch where they spend dollars.  We will only need enough nukes to kill everyone in the world 2 times instead of  10.  Maybe we don’t need fifty overlapping bureaucracies.   Maybe the CIA, FBI, and military intel can all work together to streamline information distribution.  Maybe the military can suck it up and make the marines an special type of army unit.  There are two reasons we don’t do that.  The marines interface with the Navy for transport (hey-  Just like the army.  Hmm) and they have so much “We are so much tougher and um Stuff” mentality.  When the taxpayer realizes that maybe we could drop sales tax a percent, they won’t care.    People will look at social security as a menace to financial freedom, and will demand that we reform the system.  Poeple will look at their neighbor on welfare, thinking, “That guy is why I have to pay 40-45% overall sales tax.”  There will be significant peer pressure for people to get their hands out of other’s pockets.  People think these tax rates look high, but they are reality.  The government consumes a huge amount of resources-  An amount they would like to keep hidden.  I’d like everyone to know

So much for why I like it.

When the government comes out with a new program  to help you save money, you always have to look on it warily.  The Roth IRA is great, in my humble opinion.  But I have a question.  What will be the status of the money in a Roth account if the Fair Tax gets passed?   I have been taxed on the money that I put into my Roth account once.  If the fair tax law is passed, I will be taxed on that money again.  The overall rate will be around 90%, if you look at it like a sales tax, or about 48% if you look at it like an income tax.  Either way, it sucks.  Does anyone know of any alternatives?  Anyway, just throwing in my 2% about making the savers pay 90% tax

If you vote or improve ratings or readership, nothing is your fault!

Today, in the CBS news column FDR Solves the Mortgage Crisis, Andrew Jakabovics pandered to the public with the classic line.  It’s not your fault, it is the fault of big business.

Basically, the theme is that the government should jump in and give mortgages to the people if they can’t get mortgages elsewhere.  The government is encouraging risky behavior by allowing people to reap the benefits of risky moves, while protecting them from the downside. 

I think the government should extent the relief that they have given to those in Vegas.  If we are protecting those who took risky mortgages, we might as well protect those who didn’t do so well in the stock market.  If the stocks drop, the government should give them a tax credit for fifty percent of their losses.  After all, isn’t the security of our retirees of just as much concern as having others live in a home instead of an apartment?  After all, it’s for the children. (Don’t ask me how.) 

It seems that others are very confident of our abilities to repay all of our mortgages based on the exchange rates.  Euro hit an all time high, and the pound went over $2.  Inflation is starting to rear it’s ugly head, as shown by the rapidly falling dollar.  It stinks, but we’ve been bringing this on for a long time.  The US has a bit of a hangover from the mortgage binge, and we have to pay the piper at some point. 

People are also trying to paint the picture of a mortgage market in which people just can’t get a loan, even with great credit.  According to the Wall Steet Journal,banks are tripping over themselves to give conventional mortgages to credit worthy borrowers.  This is just what should be happening.  Bankers should cut risky loans.  They are obligated to do this by their depositors, who depend on them to remain liquid.  Credit Unions, who are very conscious of the fact that they are lending out depositor (basically owner) money have had a fraction of the default rate.

On the radio a couple of days ago I heard a demagogue spouting out bull about how the bankers and evil mortage industy were responsible for this mess.  I assume grocery store owners are responsible for obesity, baseball bat owners are responsible for thuggery, and dell is one the line for carpel tunnel syndrome. 

We have dug ourselves into this hole and it is time for us to get out through thrift, hardwork, and saving.  The plan proposed by Jakabovics is based on spending taxpayer money to subsidize foolishness.  Let’s move in the other direction.

Science and Politics Don’t Mix

You can hardly get through a day without seeing a story about the benefits of some new technology in the energy sector.  Wind turbines, ethanol, solar cells, and a host of other solutions beckon at the door.  This doesn’t include the age old answer to all of our energy questions, “Just Use Hydrogen”.

These policies are based on politics and not logic.  If you don’t believe me, ask an engineer.

Ethanol, as a fantastic fuel source of the future, is one of the most popular myths.  I am sure that they have nothing to do with the Iowa Caucuses.  The states that seem the most excited about using ethanol as an alternative fuel are those that grow corn.  Corn is extremely demanding in terms of fertilizer, water, and top soil.  It has also been argued that producing ethanol consumes more energy than is produced in the ethanol.  Ethanol is less of a solution than a slogan.  Everyone can feel good about getting fuel from beautiful green plants.  It’s the same feeling you get when you are getting food from beautiful fuzzy animals.

The biggest problem is that even if it wasn’t environmentally retarded, it is economically unfeasible.  Ethanol from corn gets a $.51 a gallon subsidy in the US, according to The Economist.  Ethanol is actually viable in some foreign countries, because manufacturing ethanol from sugar cane is much more efficient and cost effective, but the government slapped a $.54 a gallon tariff on sugar based ethanol.  We could import the sugar to make it ourselves, but Washington has put quotas on the amounts of sugar we can import to protect lobby groups.  Meanwhile, oil and gasoline can be imported tariff free.

This whole system becomes more nauseating in an election cycle, when every presidential candidate is trying to kiss up to Iowa to ensure that they come out ahead in the race.  It is not good for the country, but politicians don’t care what is good for the country.  They are concerned with the next election cycle.  They apparently suck at science. The big problem is that the voting public is scientifically idiotic.  They spout some sound bite they heard, and expect that with enough research, we can break the laws of thermodynamics.  I think we should just start a “Manhattan style project” and make x-wings, beaming technology, and light sabers.  That is just as practical, and much cooler.

Wind turbines work where the wind blows and where politicians who’s names rhyme with “Eddy Kennedy” don’t care if their view is impeded.  They require repairs more frequently than many other sources, and only produce power when the wind blows.  Wyoming has wind farms, but they already generate more than enough power there, and ship off vast amounts to California.

Solar cells are so cost ineffective it’s disturbing.  They are good for two things.  Providing power to locations to which it is hard to run wires and helping environmentalists feel better.

People’s knowledge on hydrogen is laughable.  “Just use fusion.”  There is one minor catch.  The only reliable way we know to jump start fusion is with large amounts of fission… those nuclear bomb things.  “Well just use it in a fuel cell.”  Umm . . . It takes more energy to take it from water and get it into the car than it releases.  “Let’s just all ride ponies then.  Together, with and for the children.  And have world peace.”  All those people think if you think positively about something for long enough, it will happen.  It doesn’t work.  I had a crush on a girl named Ashley in 7th grade.  I thought positively about me going out with her a lot.  Going out with her would have violated one of the laws of eternity, that in junior high, cute girls don’t go out with nerds.  They wait till college when they find out nerds make many times as much as jocks.  You just can’t violate physical law.

All the same, people vote for the politicians that put forth the pretty promises. This is great if you live in a primary state and have billions of dollars going to you in subsidies.  If you are a normal joe, you are screwed.  You are especially screwed if you like candy (the quotas on sugar cost the US $1.9 billion annually).  So I guess the same old song will move forward unless we want to choose a candidate who will do some things based on principle and knowledge, not based on where the earliest primary states are.  I know what you are all thinking. . . .

GO RON PAUL

Bush Pushing for Bank Bail Out

I can still remember a very true garfield comic, in which garfield said, “If I am telling a lie, may lightning strike. . . the dog next door.” (thunder and yipping). This is what the savings and loan industry wants now. They know that if they show themselves as irresponsible enough, they can get the government to bail them out once again, taking money from the taxpayer and funneling it into hands of bank owners and people who couldn’t afford a house.  This is very similar to the bailout that they did of those who lost substantial sums in Vegas.

The government is now doing its patriotic duty in making sure that profits remain high in the banking industry. Banks made fortunes in the last five years off of the rush to pull cash out of houses. Now, when there poor risk management is about to kick them in the teeth, Bush is prepared to guarantee the loans. Now we will end up on the hook for failed loans. We had a savings and loan crisis in the eightees and we bailed out the banks. We are about to do the same things again. In addition, injecting this new money will serve to inflate the currency and steal value from the savers in this country at an ever increasing rate.

We all know who pays. The taxpayer ends up putting up the cash. But we don’t have any money, so we will finance the banks with our deficit. The government continually acts like it has the ability and the kindness to provide money all around. They steal the money from our children, putting an increasing burden on those of the future.

Everyone knows those annoying people at the store or restaraunt who’s kids are obnoxious. The parents threaten and cajole, but the misbehavior continues as there are no real consequences. There kids later turn into juvenile delinquents, and from there they become more dysfunctional than your usual adult. We have been doing this with industry and communities (see New Orleans and Hurricane Katrina). There need to be some consequences for the irresponsible, and starting all over with renting, and slowly saving up another down payment (if there was one at all) is fair. They have paid the price for their lack of vision. (But at least they won’t be killed by the emperor)

I will put it bluntly. People should lose their houses if they can’t afford them. Banks should suffer massive losses if they made bad loans for a large scale. Don’t punish the honest taxpayer and their children because banks and homeowners are irresponsible.

Casino Patrons to be Reimbursed for Losses

Reports are coming from Las Vegas of a massive government effort to help investors that have been betrayed by casinos. These investors have put massive amounts of money into investments, some their entire livelihood, only to end up broke. One investor says, “I was just doing what everyone else was. I knowed that I had to make money at this, cause my cousin, Willy, was here last week and he made 500 smackaroos. Now I’m broke, upside down on my mortgage, and my kids don’t have anything to eat. I just want what’s fair and decent.”

The betrayal by the casinos occurred on a grand scale. At one end of a casino, the lights flashed above the slot machine “Win Car Here”, but poor Harold Hickson walked home. “It just ain’t right,” he says. “It says I should win a car, but I put in my entire savings, and even pawned my mobile home, and I ain’t won crap. I don’t know what Betty Sue will do when she hears. We made this investment in good faith. I heard a bunch of people were here last week and made a bundle.”

Another patron, Graham Wellington said, “It is clear that the practices here have been unethical. As I walked in, the lady who gave me chips said, good luck, I hope you hit it big. The personnel in the industry spread this idea that investing at a blackjack table is a sure way to get a significant payout. There were no warnings that these investments could turn sour. This euphoria caught many up in it, and I cannot afford the losses I have incurred. As a working citizen, I have a right to have someone help me with the losses I face due to this deception.”

The deception is all over. Claims of million dollar payouts were spread far and wide. These losses aren’t flukes, but a scheme by those no good dealers to get fat off of their pay. Rick Henson, a college student majoring in economics, reports, “I was always good at investing back at college, and got my friends good and wasted before I cleaned them out. It’s gotta be a fraud, because I toasted my student loans in one day of investing in poker here. I saw a billboard that says people hit it big in Vegas, false advertising if I’ve ever seen it. This disaster is too big for individuals. The government needs to intervene and help the market out of this crisis.”

A spokesman from the heartless bastards at The Von Mises Institute said, “Their unwise speculations did not result in the outcome they expected. The risk management was skewed by years of being taken care of by the government, resulting in expectations of large payouts with little aversion to downside risk. If the government mitigates these consequences, it will perpetuate this poor judgment, and these types of incidents will occur with greater frequency.”

Someone from the back yelled, “What he’s saying is they gambled and lost their shirts because they were greedy. If we bail them out they won’t learn their lesson, and we will have to keep bailing people out.”

The Center for Compassionate Government rebutted these outrageous insults.  “These are people who trusted the advice of these casinos, and were provided an environment where they could simply get more chips. There was nothing that told them about the impending losses.  Serious sanctions must be taken against these corporate bosses. One investor told us that they thought they could simply get back all of their money after they were done gambling, assuming that the casino was just holding the money for safety purposes.  He never signed anything that said he would not get his money back.  He was duped.  The thought of losses had never entered his head.”

“Now he and his family don’t have the money to pay next month’s rent.  We need to help them.  After all, it’s for the children.  We are proposing that people be allowed to be reimbursed in a way that will be fair to all parties. We don’t think anyone should be locked out of the American Dream.  Now we recognize that the casino owners don’t have the means to deliver what they promised, but I am sure that no true American wants little Bobby to go hungry.  The government has the means to support this, and we demand they help the poorest,  who were tricked into precarious financial situations.”

The president of Evil Conservative Industries, Gren Bock, said, “What the heck did they expect? They were gambling at a freakin’ casino. It’s sad that the kids are in such trouble, but come on. Everyone knows that in speculations you have ebbs and flows. There is no free lunch. My father was a baker, and he worked his rear off for every cent he got. These guys think it will fall into their laps just because their friends got lucky, well, they are in for a surprise.”

It is clear that despite the heartlessness of the rich evil conservatives, something must be done to help those that invested in at these well known establishments in good faith. Americans are obligated to help those who have been tricked and swindled. Presidential candidates promise that relief is coming. We couldn’t suppport them more strongly. Everyone has a right to the American dream!

Government Waste- Paying the government for the privilege of paying

The government is once again showing its incredible business acumen, using their superior knowledge to dictate what we should do with our money.  Apparently we should give it to New York so they can charge us more to visit.  According to the associated press, Bloomberg is getting 354 Million federal dollars to set up a toll system to lower traffic in the city.  I have a better idea.

There are a lot of unemployed people in NYC.  Just equip them all with baseball bats.  Anytime anyone drives past, they should go up to the car and tell them it’s ten bucks to get down this street.  If they don’t pay, have them start wailing on the car.  Traffic is guaranteed to go down.  People could have frequent driver passes- They just give the guy $200 at the beginning of the month.  The city could even rent out the collection spots, funneling the money through some union hands, some bureaucrats, and finally have at least 3% left over for road repair.  No cost to the city, and they would even see profits. 

That solution isn’t perfect, but I have trouble seeing why my family of 4 should contribute around five dollars through taxes so they can charge me to drive through NYC, should I visit.   Does it make sense for me to go door to door in by neighborhood and demand 25 bucks from each citizen so I can build a tollbooth at the entrance to the neighborhood?  I could claim it would keep people from taking a shortcut through our neighborhood and thus reduce traffic, but when push comes to shove, I am making them pay for the privilege of giving them money.  I seriously think you could auction off this ability to collect tolls, and resell the lease every 7 years to the highest bidder.  The first bid would come in low because of the cost of the infrastructure (tollbooths), but given how much the New Yorkers pay for everything car related, businesses could make a good profit anyway- until the bureaucrats and union bosses got involved.  If they are really doing this to reduce traffic and not to generate revenue, I don’t see why this wouldn’t be a good solution.

In San Francisco and Miami, subsidies are similarly used to create other driving lanes.  I especially like how Joe taxpayer is bearing the cost for the rich in Miami, where hot lanes, paid express lanes, will ferry those with money to pay for the privilege.  Those who use the lanes will only be bearing a fraction of the cost.  You know because the federal government (reads “Joe taxpayer”) has to inject almost 70 million for the project.  If the project provided enough benefits to the users, it could be supported by the tolls alone.  Instead, the middle class is supporting the upper middle class and the rich.  Who will be able to pay the tolls in NYC everyday? The rich.  We are going to be subsidizing their transportation system- paying to have its usefulness to Joe citizen reduced.  The parade of the special interest groups in full force, and as always, the middle and upper middle class taxpayers are the ones who are carrying more than their share of the burden.

I have nothing about the rich having their own road, but I don’t think we should subsidize it.  If a private company wants to build roads and rent them to the rich, fantastic! I hope the rich enjoy the fruits of their labors in the form of a quicker commute.  On the other hand, a taxpayer in Kansas should not be supporting toll booths that will make it more expensive for them to drive in NYC, or lanes for the rich in Miami. 

Here is the story I referenced, by the way.

http://news.yahoo.com/s/ap/20070814/ap_on_re_us/traffic_fee;_ylt=ArZWHMged9vUp2JACBTTylVH2ocA