Mike Baute: ‘Your questions are not silly, but they hardly answer my questions. I asked you two things that are also not silly: (a) Why do you think the Government will spend more productively than the earner; and (b) Why don’t you speak to how tax relief is spent by the recipient?’
☞ (a) Because I don’t think the earner will spend it to build roads, control air traffic, finance a military, fund college scholarships, subsidize scientific research, provide health care to the old and the poor . . . and on and on and on.
(b) Most tax relief recipients will use it to pay down debt or buy stuff – which is why I’m not against some tax relief for most people. But the bulk of the Bush tax relief doesn’t go to most people, it goes to folks making hundreds of thousands or millions or tens of millions of dollars a year. Here’s how I’m spending mine: I’m buying foreign bonds to round out my portfolio and take advantage of what will be a declining dollar. How does that help create U.S. jobs?
John Stone: ‘Whether it’s Alabama or California there always seems to be a big disconnect for conservatives when it comes to government services: They always want them without having to pay for them. In our recall election in California, Tom McClintock, the self-styled fiscal conservative, brags that in his elected career he never once voted for a tax increase. He does this despite the fact that every paycheck he has ever received since graduating from UCLA came from the government. I don’t recall his turning down any pay raises, or offering to pay the tax-supported part of his educational costs.’
Don: ‘Poor people get to live in a really great country. They get all kinds of government services without having to pay for those services – or, at least, they’re largely subsidized by rich people paying big-bucks taxes. That’s why I’m not very sympathetic with the idea that every tweak to the tax system has to give more to the poor. They’re already getting a lot.’
☞ ‘Are there no prisons? Are there no poorhouses?’ I’m sure Don means well, but I couldn’t help thinking that he falls a bit closer to Scrooge than Marley, and that at the end of the day most of us would rather be Marley – even Scrooge.
R. Adam Smith: ‘A tax table I recently saw in the Wall Street Journal indicated that the top 10% of earners (which I would define as the rich) paid 67% of all income taxes. Since Democrats are always arguing that the rich should pay more, how much of the total burden should ‘the rich’ pay – 90%, 99%, 100%? 67% sounds like a fair amount to me.’
☞ I look at it this way. How much tax, beyond sales tax, FICA, all those phone bill taxes property tax, and so on, should a family of four with $36,000 in income pay? I don’t know – but not much, if anything at all. Now . . . how much tax should someone who earned $86 million pay? In 2000 there were 400 Americans who earned that much or more. That year, because so much of their income was either capital gains or tax-free bonds, their average federal tax burden, including FICA, was 22.3%. Was it really necessary or wise or fair to cut their taxes? Had the Bush tax cuts now in effect been in effect then, they would have lowered that burden to 17.5%, saving them an average of $8.3 million each.
To me, it was terribly unwise fiscal policy, terrible social policy, to go deeper into debt to give them those tax cuts.
(The cuts that apply to income below $100,000 or $200,000, I have much less trouble with.)
I’ll save a small fortune this year thanks to George Bush. (It’s been an unusually good year.) But why is this a good use of the nation’s limited resources? I already had the world’s most blessed life. The wonderful woman who comes in once or twice a week to clean for us – 90 minutes each way on public transportation – pays little or no income tax (she does pay FICA). Yet somehow I don’t feel she’s getting the better end of the bargain, or that we’re being exploited.
George Hoffer: ‘Look – whether or not you agree with the President’s policies is irrelevant. We’re paying you to tell us how to profit from rising deficits, (overly?) ambitious foreign intervention, and the like. How do I make money from the coming fiscal train wreck?’
☞ It’s easier to know what not to do than what to do. I’d be leery of any long-term bonds that are not inflation-adjusted. I’d be leery of stocks. I own some, but am heavily in safe, liquid investments. I’d be leery of real estate in many areas. If you’re 25 or 30 and in it for the long-term, just keep investing in stocks, adding to your holdings every month. But don’t expect great results for a while. Then again, even if I’m right and the market as a whole is no bargain, when did the market ever start listening to me?
Quote of the Day
To produce an income tax return that has any depth to it, any feeling, one must have Lived and Suffered.~Frank Sullivan, American humorist
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