Taxes and Spending
One very relevant topic lately is economy. Jobs are tight, the economy is struggling and we’re all feeling the pinch. One big reason the economy is struggling is the uncertainty about taxes and new government regulations. We have a massive new entitlement program that will change how we’re treated medically and how we’re insured. The costs of this aren’t even understood yet but the expectations are it will be a massive government program that will exceed its cost expectations.
The stimulus plan only stimulated state and local governments and allowed them to postpone some difficult decisions. They had money from the federal government that didn’t exist, money that will cost a great deal in interest and economic stability in the future. This money was used to delay the day of reckoning for state and local governments. This money prevented them from cutting back on their spending. State and local government didn’t then and still don’t have enough money to maintain the budgets they have. Employees have to be cut, spending has to be controlled and hard decisions must be made. This hasn’t happened yet because of the federal stimulus funds. Now the federal hole is deeper than it was and the state and local governments who received the money have deeper holes to dig out of.
Financial regulations have just been seriously increased. We will have more government commissions and organizations that will peek under the beds and over our shoulders and penalize everyone and anything that makes money. There will be quota police to insure we are diverse and affirmative enough for a government autocrat. They will make decisions about when and how banks are trying to make money. Penalties will be assessed for transgressions and a lot of confusion over the new rules and regulations will cause the bankers and investors to be cautious and very conservative. That means money will not be put at risk. Jobs are created when people put money at risk.
The economy is a function of how money moves around. Investors have money available for banks to lend. People borrow money to take a risk and start a business. People take money they saved to put at risk to start a business. No guts, no glory. With all of the uncertainty today no one wants to take a chance. Why start a business when you don’t know how the medical mess will affect you as an employer or as an employee. Why risk losing money in an attempt to create a thriving business when you aren’t sure how much of your profits you’ll be able to keep. With all of the deficit spending and the loss of revenues, how will I be taxed next year and the year after? Is it worth putting my savings at risk now? I may need that money to live on.
How much can I borrow from a bank to expand my existing business? Is it wise to add on more employees? How much will I be expected to pay for them in taxes and benefits? Maybe it’s better to stay the size I am now and suffer the pains of expanding government as I am now without putting more money and jobs at risk.
Uncertainty causes decision makers to be cautious. Why expose myself to risk without a clear possibility of gain? Money is tight and people have far less disposable income now. What little money we all have now we are holding on to in case of a future need.
Taxes are a big concern. Not all of us pay taxes. Many of us make a profit from not making much money every year. Our tax system allows some people who have failed to earn enough money to get a paycheck from the government instead of an opportunity to pay their fair share. That means for those of us who made some money we have to pay our share and their share as well. But it doesn’t stop there, we also have to fund the free cash that they didn’t earn but get from the government for no apparent reason.
We have some tax cuts that expire this year. And some estate taxes that go into effect next year not to mention an assortment of other taxes to support the new medical program. That will also drive the costs of a lot of other things up other than taxes. Higher tax rate and more taxes will probably not increase revenues. People put money away in places that are not at risk, places that don’t earn interest. Certificates of Deposit right now at under two percent. The money is safe but doesn’t earn anything. Money that could be invested in business or in loans are sitting in safe places and not earning anything. Why risk it if the rewards will go to the government to spend any way they want. Less income will be taxed at a higher rate, therefore less revenues. Less revenue means the government gets less of our money to misspend.
Spending must go down, taxes must go down, the economy will not grow in this environment. Government has to stay out of business. Government has to punish success less than it already does not more. The rich are the key to growth, trying to demonize the rich to buy the vote of the poor and needy only causes the rich to lay low and wait out the foolish government.
Stop spending, lower taxes, and get out of businesses way. The free market works let it cause an effective recovery.
Vote the Bums Out,