Monday, September 20, 2010

Taxes, Lies, Media and Politicians

As this election season thankfully heads to a close in November, the issue of whether or not to renew the "Bush Tax Cuts," stands at the top of the list of items the cowards in Congress hope to avoid taking a firm position on. This includes both parties, which are all over the place. In general, Democrats want to extend them for everyone except the top 3-4 percent and Republicans want to extend them for everyone, especially the top 3-4 percent.

Oddly - or perhaps not so oddly - both sides are not being totally honest about their positions. In brief, the Democrats claim that raising taxes on the top earners will somehow resolve the deficit. Not so much. The amount gained over 10 years would not cover this year's deficit, let alone a 10 year run. They also want us to somehow believe that those that earn more want to pay more taxes. Well, except for big fat liars like Warren Buffet (he really is a big fat liar who get on Goldman to profit from our misery) nobody wants to pay more taxes.

And the Republicans claim that this top 3-4 percent of earners are job creators. Again, not so much. Every bit of research indicates that this tax cut on top earners has almost no effect on the greater economy and creates very few jobs. The GOP also makes goofy claims about small businesses being harmed. Also not really true. I run one of those small businesses and this tax change would not affect me at all. The truth here is that those top earners will not spend the tax savings, nor will they be seriously harmed by the increase.

All of that said, this is simply not a good time to raise taxes. Not because of the false economics put forth by the 2 corrupt parties. Not because of any actual economic harm. It is just a bad time to raise taxes because of the psychological factor. There is a saying that in politics, perception is reality, and the tax issue fits right into that.

A tax increase of any kind right now would have a serious psychological impact on the economy that far outweighs and real dollar impact. Before folks start yelling, remember that we have spent over 2 years being told scary things about the economy that mostly were not true. The banking system was not about to implode, depression was not around the corner, stimulus did not stimulate, states did not default, nations did not go bankrupt and the Wall Street gang did not need our money. So the claims about these tax cuts have to be viewed in the light of over 3 years of lies from Congress and both administrations.

However, the damage to the recovery of the economy from the psychological factor of a tax hike is real. Businesses would stop growth and people - at all income levels - would stop spending. Not because of anything tangible, but because of the intangible effect, which is endlessly amplified by the nonsense spewing forth from the financial media. One of the unspoken truths about this entire financial mess is that the financial media has way exaggerated the situation to increase the drama for ratings. In much the same way as the ever unreliable Jim Cantore at the Weather Channel exaggerates a simple thunderstorm into a disaster of epic proportion. This has not helped at all.

Well, the same financial media is exaggerating the real impact of increasing taxes on the top 3-4 percent to try to extend their relevance. Oh, don't forget that most of them have a personal and undisclosed interest in the tax situation. Their taxes might go up.

What we never hear and what we should be hearing more about is a flat tax. If there ever was a time to put one into place and eliminate the zillion page tax code, this is it. If the financial commentators were honest and not spinning for politics and profit, they would talk about a flat tax. Instead they prattle on - incorrectly - about how Wall Street dislikes uncertainty. Wall Street love uncertainty. They profit from it.

Businesses dislike uncertainty. Families dislike uncertainty. It makes planning impossible and fairly pointless.

Imagine if every business and person knew - for certain - what their tax burden would be. Say the flat tax is set at 20 percent. No deductions, credits, exemptions or tricks. You make a dollar and 20 percent goes to tax. No property tax, no sales tax, none of that. Then businesses could plan. Then families could plan. Of course Wall Street would have to go back to fundamentals and actually working for a living, but that is not a bad thing.

Best of all, imagine never again having to deal with 2 inch thick tax returns and instructions that are written in some language that defies understanding. No more Schedule C, Form 1040, Earned Income, Deferred Income and the rest of the jungle of garbage that we call the tax code. No more paying someone else to decipher that maze of nonsense. Imagine the stimulus the billions spent on tax preparation would have if it suddenly was available in folks' pockets. Not to mention the psychological boost of being freed from the servitude of those forms.

If the Tea Party people were serious (they are, but not enough for this) they would be advocating a flat tax and a balanced budget amendment to the Constitution. Put those 2 together and government will shrink to fit. If the Eric cantors of this world were serious about taxes, they would be advocating this, but the Eric Cantors of the world are not serious about this. They are puppets on the strings of their masters, who like the complex tax code that allows them to hide money legally.

So let Congress know that a flat tax beats a tax cut all day every day. Date those elected morons to defy their special interest masters and do something for the people they pretend to represent. I would tell my failed Congressman Kendrick Meek, but he is too busy running to lose for Senate to care about actual constituents. As if he ever cared.

And on November 2, lets help Congress with their taxes by firing the lot of them.

To drive home that message, I am offering T-Shirts with this message:

As a capitalist and a free market person, I am selling them for both profit and with the intent of donating to those candidates that are willing to step outside the parties and declare a concern for the Constitution and the people.

You can order them here:

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