Thursday, September 23, 2010

My View

Random thoughts from a warped and fevered mind...

Congress has so far punted on deciding whether to extend the tax cuts enacted by President Bush in 2002. Most of us focus on the income tax rate because its impact is immediate. There is another tax that has not received a lot of attention, but the impact will be dramatic if it is allowed to revert to pre 2002 levels. That tax is the estate, or "death" tax. Today, and for the remainder of the year, there is no estate tax. The tax cuts scaled back the estate tax to zero for this year. If Congress does not extend the current tax rate structure or modify it in some way, the estate tax will be assessed on any estate valued at $675,000 or more. The top rate can go as high as 55%. While $675,000 sounds like a lot of money, factor in the value of a home, life insurance, any savings or investments, and you can quickly move past the exempted amount. This tax becomes especially troubling for small business owners and farmers, as the value of these assets tends to move an estate quickly past the exemption, but are oftentimes difficult assets to sell to meet the demands of paying this tax. Our "friends" in Congress have never met one of your dollars that they didn't covet, though. Bernie Sanders (VT), Sheldon Whitehouse (RI), and Tom Harkin (IA)- all Democrats- have proposed raising the estate tax to 65%. It is obvious that the Democrats in Congress have no intention of reining in their spending. They just want more of your money to spend. Even after you are dead.

A penny a government oversight.

Remember all the promises made about the Obamacare socialized medicine program? Lower costs, no funding for abortions, keep your own insurance, and the list goes on. Guess what? None of it was or is true. Of course, you weren't surprised about that, were you? Now before some of my friends who are left of center become apoplectic, know that this is not my opinion. This is the actuarial office of Medicare speaking. Funding is provided for elective abortions. The prohibition against funding of elective abortions will come from regulations written by the Department of health and Human Services. Those regulations haven't been written. Remember being told that you could keep your own insurance. The White House now estimates that  that 69% of employees and 80% of small business will be forced to change coverage to comply with the law. The list goes on. The truth about socialized medicine was NOT that it was good for employees, employers, or individuals. It was solely about a power grab by Washington that limited our freedom and moved us many steps closer to a nationalized (and poor quality) health system.

I am living proof that not all bodies are temples. Some are amusement parks.

According to the National Bureau of Economic Research (NBER), the recession is over. Actually, they say it was over in June of 2009. Certainly doesn't feel like it, does it? NBER says the recession ended in June of last year when the downward decline in our Gross Domestic Product reversed. Technically, that does signal the end of a recession, and if you look at economic performance after the end of prior recessions, you can usually track a pronounced recovery that occurs over the span of many months. That is not happening now. Unemployment remains stubbornly high and business are not spending. Consumers are nervous and saving rather than spending. Why? I think that many businesses and individuals are concerned about the potential for significantly rising taxes. Business face a myriad of new regulations and accompanying costs. Individuals are worried about losing their job and about a significantly declining standard of living. These factors combine to create a negative current environment and a sour outlook for the future. Want to know how to fix this? I'm glad you asked. Create certainty in our taxes, laws, and regulatory environment. Business will not invest or hire if faced with a massive level of uncertainty. Individuals will not spend faced with uncertainty and the prospect of even more confiscation of their hard earned dollars. Lower taxes and clean up some of the mess that is our regulatory environment, and watch the economy respond positively.

All power corrupts, but we still need the electricity.

And that, my friends, is my view.

*the picture was changed this week because I was attacked by a dog while out running. The friendly dog will return next week

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