Money, or capital, is agnostic. What do I mean by that? Simply put, capital is going to be employed or used where there is a high probability of safety and the best return possible commensurate with that safety. Those who make decisions about where to employ capital are not going to put it at risk without an appropriate return, and they are going to work to protect that capital. One way that capital is protected is to minimize the effect of taxes. Keep as much of your capital as possible without having it confiscated by the government. Now many of you may have read that last statement and said that is typical of a cold hearted conservative, but a funny thing has happened this week. Costco Wholesale Corporation, whose principals Jeffrey Brotman, James Sinegal, and Craig Jelinek were all large contributors to the Obama campaign, has declared a special $7 per share dividend, costing the company over $3 billion dollars. That dividend will be paid before the end of the year, when taxes are expected to go up and dividends are projected to lose their favorable tax treatment and be taxed as regular income. What this company has done is pay their principals and shareholders in the most tax efficient way possible, thereby preserving the greatest amount of capital for those beneficiaries. And Costco is not alone, as Tyson Foods (another big financial supporter of the Democrats), Wynn Resorts, and other companies look to preserve capital and avoid taxes. And there is nothing wrong with this. It is this fact that Washington continually fails to grasp: that capital will be employed in the most efficient way possible and will be used in the most tax efficient ways possible. Raising the tax rates will result in no more revenue coming in to Washington than currently does for this reason.
My mind works like lightning: one brilliant flash and it's gone.
While there is a lot of focus on income taxes and the impending "fiscal cliff" that happens December 31st, look for the Obama Administration to raise other taxes to siphon off more money from American workers. One area to pay attention to is the resurrection of the global warming hoax and the attendant taxes that will be implemented to arrest climate change. One of those taxes that will probably come up soon after the income tax issue is resolved is a carbon tax. This tax would be used to fund more green energy projects- as if 34 failed green energy companies in the first term of the Obama administration weren't enough- and more importantly, to force less automobile use because of the price of gas. Stephen Chu, Obama's Energy Secretary, has made it his- and by extension- the Obama Administration's- stated goal to have the price of gas match what Europeans pay. If you didn't know, that is well over $5 per gallon. Stay aware of what happens once this fiscal crisis is past and see if we don't have another "climate change crisis" as a way to raise more tax revenue and to change your lifestyle.
I recently went to a very emotional wedding. Even the cake was in tiers.
Elections have consequences, and almost immediately after Obama was re-elected, companies began laying off large numbers of workers. Why? The hope was that if Mitt Romney won the election, there would be a serious effort to repeal Obamacare or gut out the most expensive parts. The election results meant that would not happen, so companies, faced with a staggering increase in health care costs that have been mandated under Obamacare, began to cut their workforce to contain those costs. To date, over 70,000 announced layoffs have occurred, and many more are expected. Couple these layoffs and those to come with an increased tax burden, and the economy is going to have a difficult time growing. You know... it sounds so academic to say "the economy" is going to struggle. The reality is that this election meant that you and I, the producers, income earners, and job creators, are going to struggle. Our communities are going to struggle. Charitable organizations are going to struggle. Prepare for a long trek through a dismal economic period. Elections do have consequences.
Build a man a fire and he will be warm for a day. Set a man on fire, and he will be warm for the rest of his life.
And that, my friends, is my view.
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