Tax the Economy to Health, yeah Right!

Nothing reduces consumption faster than rising prices. Lower consumption leads to lower overall economic growth. So what idiot would propose raising prices to "avert fiscal calamity?"

According to Lori Montgomery of The Washington Post, the idiot(s) would be:

"... a roomful of tax experts pleaded with Treasury Secretary Timothy F. Geithner to consider a VAT."

A VAT, or Value Added Tax, is sales tax, usually a fixed amount added to the purchase price of any good or service sold. Ms. Montgomery continues that the poor are most hurt, but should promote a VAT because:

"VAT advocates say those negatives could be offset by using the proceeds to pay for health care for every American -- a tangible benefit that would be highly valuable to low-income families."

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Ahh, now I understand, to add health care to the list of nationalized industries, President Teleprompter needs some extra cash. Is it not clear to the 50% of us who pay income tax that even darker economic times are yet to come??

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Let me provide the fastest and easiest way to get this country out of its economic trouble, REDUCE GOVERNMENT SPENDING!!! Additionally, reduce fees and regulatory burdens on business, as well as eliminating the death tax and capital gains tax. Did I mention eliminating corporate taxation?

Lest anyone forget, this VAT being discussed is ON TOP OF existing federal income tax, and will likely be raised, just like state sales taxes are. Again, higher prices equals less consumption. Less consumption leads to lower industrial and economic production. Lower production leads to unemployment and economic degradation. Stop this VAT nonsense!

The Unconstitutional Congress

Bills of attainder, ex-post-facto laws, and laws impairing the obligation of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. James Madison, Federalist 44.

The US Congress has written and is debating legislation, today 19 March 2009, to "claw back" the bonuses that AIG awarded to certain employees in the amount of $165 million. Cheap? No. 100% Free. Trade stocks for free on Zecco.com. The Free Trading Community. www.zecco.com

It turns out that Sen. Chris "Sweetheart Countrywide Mortgage" Dodd (D-CT) admitted to writing the legislation that allowed the bonuses in $787 billion stimulus package.

Dodd, D-Conn., told FOX News that Treasury officials forced him to make the change.

"As many know, the administration was, among others, not happy with the language. They wanted some modifications to it," he said. "They came to us, our staff, and asked for changes, and the changes at the time did not seem that obnoxious or onerous."

In a brazen attempt to cover their political backsides, Congress has written legislation "...that would levy a 90 percent tax on bonuses paid to employees with family incomes above $250,000 at companies that have received at least $5 billion in government bailout money." Guess who wrote this gem, none other than tax cheat Charlie Rangel (D-NY). Become a Decision Maker. Search Director, VP, & Manager level Jobs.

The legislation is clearly unconstitutional, as it specifically targets AIG who lawfully paid bonuses, that were approved by Congress. Congress approved the bonuses as part of the last $30 billion in aid that AIG received. In short, it is a Bill of Attainder. According to techlawjournal.com a Bill of Attainder is:

A legislative act that singles out an individual or group for punishment without a trial.

The Constitution of the United States, Article I, Section 9, paragraph 3 provides that: "No Bill of Attainder or ex post facto Law will be passed."

As I wrote in my previous post, "Bonus Indignation" Congress is trying to make political hay and create cover, by using AIG as a scapegoat. This is all a big distraction from the disastrous spending they have written and President Teleprompter has signed.

Americans are finally beginning to clue in to the enormity of the bailouts and fiscal irresponsibility of Congress and President Teleprompter. As America's future generations have been sold down the river of debt, and the current generations are getting ready to face hyper inflation, Congress fiddles with manufactured outrage over $165 million. Protect your Medical Identity with TrustedID. $1,000,000 Warranty & Great Customer Service

Too bad they don't have President Bush to kick around any more.

Hold on to Your Wallets, Here Comes Obama

So you went and did America. You voted for Barack Obama. All of that "Change" and "Hope" talk snowed you, didn't it?

Well guess what? Starting with the new Democrat congress and Obama in the White House, taxes are going to skyrocket! One of the first things on the agenda will be allowing what was known as the Bush tax cuts to expire. That is an instant tax increase on all tax payers.

We also know that Congress and President-elect Obama are going to raise income taxes on anybody making $250,000, no wait, $200,000, nope, its $150,000, ok, just everybody. The tax increase that is really going to hurt the US economy is the capital gains tax.

Captial gains tax is a tax on the increase in investments. For simplicity sake, if your investment earns $100, current tax law takes $25. In percentage terms, if your investment earns 8%, your actual return is 6%, after taxes. President-elect Obama plans to raise that rate to 35%, thus making that $100 gain worth $65, or that 8% gain is really 5.2%. Will triple tax-free bonds become more popular?

What that really means is that folks will reconsider investing that next dollar, as the tax hit may not be worth it. Additionally, if companies have investment gains outside of the US, they won't repatriate that money because it will wipe out their investment returns. Without money to improve the business, or pay dividends, the economy begins to sputter. Considering the current state of the global economy, ANY tax plan that increases the burden on individuals or corporations is both dangerous and foolish. But don't blame me, I voted for McCain. Rant over.

Oil Speculation is Good!

Does $4 gas get you down? How about those high airline fares? I have heard the cry, "Quick Congress, do something!!!" Airlines have sent emails and taken out ads decrying speculation, yet if I recall, all airlines buy oil futures. Yes, buying futures is the same as speculating, and it is good!

In the 22 July edition of the Wall Street Journal, there is an editorial titled, "An Energy Sarbox." The editorial clearly details the 40 hearings Congress has had and all of the associated hand wringing. Before we go any further, the future purchasing of commodities is good for all consumers. It allows for businesses to plan how much of any commodity they will consume in the future, and for what price. It allows these same businesses to set stable prices. Additionally, it allows for contracts to be made on future outputs at fixed prices.

Back to the knuckleheads in Congress, the article spells out how the left goes back to the old power play book. Declare a crisis, then move in to increase power.

"Instead of merely increasing funding and manpower at the US Commodity Futures Trading Commission, it vastly broadens the CFTC's regulatory purview. It also orders the CFTC to distinguish between "legitimate" and "non-legitimate" traders."

So what happens when US lawmakers make doing business in America too expensive and difficult? They leave. So, if Congress wants to "wring the speculation out of the market," they are going to run all commodity exchanges out of the country. Yes, that would be the NYMEX (New York Mercantile Exchange) and the Chicago Mercantile Exchange. Guess what happens when things go overseas? You got it, they can't be regulated. So much for regulating "speculators," Congress!

Nuclear, Silver Bullet or Money Pit

When discussing the "energy crisis," one of main issues is electricity, including its generation and distribution. In the US, electricity is mainly generated by burning fossil fuels, however, nuclear power generates about 20% of nations electricity, with hydroelectric, and to a much smaller degree wind and solar rounding out the list (numbers, source EPA).

When considering what is the most efficient as well as "best" for the environment, nuclear seems to be a pretty good option. Its day to day generation of electricity doesn't produce any green house gases or other pollutants to global warming adherents fear. Were that not enough, the French produce 80% of their electricity through nuclear power. So why not more here in the US? Cheap? No. 100% Free. Trade stocks for free on Zecco.com. The Free Trading Community. www.zecco.com

In the July 7, 2008 print edition of "Business Week," there is an article titled, "Nuclear's Tangled Economics," (which is the source of all quotations in this post). It highlights presidential candidate John McCain's desire to have 100 new nuclear power plants. The article also highlights that current estimates put the cost at new plants at about $7 billion dollars. While that number is expected to grow as the cost of materials to build the plants grow, the question is whether it makes sense for power companies to build them.

One the first issues any such project is going to contend with is the cost of regulation. Fortunately, the US has standards for building new plants, as well as more efficient regulation. However, some power companies have decided to drop their projects. Most notably, MidAmerican Energy Holdings, "... a gas and electric utility owned by Warren Buffet's Berkshire Hathaway, shelved its own nuke plan earlier this year, saying it no longer made economic sense." Protect your Medical Identity with TrustedID. $1,000,000 Warranty & Great Customer Service

While Berkshire Hathaway shareholders should be grateful for the careful financial management of the company, they may also consider that NRG Energy, Dominion Resources, Duke Energy, and "...six other companies have already leaped to file applications to construct and operate new plants largely because of incentives Congress has put in place." The incentives are not just tax credits, but also $18.5 billion in loan guarantees. Considering the status of the credit markets, the loan guarantees can make all of the difference. eFax Annual Subscription

While nuclear energy is clearly one the best, proven, and clean technologies for electricity generation, it isn't without commercial risk. Each power company is going to have to review the risks, their capital positions, and the economic climate to determine is building a new, nuclear power plant is right for the share holders.