October 29, 2006

The Democrats And Taxes

According to such cartoon characters as Nancy Pelosi and other Democrats, should they manage to get enough of their fellow travellers elected so as to have a majority in the House of Representatives, with Pelosi expected to become Speaker of the House (well, Halloween is almost upon us, so what's a good scare among friends?), one of the first priorities of the Democrats will be to stamp out the Bush tax cuts and roll back our taxes to 1990s levels.

If I were an enemy of the state, I would utterly destroy my hands applauding this ambition. Unfortunately, I am a patriot who loves America, to say nothing of the fact that I am also an American who lives and pays taxes here, so I must convey the blatant fact that I am not a fan of this intended tax increase.

I understand the Democrats' need to tax me into the ground. Well, not exactly understand it, per se, but I realize that the Democrats have a serious problem with their fellow Americans being able to keep some of the money they earn and are fixated on the concept of raising taxes whenever the opportunity presents itself.

Some people are into sky diving, some people collect butterflies, some people are passionate stamp collectors, some people love archery, some tennis, some throwing rocks at passing cars, some surfing porn websites, some collecting sea shells, some climbing trees, others mountains.... Democrats are into raising taxes. It's what they do, just as sucking blood is what mosquitos do, or what leeches do.

It's not their fault, it's simply who they are.

They particularly like to tax those who are successful, like the rich and like large, prosperous corporations, and are very much like Robin Hood -- they take from the rich, and give to the poor. It makes them feel good -- hell, it makes them feel great -- stripping a big company of its investment capital plunges them into ecstasy.

Back in the 1980s, during the Reagan Administration, the greatest President in my lifetime stopped the bloodsucking practice of penalizing American business for its success, allowing it to keep its investment capital in order to put it to work, and lo and behold, despite the Democrats' criticism of what they fondly referred to as Reaganomics, our economy exploded into a dynamo of successful professionals, low unemployment, newly created millionaires and prosperous companies.

This trend continued through the Bush 1 Administration, but then, alas and alack, American voters sent Bill Clinton, a Democrat, off to the White House.

Keeping to the sacred tradition of Democrats, he raised taxes, as usual targeting the rich.

Before the end of his second term (he was actually reelected, go figure!), we were plunged into recession. The unemployment rate soared, businesses struggling to stay afloat transferred record amounts of their production to outsourced labor pools and after Algore, Clinton's Veep, lost the 2000 presidential election to George W. Bush, the newly elected President engendered massive tax cuts.

Naturally the Democrats, dismayed that Americans were being permitted to keep more of their earnings, mounted yet another of their innumerable bumper-sticker friendly campaigns -- "The Republicans have given tax cuts to the rich, screwing the poor as always!"

That was worth, at the very least, a good chuckle, since every American taxpayer was entitled to the cuts. The Democrats somehow managed, once realizing that they really couldn't produce any low income working folks who were being either neglected or recieving the fid, cited poor people on welfare and other premature social security venues who weren't benefiting from the tax cuts, the fact that these people didn't pay any income tax to begin with notwithstanding... they actually forced the government to give something "back" to these noncontributors as well.

Meanwhile, the tax cuts enabled corporate America and smaller business people to use the "surplus" equity to expand existing business and create new enterprises.

The result has been a major rebound in our economy and a serious decrease in the unemployment rate that is still adjusting downward. America is again flourishing!

But let's not be too confident, friends, okay? We still haven't had this year's elections, so we don't actually know where we stand.

We're pretty confident about holding a Republican majority in the Senate, but there has been a lot of negative conjecture regarding the House majority after 7 November. Personally, I believe we'll hold our majority there, as well, though we'll have a few less seats.


Should the Democrats gain a majority in the House Of Representatives, they will raise taxes, and you can bet your bottom dollar, assuming you still have one, that the late 1990s recession will return even more quickly than it went away.

Of course, the Democrats will find a way to blame Bush....

Posted by Seth at 04:27 PM | Comments (29) |

December 12, 2005

Good News For Many, If True

If this is true, it could be good news for those of us wishing to buy a house as a home rather than as an investment.

Sales of new homes jumped to an all-time high in October in what could be a final spurt from a housing market that is expected to slow after five record-breaking years. The Commerce Department report released Tuesday showed sales of new single-family homes climbed to a record annual rate of 1.42 million units last month. The 13 percent increase from September was the largest percentage gain in more than 12 years.

Analysts said the unexpected surge was probably influenced by fence-sitters rushing to buy homes before mortgage rates climb higher.

"The housing market is peaking despite what today's data suggest," said Mark Zandi, chief economist at Moody's Economy.com.

He said part of the rise in October could have occurred because worried builders have started cutting prices and offering other incentives to move unsold homes.

Home values are not a tangible phenomenon, nor is there any precise formula that can be applied to them. They are a product of the marketplace and therefore completely reliant on the good old concept of supply and demand.

When there is a strong demand, everybody on the selling end cashes in; Realtors make more money on their average 6% fees, sellers make a bundle in profits based on their initial investments in the properties and on the buyers' end, banks make the money by raising mortgage rates to take advantage of the demand -- in a manner of speaking, they are the pilot fish of the transaction, though their necessary function brings them a much better return than that enjoyed by their cousins whose only satisfaction is that of a job well done in the cleaning of a shark's teeth.

When the price of a house becomes prohibitive to all but a few and the cost of borrowing the money to buy increases along with it, the "buy as an investment" crowd becomes cautious because they see their potential for earning a substantial "hold on to it while prices go up, then sell it" profit margin begin to dwindle.

That's pretty much what's happening now, so,

Economists believe the momentum so far this year will result in a fifth year of record sales for both new and existing homes in 2005, but they forecast sales declines in 2006 as potential buyers react to sustained increases in mortgage rates.

Rates for 30-year mortgages have been above 6 percent for seven consecutive weeks and economists are predicting they will rise even higher in coming months as the Federal Reserve keeps raising rates to combat inflation pressures.

Patrick Newport, an economist at Global Insight, a private research firm, predicted that sales of both new and existing homes would drop by around 10 percent next year.

"We are not expecting a crash or anything dramatic but a slowdown from the sizzling numbers that we have been seeing," he said.

On the other hand,

The concern of some economists is that the booming housing market could have a bigger downturn similar to the bursting of the stock market bubble in early 2000.

The worry is that activity in recent years has been pumped up by investors buying homes and condominiums in hopes of quick gains. If they suddenly decide to dump those properties, it could cause a glut on the market that would further depress prices.

What is indicated here, if the "experts" are correct, is that the seller's market that now dominates the real estate industry in most of the United States is about to become a buyer's market, which will move home buying out of the short to midterm investor's court and into that of the "common man."

Posted by Seth at 01:43 AM |

July 16, 2005

Bush Tax Cuts Perform

Despite reverberations of the Democrats' whiny doomsaying about the Bush tax cuts on dividends and capital gains(yes, they were so loud they still echo a couple of years after the cuts went into effect), you know, despite the shouting about how the tax cuts only help the rich, etc, the tax reductions are proving out. Per an editorial in yesterday's Opinion Journal,

Let's see if we can get this straight:When tax revenues fall and budget deficits go up, it's bad news. But when tax revenues rise and deficits decline, it's still bad news.


At least that seems to be the way a sizeable chunk of Washington is reacting to this week's report from the White House budget office that the federal deficit is down by nearly $100 billion this fiscal year, that the deficit as a share of GDP is down to 2.7%(very near its historical average), and that this is all happening because tax receipts are surging by more than 14%: Uncle Sam is having a better year so far than even Paris Hilton, but half of the Beltway is depressed.


John Spratt, the ranking Democrat on the House Budget Committee, seems especially upset that this revenue surge isn't coming from wage income, but rather from investment income--that is, the so-called non-withholding income tax collections, which have skyrocketed some 30% this year. "These are typically taxes paid on one-time capital gains, bonuses, stock-options income that may not recur, he laments.


Well, sure, Congressman, the 2003 reduction in the tax rates on dividends and capital gains seem to be resulting in much higher tax revenues on...dividends and capital gains. This is called the Laffer Curve effect, and we think Mr. Spratt is validating it. If he wants those revenues to "recur," maybe he'll vote to make these tax cuts permanent.

So, once again events have, as they say, overtaken the tax hungry left, who refuse to acknowledge that the revenues of big business and wealthy investors can be better spent for good of country by being reinvested, generating more taxable income than by being sucked up and spent by the government.

This brings to mind four lines from the 1971 Ten Years After song, I'd Love To Change The World:

Tax the rich

feed the poor

'til there are no

rich no more...

So then what?


The Laffer Curve is a graph that illustrates the relationships between tax rates and taxes collected by a government.

It shows that when tax rates hit certain levels, productivity declines and as a result, less taxes are collected.

Makes sense, doesn't it? If you know the government's going to snatch up most of your profits, anyway, why bother making an effort? Here's a lesson we can learn from Europe--and Canada, for that matter. In those countries taxes are significantly higher than they are in the U.S., and none of them comes anywhere near the level of productivity we enjoy in the United States. Hell, the output of the vast majority of our states, individually, is higher than the collective output of the European Union

No matter what the port side of politics, even while brandishing rabid, anti-Bush leftist economist/columnist/stooges like drooling Paul Krugman tries so hard to make "go away," the truth remains: The capitalists in our capitalist republic are the entities that pay most of our taxes as it is.

If the tax man charges less, the freed-up profits of the taxee are invested and generate more taxes on profit volume.

Duh! Wake up, Democrats!

Of course they won't, and not because of any logical or patriotic reasons, simply because the Democrats have evolved, since being indoctrinated by their liberal faction, into a party whose leanings tend toward socialism. We are the richest and most powerful nation on earth because we are who we are. Don't fix what ain't broke.

And yes, I can understand why the Democrats on the Hill are distressed by the positive results of the Bush tax cuts; they are once again standing there, looking forlorn. Being proven wrong time and time again has to be a frustrating experience. I tend to think, for some reason, of Rita Repulsa when she is beaten still again by her becostumed super hero teenage enemies, or of Snidely Whiplash after Dudley Do-Right has again cleaned his clock. "Curses, foiled again!"


But you have to give the Dems credit where credit is due: It's awfully hard work trying to make a strong President fail at his job, and to that end they have thus far shown a level of dedication and perseverence that even our enemies would have to admire. Then again, our enemies probably appreciate their efforts, since those efforts are in anything but our country's best interests. If the Dems applied the same tenacity for this country that they do against it, they'd have a lot more people in Congress and maybe even a shot at winning the White House in 2008.

I mean, the Democrats aren't serious about believing all this crap they spew, right? They aren't really that stupid, right?  It's all politics, it's gotta be, because if it isn't it means that over there on the left side of the aisle are a whole lot of folks with issues that need to be resolved with professional help, or something.

Nah! It's only partisan politics.


By the way, we don't recall Mr. Spratt and other Democrats lamenting when a similar spike in taxes from investment income was boosting tax revenues to historic heights as a share of GDP during the dot-com bubble of the late 1990s, as per the nearby chart. Then it was all said to be an economic miracle; now it's a windfall for the wealthy. This selective budget criticism couldn't be related to who's sitting in the White House, could it?


Posted by Seth at 04:12 PM |