[GCFL-discuss] Presidential plans on Taxes

Sat Sep 20 00:45:35 CDT 2008

Lance, I can be such an idiot sometimes. When I read your question, I
typed a long, rambling reply including everything I thought I knew about
the subject. Before sending it, I flipped over to the late-model computer
that I use for internet and high-memory files like photos. I quickly
learned that there is a well-identified fraud circulating, which your
mother apparently got a copy of, or was told about. It has been
thoroughly debunked by FactChecker, which openly states that it is so
lacking in any factual basis that the email must be a deliberate lie.
Check this link:

http://www.factcheck.org/askfactcheck/would_obama_tax_my_profits_if_i.htm
l

If it doesn't open, let me know, I'll look it up again.

Siarlys

P.S. in case its of any interest, here is the rest of what I put
together:

To keep this honest, please remember that I am partisan, that is, I've
made up my mind who to vote for, and, I am not an economist. Having
disclosed that, I will try to stick to facts or common sense
observations.

One thing we all have to watch out for is that both campaigns are going
to reduce everything they say, almost, to trite slogans that don't
provide much information. Why do they do that? Because experience shows
that it wins elections. You've talked about the sheeple before, and it is
nowhere more true than the last weeks of an election. Much as I don't
trust John McCain, I know that the reason he is running such a sleazy
campaign this year is, his "Straight Talk Express" LOST in 2000.

OK, taxes and retirement. Obama has said that he will not raise taxes on
incomes under $250,000. I think that number has varied a bit over the
past ten months, but that is what he and Biden have both said on TV
lately. Frankly, I wouldn't object if he went down to $100,000, but he
hasn't. So all of us can breathe easy on that.

The argument offered, by lobbyists for big corporations, why your parents
should oppose higher taxes on corporations goes... your parents'
retirement funds are in a variety of stocks and bonds, so if corporations
pay more, your parents will get less. That stretches the truth so far, I
could almost call it a lie. My parents, by the way, are in a similar
situation, and my mother was just talking to me about it during a two-day
visit this week.

Say Sam Smith retired with $300,000 in his retirement fund, whether it is
a 401(k) or a union pension plan or an employer-controlled pension plan
or his own brokerage account and some CD's in the bank. In the years left
to him, Sam will need to spend that $300,000. Every year, he will sell
off SOME of the stock in order to regain the money. Two things can hurt
him: 1) the value of the stock goes down, 2) the stock pays less
dividends, so less new money is coming in, and therefore his fund goes
down a little faster than he planned for.

Of course part of the idea of investing in stocks is so they will go UP,
so $10,000 a year set aside over 30 years might, with luck, be worth
$500,000 when Sam turns 65. But that is not guaranteed.

You are right that corporate income tax used to be a much higher
percentage than it is now. That took some tax burden off of middle income
working families. About 90% of the benefit of the GWB tax cuts went to
the wealthiest 5-10% of taxpayers, but we all got a LITTLE of the
benefits. Then, to cover for the fact that he was still spending money,
GWB borrowed, heavily, mostly from Asian banks, including China. Sooner
or later, that debt has to be paid back, and some combination of tax
payers is on the line to pay it.

If corporate income taxes go up, it is POSSIBLE that it would lower,
somewhat, the size of the dividends that would come in from any stocks in
your parents retirement funds. But a whole lot of corporate net income
doesn't even go into dividends. It can be "retained earnings," which can
be used for whatever the managers and directors and MAJOR shareholders
want to spend it on. Generally, "retained earnings" is what gets hit, not
the dividends paid out. They have to pay dividents to keep stock price
up.

The real risk to your parent's retirement fund is that the value of the
stock will go down. That has little or nothing to do with corporate
income tax. If you look at the unstable financial markets, stock prices
ARE going down, because investors are running from the American market,
because investment banks are failing. Why? Because the same mentality
that cut corporate income taxes also "deregulated" financial markets. You
know why AIG failed? It sold "insurance" on the VALUE of investments --
like, if your investment loses value, they would make it good! For
obvious reasons, they went broke on that. Too many securities backed by
bad mortgages are losing value. There oughta be a law, literally, against
selling such insurance. With AIG going broke, it means a lot of "insured"
investments lose value, because the insurance is no good... and everyone
pulls out.

The value of your parents' stock, not their CD's or savings, but any
stock they hold, is only as high as the price people are willing to pay
for it when the stock exchange closes for the day. Its not a magic
number. More people want it, the price goes up. More people want to sell
it than there are buyers, the price goes down. The value of stock your
parents may have been holding onto for years depends on what those who
want to buy or sell today are offering and accepting. Of course, even if
it goes down this month, it could go back up before they need the money.

As far as I can see, McCain has supported all the deregulation that
allowed big financial companies to have a big party for the last ten
years, and now they are crashing, they want the taxpayers to pay the
bill. That is the real threat to your parents' retirement, and my
parents' retirement. There are two reasons someone is going to have to
pay more taxes:

1) GWB ran up a HUGE national debt. Right now, you could say we are
mortgaged to the Bank of China. That's scary. The INTEREST is costing us
more than the war in Iraq! The truth is, Democrats are the party of
pay-as-you-go, and Republicans are the party of spend the "surplus," and
borrow to pay for what we need. I would rather see those who made all the
money at the Wall Street party pay the bigger share of the tab to pay
down the debt. McCain IS railing against "Wall Street greed" now, but be
careful. He is blaming greedy INDIVIDUALS. He is a prime author of a
deregulated SYSTEM that made greed into a sound business practice. He is
talking about keeping all the "Bush tax cuts," but he is saying nothing
about reducing borrowing, or which spending he would cut.

2) There are some things we really need our government to do. Our
national infrastructure is falling apart. New sources of energy need some
kick-starting and regulatory support, which incidentally will create a
lot of jobs which cannot be exported overseas. Again, I'm voting to keep
the tax burden in the upper brackets, where its reducing spending on
luxury, not cutting into necessities. Nobody ever walked away from $1
million because they might only get to keep $578,985 of it.

Nobody is proposing to tax anybody's retirement or pensions. I expect
Obama will look out for working families (and retirees) better than
McCain. Whoever wins, they are going to be facing a nightmare situation,
requiring incredible work and cool judgment. Right now it is already a
mess.

Siarlys
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