Politics and Finance -bmkriger
“Change”. Get into a political discussion with any college student about why one should or should not vote for Obama, and their argument is simple: “Change”. But what does “Change” make you think about financially in connection to the election?
What might happen when we increase taxes on large corporations:
The “wealth” of individuals is tied to investments. In America a substantial amount of wealth is connected to the stock market. Whether you buy directly, or if you buy indirectly through a mutual fund, you’re still buying into the stock market. Granted, you may buy bonds as well. Many of the stocks you’re going to have in your portfolio are going to be large companies whom will see a tax increase through Obama’s plan.
In doing so, the companies will do three things: (1) Post lower earnings by doing nothing and paying higher taxes, (2) pass on the additional expenses to the consumer, or (3) move to another county as a tax shelter (check out where Halliburton is located now-a-days). So, what will happen to the earnings of a stock portfolio in return to any of these?
What might happen if we decrease the taxes of 95% of Americans, or those individuals making less than $200,000.00 anually?
If the nations average personal saving rate is negative five percent (-5%)
(http://www.usatoday.com/money/perfi/general/2006-03-01-savings-cover-usat_x.htm), will giving a tax break really do anything to boost the economy for the long run? If the savings trend is negative, then wont all the money that is kept, plus five percent be spent? I think a stronger alternative to a better economy is to instead implement better saving plans, not give money to people who spend it. A stronger economy would result if people had wealth. The reason the economy is so messed up in the first place is because its ran on credit with no real wealth behind it. Credits only as good for the amount you can collect from it.
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I agree that tax breaks in general aren’t very effective, no matter which class receives them, but credit and spending is the american way so changing our society into a saving society will take extensive reworking of the american economy. Saving will make people feel more wealthy because they actually will be wealthier, but changing the general view of the US consumers to a savings mentality would be like turning an oil tanker, its possible but not quick or easy.
brandenelmendorf - November 3, 2008 at 5:15 pm
However, if these coimpanies have no one to sell their products to because the majority of American poeple can’t afford to spend their money on items that are not necessities, they will loose revenue as well. Essentailly, more needs to be done to improve the current state of the economy besides reducing taxes for individuals who make $200,000 or less, however, it is a good start.
Jazelle Reed - November 4, 2008 at 3:18 pm
I agree that more needs to be done to the current state of the economy, however I think my disagreement is in the fact that taxes need to only be reduced on those making less than $200,000.00 a year.
In fact, I make less than $200,000.00 a year, but raising tax on corporations who make upwards of that directly effects my personal wealth. Why?
Because I am actually part owner of some of those companies. How do I figure? I own stock in a lot of those companies. If those companies are taxed, its going to effect their ability to produce profits, and in turn, it’s going to hurt my financial gain from my stock portfolio. And its not just me, many, many Americans, in fact I think it would be safe to say that most Americans with a savings account own either directly or indirectly, stock.
So, if I get an extra tax break, but my portfolio loses earnings, then I feel like I am going in a circle. Which would matter, except for the fact that on top of it, these large companies are going to move out of the USA, or employ tricky tactics to get passed the taxes.
If you’re really interested in this topic, I suggest you read the book “Rich Dad, Poor Dad”. The chapter on taxes will teach you a lot.
Although we may disagree with each other, I do like how you take an interest in finance similar to the way I do.
Bmkriger
bkriger - November 4, 2008 at 6:51 pm