The ‘FISCAL CLIFF’ we hear so much about…
What are we REALLY up against?
Why is it so critical that the correct decisions are made – and what are those?
Obama wants to raise roughly $ 1.3 billion.
How does he want to raise it?
1) Raising taxes on those making over $250,000 will raise about $450 million
2) In addition, Obama wants to cap deductions for those same folks which could raise another $450 mil.
But that leaves him still $400 mil. short
To close the gap Obama wants to raise capital gains taxes and increase government spending (more bailouts) some more and business taxes..
The latter can be especially dangerous, in our view, since capital gains are what drive the economy. New private and business capital is reinvested and creates new jobs. If anything one would CUT captial gains taxes to stimulate the economy as even Clinton did during his presidency – and it worked. Russia, on the other hand, failed when it cut capital gains taxes.
As Jack Kemp used to say, ‘ There’s no capitalism if you cut capital gains.’But then, maybe Obama that’s exactly what Obama wants – to move the econmyaway from capitalism to communism.
We haven’t even mentioned Obama’s other new taxes that will go into effect january 1, namely that paying for Obama care amd others.
The John Boehner / Republican strategy would be to cap deductions as well as cut loopholes – and government spending. For us that would make more sense. The government is currently spending at a record rate approaching 30%. We’ve gone all the way from 2% which George Washington thought was excessive to this.
And then we’ll all be saddled with the end of Bush’s tax cuts at the same time.Put this all together and it really many of us middle and upper class folks may really fall off that financial cliff if
Without any real stimulus to the economy – other than more artificial printing of money – we’ll continue on a downward spiral. Government spending hurts the economy in the long run. Obama may eventually get himself in a hole with nothing left but to keep taxing the wealthy – nobody else will have any money – and then we’ll be just like Russia and European countries where the wealthy are the only ones paying taxes – and to the tune of 90%.
The only hope, as we see it, is that Obama / democrats will compromise with the Republicans and Boehner, using other means than just raising the wealthy’s taxes – means that will also stimulate spending, not hinder it.
BROADEN THE TAX BASE – LOWER THE TAX RATES
Ideally, the Republicans would stand firm, not raise any taxes – in fact lower them as they ‘ broaden the tax base’ – and get rid of those loop holes and deductions. It would likely mean cutting cut the Obamacare tax hikes which will be difficult to budge. Ideally a strong personality such as Paul Ryan or Marco Rubio could stand up and well present the Republican case, as suggested here. It’s doubtful the Republicans could fully get their way, as correct as we believe it is, so they should compromise only to the extent of giving in to the deduction caps and NO NEW TAXES! Otherwise the Republicans must hold their ground as any more tax increases could get the country into such much debt they could never climb out from under, while citizens would become more and dependent on the government for benefits as they go broke. IT WON’T BE THE WORST THING IF THE REPUBLICANS HOLD THEIR GROUND. IT WILL BE IF THEY GIVE IN TO HIGHER TAXES!!!
