Tax Policy

Tax Policy

Obama kept promising during the campaign to give tax cuts for 95% of Americans. In combination with the rest of his promises, the only way that this is going to happen is one of the following:

1. Big deficits.

2. A rather astonishing increase in income taxes on the multimillionaires and billionaires that funded his campaign.

3. New taxes, such as what he proposed to bankrupt anyone who built coal burning power plants.

Big deficits will result in either higher interest rates (as the government borrows) or higher inflation (if he can persuade the Fed to print more money). Either way, it sounds like I might be better off selling some of my bonds, and paying off the mortgage before rising interest rates or inflation drives down the value of the bonds. Either strategy will drive up the mortgage payment when it comes up for adjustment next year.

New taxes, especially carbon taxes, seem inevitable, since this will force many American businesses under, and benefit foreign competitors. I suspect that whatever health insurance plan comes out of Obama will drive many small businesses under as well--to the benefit of larger companies which are more likely to have unionized workforces (and which already have health insurance because of that). I'm reminded of Hillary Clinton's response back 15 years ago when someone asked about the small businesses that her plan would close, "I'm not responsible for every undercapitalized business in America."

I've already been talking to people who may start working half-time because they are expecting Obama's "soak the rich" plan to affect them. Of course, working half-time is only possible if your employer doesn't get driven under by the health insurance mandates.

I think that Republicans will have a real chance of retaking control of Congress in 2010--assuming that they don't decide that their mistake this time around was that they didn't get to the left of the Democrats on gay marriage and government ownership of the means of production. They are called the stupid party for a reason. I already know a lot of people who can only reluctantly vote Republican because they are so committed to "me, too" policies.