Is Taxing Upper Income People A Good Idea?

Hi Everyone:

There is a lot of talk about what to do with the Bush Tax Cuts. The Democrats want to end the tax cuts for people earning over $250,000. The Republicans want to keep all of the tax cuts in place. Who is right and who is wrong? Or is there a right or wrong in this debate? Lets look at the facts as per the Gannet news:

The final 2 years of the George H. W. Bush presidency brought a creeping recession, with an unemployment rate that increased from 5.6% in 1990 to 7.5% in 1992. By June 1992, just 5 months before the elections, the rate reached 7.8%.

Newly elected President Clinton proposed raising the highest marginal tax rate from 31% to 39.6%. President Reagan's chief economic advisor, Martin Feldstein, said that "raising the tax rate of high-income people would hurt incentives, weaken the economy and waste investment dollars."

As you may or may not remember, there was a fierce debate with a lot of mud slinging and fear mongering. Republicans truly believed that Reagan's trickle down theory, tax cuts for the rich would benefit the middle and lower classes. They claimed that raising taxes during a recession was wrong. Even though Reagan's tax cuts among other things created a huge deficit, they still believed their way was correct.

When the debate ended and the votes were counted, the house voted for the tax increases by a vote of 218 to 216. The senate vote was tied and broken by Vice President Gore. So what were the consequences? In the following 7 years the unemployment rate decreased every year until it reached 4% in 2000. Did the tax increase alone cause the drop in the unemployment rate? Probably not. But the increase went a long way towards closing the budget deficit that Clinton inherited from Reagan and Bush and it also raised the incomes of poor families through the Earned Tax Credit. Both of these factors provided major economic boosts. Also don't forget that by the end of Clinton's presidency, the huge deficit that he inherited was gone and a huge surplus was given to Bush #2.

President George Bush #2, not believing in history repeating itself, slashed tax cuts for all individuals. Then the economy fell off a cliff. The tax revenue lost from the tax decreases helped in part to send this country into the worst recession since the Great Depression.

So what is the correct answer regarding keeping the tax rate for the rich as is, or increase their tax rates? Well, using common sense, it appears to me that raising the tax rates for the rich is good economic policy. It worked in the 1990's, so why wouldn't it work now? How can one argue that the trickle down theory of economics works? History has proven twice that it didn't work. It didn't work for Reagan and it didn't work for Bush #2. If history has shown which way works, why would we want to try a failed policy for a third time? That makes absolutely no sense to me.

Additionally, please don't forget that keeping the tax cuts for the rich will increase the deficit by almost one trillion dollars. If the GOP was really serious about reducing the deficit, which they say they are, the first thing that they should do is to eliminate the tax cuts for the rich and increase their tax rates. You can't argue with history. It is there for us to learn from and not to ignore.

Common sense rules and poor policies drool.

Til next week.

Reason # ??? Why School Taxes Are High

Hi Everyone:

Just when you thought you had heard it all regarding high school taxes; Buffalo, New York may well take the cake and win the award for the dumbest ever. Common sense must have been dead and buried in Buffalo because you could never guess, not in a million years, what their teacher contract covers. The Buffalo school union really snowed the taxpayers with an unbelievable pert covered by their contract.

So what is this pert? Before I tell you, keep this in mind; Buffalo taxpayers shelled out $9 million just for last year, to cover this pert for 500 teachers and their dependents who used the pert. And the pert is, drum roll please.............................................................................................. cosmetic surgery?! Now mind you that this is not cosmetic surgery due to an accident or mastectomy etc., which are usually covered under a medical benefits plan, but for elective cosmetic surgery. This is wrong on every conceivable level. Shame on the union for asking for such an outrageous pert like elective cosmetic surgery. Equal shame also has to be placed on Buffalo's school administration for accepting this pert as part of the contract. What were they thinking? Oh yea, they weren't!

Sometimes I feel like the world in which we live is upside down and I am living in a Bizzaro world, (see Seinfeld the TV show). Why would it be necessary to have cosmetic surgery included in any contract what so ever? Are Buffalo teachers and their dependents born so ugly and deformed that only elective surgery can correct their plight? Do Buffalo teachers and their dependents enter lots of beauty contests? Does Buffalo win an award for having the most beautiful teachers? Obviously the answers to all of these is a resounding NO! So the only reason this pert became part of the contract is due to a complete and utter lack of common sense on any one's part. Shame on them all!

This is a prime example of how union contracts have gotten so out of control and so far beyond their scope of coverage since their inception to protect employees rights and pay. Their aren't enough adjectives that the Buffalo taxpayers should be shouting at the top of their lungs to rescind this pert and any others like it. As part of trying to get this country back on its feet, I firmly believe that all union contracts must be reviewed with a fine tooth comb and remove outrageous and costly perts such as cosmetic surgery. If the unions don't like it, TS!!!!!!! They should have never received such a pert in the first place. Shame on everyone!!!

Common sense rules and greed drools.

Til next week.

Peter

Florida

Hi Everyone:

I'm back from vacation. Although we all had a great time, vacations always seem to end much to soon. While on vacation though, I unintentionally discovered something that really mystified me. But I am getting ahead of myself. First the back story is that 4 of us went to Florida for some much needed R&R. While there, our friends wanted to check out some retirement homes, condos and townhouses. I believe that we visited about 12. All of the homes etc. were built between 1997 to 2006. So they should have been built with efficiency in mind. Not so fast with that kind of thinking.

Every single house, condo and townhouse had single paned windows, this included the windows in doors and the sliding glass doors. When we visited stores and restaurants etc., they also had single paned windows and doors. Even the resort that we stayed at used single paned windows and sliders. On mildly chilly mornings, we could see condensation on the windows.

Now it doesn't take a rocket scientist to figure out that having double paned windows in a warm climate can also save a lot of money by lowering one's air conditioning needs which in turn lowers the electricity bills. I really couldn't believe that all these recently built homes etc. were built with not enough attention paid to energy savings. What an absolute shame.

Obviously, common sense was not used in the designing and constructing of all these structures. Money was most likely the determining factor in choosing single paned over double paned windows. Just think about all the energy wasted. It is mind boggling. Again, what a shame!

Common sense rules and inefficient buildings don't.

Til next week.