Sunday, October 26, 2008

Hard to Avoid Higher Taxes

I have a reflexive reaction to higher taxes, particularly on the most productive members of society. I always think “will congress/state legislatures deploy the tax revenue more productively than society at large?”. Generally speaking, I think not. There is also the issue of tribute paid to members of congress to curry favor with various interest groups. When an entity has the power to redistribute wealth via tax policy, it has a corrupting influence on everyone involved.

Given the fiscal problems in our Federal and State houses, I don’t see how we will avoid higher taxes. I also believe the “top 5%” targeted by Obama today will become the top 50% in 12 months. Unless we make major changes to the way our federal and state governments are run, the politicians will need to raise taxes by a large amount to fund the myriad programs. It is going to be ugly. Keep in mind that a major tax increase will occur in 2011 regardless of who is in office because the 2002tax cuts are set to expire. One thing I would really like to see is an expiration date on tax increases.

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