When taxing is too much...

I was driving, the other day, listening to NPR and they were discussing the estate tax proposed modifications, which got me to thinking.

• I work 60 hrs a week and make $100K (my money) and pay income taxes on that, both to the Feds and the State.
• Using the remaining of my money (which I've already paid taxes on), I buy clothes, a car, etc. and I pay sales taxes on that.
• I also need to buy gas for my car, and I pay sales and gasoline taxes on that.
• Since I am privileged to own a car, I also have the privilege of paying annual excise tax on the car.
• From the remaining balance of my money I put some aside and bought a house. I get rewarded by having to pay real estate taxes on that.
• There was just a bit of money left, so I decided to take my wife away for 2 days, I had to pay all sorts of government fees (taxes) on the airline tickets and again a number of taxes on my hotel bill.
• During the weekend we went out to eat.... you guessed it, I had to pay meals taxes.

All these taxes (and many others I can't think of, at this moment) are levied against my $100K a year. Then, a few years from now (hopefully, many years from no), I die and leave this nice house and whatever money I had saved to my children. Aha, not so fast, they have to now pay estate tax. So, I am being penalized for leaving something to my children? How does that make sense?

And I know, people will say, not the first $500K or whatever, or it's meant to catch people leaving tens of millions, but that is so irrelevant! I can see if the house was stolen or the government gave it to me, of somehow I had found the money in my savings account, but darn it, I worked very hard for it and paid taxes on what I made along the way. Why this additional estate tax? Doesn't make sense.

USA dealt a blow at the G20 Meeting

I can still hear the echo. The USA was told in no uncertain terms that (a) we don't know how to manage our own finances - never mind helping the rest of the world manage theirs, and (b) we have to stop whining about being shut out of world markets and blame currency manipulation, and start building better products, that would be attractive to those foreign markets.

Analysts have been telling us for months (years ?) that the US hegemony of the world finance is pretty much finished and China may be the next likely leader, and now it looks as if that's eminent.

I can't really blame the other countries for telling us that we destroyed our economy and we are now asking them to pay for fixing it. They are right. Not only did we destroy ours, we almost took a number of other economies down with us (our only defense may be that their greed helped, as well).

And, our delegation went to the G20 complaining about the Chinese illegally or unethically manipulating their currency value to take advantage of us. We did that about a week and a half after the Fed announced dumping another $600 Billion (actually closer to $900 Billion) into out economy. What is that? Isn't that currency manipulation/devaluation? How do we expect anyone to take us seriously? What are the Chinese supposed to do? Think about it. They hold close to 2 trillion dollars of US Treasure bonds, and the Feds just made sure they lost some of that value. If I were them, I'd be pissed too.

I don't know what the solution is, but what I *do* know is that always blaming someone else doesn't work. The Chinese are not to blame for our current situation. The tax system, the ever-increasing size of government, the ever-decreasing productivity of the American worker, the ever-decreasing quality of American products, big Unions, much higher wages than other countries, etc. All these, and many others, may be contributors to bringing us to the brink we are today. And convincing the Chinese not to manipulate their currency will not solve our problems. Let's be realistic. A auto-factory worker in China makes the equivalent of $1.20 and hour. So, we'll convince the Chinese to stop their currency games and that may increase by 20%, 30%, even 50%. So, now the Chinese auto-factory worker hourly rate will be $1.80. Do you think we will all of a sudden become competitive, when the US auto-factory worker hourly rate is $39.00. Dream on...

How about we build a car that is of such quality that Germans import it and make it their top-of the line, luxury vehicle, much more expensive than their Mercedes? Now there is a concept - compete on quality! But that is not our mentality. We have all become accustomed to the Walmart mentality, i.e., "I don't care about the quality, as long as it's cheap and I can get lots of it". Sure, the Chinese may have adopted a similar paradigm, but guess what, *we* are the ones stocking Walmart's selves with "Made in China" products. The reverse is not true, and it couldn't be, since we don't have a manufacturing based economy in America, not any longer.

I hope the way the US was shot down at the G20 becomes a wake-up call, but I am not holding my breath.

I know that posting these thoughts here don't change anything, but at least it helps me vent some of my frustration. So the Fed decided to issue another 600 billion dollars (oops, make that ~ 900 billion) into the economy. How is that backed up, you ask? It's not, it's phony money, monopoly money, only this is *NOT* a game! Brazil, China, Germany,... they are all complaining and for good reason. Since releasing this money into the economy will further devaluate the dollar, all their holding in US bonds, the ones they were convinced to buy in order to the help the US and world economy, all of a sudden are less valuable! So what if they decide to do the same with their economy? How will that impact the US? You don't really want to know :-(

But it's not just other countries that are being affected. Watch for an almost immediate raise in prices of most commodities, in this country. Watch for a quick jump in gas prices. Watch for another increase in unemployment. What are these people thinking? Who is advising them? They tried it, they've already pumped almost 2 trillion dollars of stimulus and bailout money into the economy and it didn't work! And, that's because they are not addressing the real problem. Small and medium size companies will not invest in creating more jobs, not in this climate of uncertainty, of looming tax increases at the beginning of the year, etc. Why should they?

But, don't worry, the government may extend unemployment benefits again, so where are we at now, three years, or so? I am all for helping people who were hit by bad times, but extending the unemployment benefits doesn't do much to solve their problem, all it does is increase their dependence on the government hand-outs. Use the money to create jobs, instead. Where are the millions of new jobs that would be created, updating the country's infrastructure?

Oh, yeah, another 900 billion of fake money will magically solve all problems. Strap-in, we are in for a very bumpy ride :-(

Don't kill the language

Like everyone else, I have many pet peeves regarding the language. Here are some of my favorites...

1. "its" .vs. "it's" - Why is it so hard to understand? "It's" is the abbreviated form for "it is" and "its" is the possessive. Yet, how many times do we see (even in newsprint) phrases like, "The city has it's own lawyer..."

2. Using the word "amount" for everything, like "the amount of people" or "the amount of time". Amount can only be used within a collective context. It cannot be used for items that can be counted! So, it's "amount of time", but "number of hours", not "amount of hours". It's "amount of money", but "number of dollars". It's "number of people" not "amount of people". It's "length of time" not "amount of time", and so on.

3. "Their" is not the same as "there" and "theirs" is not "there's". It's not "their is a house", it is "there is a house". It's not "the house is there's" it's "the house is theirs".

Obama to lay out Afghanistan plans

So, president Obama will lay out our war plans tonight, so that the American public will be informed and he may get a bump on his quickly declining rating. That's just great. Did the White House make sure to ask the enemy not to listen in? I mean after all we are in a war in Afghanistan, and we don't want the enemy to know our plans, right? But wait, may be the war plans are being broadcast so that the war will be fair. We don't really want to surprise the enemy, that wouldn't be fair, now would it? Or may be this is the real manifestation of the "fifth column".

It was really interesting to read some comments in various blogs this morning, like... "Our tactics won't be compromised by discussing his vision for the war,... this is better that the previous administration that kept us in the dark..." I don't think I have ever heard a more moronic assessment :-( So, providing information about the war , *ANY INFORMATION* does not help the enemy? These bloggers are probably the same people that feel all information should be available, and something like inside trading is not really a problem - it's just releasing information about the plans of a company, right? No crime in that. Nobody will use that information to their advantage

And, to make things even worse, the President's speech is bumping Charlie Brown's Xmass Classic, which was scheduled to air at 8:00 pm. Whoever ever heard of something like this before!

As another blogger put it, "It's Obama's world, we're just living in it."

Santelli is right, No bail out for bad behavior!

This past Thursday, on CNBC, Rick Santelli accused the Obama administration of "promoting bad behavior" with its $75 billion lifeline to millions of Americans who are on the brink of foreclosure.  And, White House Robert Gibb's comeback was that he'd buy Santelli a cup of coffee if he goes to the White House to read the details of the Obama plan.  Indeed, this is the same White House that quickly pushed through the stimulus 1000+ page stimulus package that no Congressman, Senator read!  (Anybody taking bets as to whether Obama read it ).

The white house claims that the goal of Obama's plan is to help millions of homeowners from being evicted and stabilize the flailing housing market.  Santelli says responsible homeowners will end up subsidizing other people's bad behavior.  He made his point on the floor of the Chicago Board of Trade, when he turned to traders and said: "How many of you people want to pay for your neighbor's mortgage that has an extra bathroom and can't pay their bills?" The traders booed that notion, as would any logical person.

I'm with Santelli (is that a surprise?).  You want to help those people that are in danger of foreclosure?  Don't subsidize their mortgage, create jobs and put them to work (may be even 50, or 60 hrs a week at the beginning) so they can pay for that mortgage.  How am I going to teach my kid responsibility?  How am I going to teach him that when he grows up he should ONLY buy what he can afford?  He'll just turn around and tell me... "Don't worry dad, if I can't afford it, the government will pay for it..."

This bailout is just another form of entitlement, and a slap to those of us who have worked hard to meet our obligations.  Santelli is right!

Stimulus and Mortgage Help

Stimulus package?  Sure, it sounds good.  Mortgage help to millions of homeowners defaulting on their loan?  And that somehow is going to help ease the real estate crisis? Who are we kidding?

So, the government will subsidize people's mortgages.  They want homeowners in distress to renegotiate a lower payment and the government will make up the difference to the bank.  Lots of things wrong with this idea.

First, let me say that there may be *some* homeowners that are in distress through no fault of their own.  But, let's look at the most likely scenario of how most of them got in trouble.

I make $35K year, and after many years, I save $20K as a down payment, and go to the bank to get a loan for a $200K home, which is about the most I can afford.   The slimy loan officer tells me, "...you know what, I can set up the papers so that I can show you can afford that new $450K house they just built, up on the hill".  My heart is pounding,...  "what that beautiful 3-car garage home, are you serious?"  "Yes, don't worry, we'll set it up so you only pay the interest for a the first two years, and then we'll re-negotiate a term at that time, it'll be O.K."   I'm so excited, of course, "go ahead, draw up the papers,...."  that beautiful house on the hill...  it will be mine, oh my God.  Of course, it doesn't cross my mind that I am only making $35K a year, that I can't even afford to keep-up the house, never mind pay the real mortgage.   So, here we are a few years later, and I want the government to help me, I am screaming bloody murder, I was misled by the loan officers, the government has to do something about it.  Give me a break!  What, I didn't know that I was only making $35K a year?  I didn't know that all I could afford was a $200K home?  Who are we kidding here.  And, even if we assume for a second that I didn't know, is that an excuse?  Shouldn't I know?  Can you imagine going to court for having bought a stolen car, and trying to use the excuse... "Your honor, it's not my fault, I didn't know that when I was paying $5K for that brand sparkling new $80K Mercedes, there was something wrong".  And what, do you expect the judge to say, "...Oh, don't worry... it's not your fault, we'll just help you pay for the difference so you can keep it".

Doesn't that sound like what's going on here?

And then, there is another issue.  The government is going to supplement these mortgages, and the want people to keep making payments on a property that keeps losing value?  Now, how much of a business sense does that make?

Oh, I forgot, the government will only help those families in distress.  So, let's see.  Finally, three years ago, after working long hours for many years, my wife and I were able to save enough money to put as a down payment to build a home the way we wanted it.  Last year, my wife lost her job, and is now working part time, that's the only thing she could find.  To make enough to carry our new home mortgage, I am working an average of 65 hours a week in a descent paying job (thank God I have this job).  We are just able to stay above water.  But guess what, we do not qualify as a "family in economic distress".  If I go back to working just 40 hours a week, we would.  Talk about an incentive to become state-dependent.