SmartMoney: how the the expiration of the Bush tax cuts affects you

There was nothing in the article that explained how it related to health care reform other than a line at the beginning saying it was part but no further explanation.

 

Normally, you're right. I think the difficulty of the current situation is that credit is nowhere to find - meaning any expansion/growth by small business is effectively being funded by equity - so if you have less $ after tax, you have less to invest in.

For example, we'd love to expand our business, but without credit, its basically impossible. The more $ we put into taxes, the less we have to fund growth with. However, let's not be naive - a drop in taxes from 40% to 35% doesn't provide the capital to all of a sudden expand either - it just doesn't help.

If they really wanted to stimulate the economy, they wouldn't hold hostage measures that do have the biggest impact (SBA financing, UE benefits, etc.). Fundamentally, this is the problem you have when partisan politics trumps country - folks just toe the party line and won't think for themselves. It was pretty obvious when the stimulus package debates were going on how blindly partisan folks were. The far left would argue that the benefits of all of it, regardless of multiplier effect (hell, war has a stimulus effect but that doesn't mean we should wage it to help the economy) and the far right would just focus on balanced budgets or waste (ignoring the benefits of construction during slow down or the fact that a depression was in the cards).

 

I don't care for the Government lifeline enabling companies but Goldman is a case of a company that was run better than Lehman, Bear and others and i'm sure there marketshare will grow and when we come out of this they will shine.

What upsets me is that as Goldman, Morgan Stanley etc. are bank holding companies now and the FDIC backs up their CD's giving them a backstop against losses. This means that we as taxpayers are backing up their riskier practices with the moral hazard issues once again of taxpayer backed CD's.

Many smaller advisory firms are springing up as people are disenchanted with the large firms and their multiple divisions and de-leveraging issues. As they sell off quality assets to raise liquidity other stronger firms and independant boutiques will benefit from the flight out of these 'almost failed' companies.

 

I think he meant it in the context of cheap borrowing cost by the US government.

As liquidity is not available through the conventional banking system its important that we have taxes lower, as that is one form of stimulating small businesses and their owners to re-invest in themselves. Also as these people have excess cash this will have to be invested in money markets, bonds or equities either way providing capital to banks and companies which will provide lubricant to this struggling economy.

I think this will promote potential business spending/investment/savings which will all lead to positive benefits in the economy more than higher taxes and even more less efficient spending by the government.

 

Alan Freaking Greenspan...

 

http://www.mytaxburden.org/

 

Probably not as simple as they are making it out to be (plus under Bush's plan my taxes are DOUBLE what they would be under Obama's plan.)

Check out http://dontmesswithtaxes.typepad.com/dont_mess_with_taxes/