Sunday, May 22, 2011

Tea Partiers, Doggy Health Plans

Taxed Enough or Spent Too Much?
Kevin G. Hall writing for McClatchy Newspapers recently published an article (This Fact May Not Sit Well: Americans are Under-Taxed, May 5, 2011) says that Americans are not over-taxed.  He compares our current tax rates to other major developed countries and to our own historical taxation levels, and concludes that we're not over-taxed, in fact, we are under-taxed.  According to figures Hall cites, through all forms of taxation (personal income taxes, business income taxes, sales taxes, etc.) the government currently takes in about 28% of our aggregate income which is a figure on par with the tax burden over the last 50 years.  He also compares our tax level in terms of taxes as a percentage of GDP.  The US is currently sitting at a total tax level that is 31.6% of GDP as compared to Canada at 38.6%, UK at 41.4%, Germany at 42.8% and France at 48.9%.  Relative to our socialist European cousins, we should be at the lowest tax rate.  For a vibrant economy, tax rates are kinda like a golf score, lower is better.
Various economists quoted for Hall's article conclude that the remedy to our current deficit problem requires a combination of tax hikes and spending cuts.  I tend to agree as the hole we've dug for ourselves is now so deep that we'll probably have to work the problem on both ends.  I do have an issue with raising taxes now, as the last thing a fragile recovery needs is a tax hike.  But when the economy is stronger, I think we'll have to consider boosting taxes at least for awhile.

The assertion that we're not over-taxed will not sit well with the TEA (Taxed Enough Already) partiers.  As their name implies, the TEA party is against any tax increase.  In my opinion, the TEA party should give way to the SEA Party (Spent Enough Already) or maybe the STMA Party (Spent Too Much Already).  The focus has to be on spending cuts.  I'd like to see us devise a plan to permanently cut our spending and roll back the scope of government that has grown untenable.  If we can do that, we'll fix our deficit, we can lower our taxes, and increase our economic competitiveness vs. the rest of the world.

Health Insurance for Your Dog?
The Unrepentant Capitalist bought some new tires this weekend.  At the check-out counter, the sales guy asked me if I wanted to buy the road hazard warranty for a mere $100 more.  I declined, and the sales guy looked surprised.  "You know what this covers, right?" he asked.  "Yep, but no thanks", was my reply. 

The extended warranty has become a big player these days in everything from cars to pets to home electronics. As my readers know, the Unrepentant Capitalist is a big believer in American business,  I just don't buy everything they're selling.  As retailers look for ways to grow sales, the extended warranty has entered the picture.  The extended warranty is a good deal for the seller, and usually a bad deal for the consumer.  You're better off banking whatever money you'd pay for the extended warranty. 

The extended warranty is another form of insurance, and an unnecessary one at that.  The Unrepentant Capitalist has talked about insurance before, and my position is that insurance is best used to protect the insured against risk he couldn't otherwise manage.  Said another way, buy insurance for those cases where a loss would wipe you out or do major damage to your finances.  You buy health insurance in case you or a loved one has a serious medical condition where the doctor bills would empty your bank account.  Really rich guys like Bill Gates don't need health insurance because if they did get sick, they've got the money to cover it.  The Unrepentant Capitalist is not a rich guy, but if I have a tire blow-out, I can cover it.

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