Thursday, April 16, 2009

Another Tax Day has Come and Gone

I read an article several years ago that stated that Americans spend a total of 300 million man hours to complete their taxes. That is equivalent to all three of the US auto makers producing vehicles for one year. I talked to people from other countries and they said that their income tax systems are worse than ours. I can't even imagine just how complicated their systems are.

As for me, I would prefer moving to a consumption tax. When you consider just how complicated our system, they has to be a better way. I have looked at the "Fair Tax" plan and thought about a consumption tax. To be quite honest, I know that I have to pay for the government, but no matter what system we choose. There must be a change to the spending habits of our local, state and federal governments.

I think that a simplified tax system could be created. When Steve Forbes ran for the White House, he wanted a simplified tax system. I think he was on to something. You could just have a simple flat tax.

Right now, I'm opened to anything that will reduce the amount of time we spend on taxes and wonder in we got the right answer when we sign our forms.

Wednesday, April 8, 2009

Spend or Save?

This is a question that is facing a lot of people including the President. Should we begin to spend money in order to stimulate the economy in hopes of improving things? Or, do we need to save our money in the event the economy continues its downward trend?

I can say this. With the confidence level of the CEOs extremely low and their predictions that the GDP will decline by 1.9% and more layoffs will occur within the next 6 months, I would say that the answer has already been made. Take a look at it. If people are afraid that they will be laid off, will they honestly consider buying a computer or a big screen television? I don't think so. I don't have a degree from a prestigious business school, but I can tell you that 99% of the people I have talked to will not be spending their tax refund checks on frivolous toys. For example, my brother said that he was using his tax refund to pay off some more of his debt. I think my brother is doing the right thing with his check. Yes, he could have bought something with it; however, he decided that being debt-free was more important.

On the other hand, he could have purchased something and saved a person's job. I am being idealistic. The money wouldn't save a job, but it would be used to pay a bonus or package for some executive in the company. Until we get to a point where confidence increases for both businesses and consumers, Americans will continue to save money. I have a refund check on its way to me and I will be saving it until I find a job.

With more and more Americans out of work, spending will continue to drop and people will save more and more of their money. So, it doesn't matter how money the government pumps into the economy. Until Americans have jobs, we will not be spending. In a recent article, I read that food purchases constitute 49% of Wal-Mart's sales. People are saving money. The days of unbridled consumerism are over.

Have you noticed that gas prices are increasing? So much for spending on luxury items.

Thursday, April 2, 2009

Finger Pointing at AIG

I was just reading a series of articles about AIG and its former CEO and largest individual stockholder, Maurice "Hank" Greenberg, who is the creator of the AIG investment unit that triggered the insurance company's meltdown.

In a testimony in front of a congressional panel, he claimed that he was a victim and that he left the company in a solid and profitable condition. Those still at AIG say that Greenberg knew about all of this and was there when the CDS, Credit Default Swaps, were being sold at a fast and furious pace.

To me, I don't care who is to blame regarding all of this, but something needs to happen. I am a capitalist and believe in fair and open markets. However, it seems to me that every time we allow an industry to regulate itself, the industry begins to conduct business with no accountability or responsibility for its actions. Don't get me wrong. I prefer small government and I believe that industries should regulate themselves whenever possible. It just seems like they can't for whatever reason. This situation and the subsequent downturn in the economy is yet another good example of deregulation gone awry.

I miss the days of conservative investments made by solid companies. To me, all of these different investment instruments seem like a big Ponzi scheme to make money for a few. If something happens everyone who can afford it can run for cover. Families like mine and yours get the raw deal and we have to bailout the companies for mistakes made by a few people who don't care about others.

I was watching an old "I Love Lucy" episode this morning with Tennessee Ernie Ford. He played Lucy's cousin. In order to get rid of him, Ricky and Lucy pretend to be broke. Well, cousin Ernie comes to the rescue and gets food and takes up a collection. He presents the money and food to them and tells them that people are good and kind. People come to the aid of one another and do not try to profit from hard times.

There is a lesson for us all. Thanks, cousin Ernie! I hope we can learn from your words.