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Friday, September 22, 2017

Taxes and Incentive


Taxes and Incentive

A cranky opinion for

CRANKY OPINION SATURDAY

The following is the opinion of a cranky old man with no expertise on the topic opined.  Opposing opinions are welcome, but they are wrong.  As always, please, no name calling, and that means you, you big stupid-head!

I studied Economics about 50 years ago.  I am not an economic expert, I barely passed my final exams.  I have never used my economic degree since graduation, and yet I have no problem spouting economic opinions.  To paraphrase the famous TV quick draw artist Bob Ross, “It’s my blog I can post opinions when I want to.”

There will soon be much discussion about changing the US tax code.  There will be statistics and claims from many different perspectives. 

Some will tell us that we are running a huge deficit and reducing taxes now would be CATASTROPHIC!

Some will tell us that any tax cut to the rich (defined as anyone who has more money than you do) will cause DRACONIAN costs to the poor (defined as everyone who doesn’t pay taxes.)

Some will tell us that cuts will benefit the middle class (defined as everyone except Gates, Buffet and the homeless.)

Some will tell us that reducing taxes will increase revenues because people will work harder and longer and rising incomes will increase revenue.

Some will say we need to increase taxes, but only on the rich, in order to provide more services and to reduce the deficit. 

There will be experts and statistics to prove each and every claim from all perspectives.  Who is correct?  As long as the economy is a political football we will never know.  The politicians are more interested in a position which helps them win their next election than they are at designing the best code for the well-being of the country.

We need a tax code that is not static, but adjusts automatically to changing indicators.  The best tax is one that maximizes revenue while still encouraging investment and discouraging bad behavior (smoking, drinking, cheating at cards, bad breath, etc. etc.).

A tax is similar to price of any good or service.  Increase the tax (price) and revenues will rise as long as people can pay it.  Raise the tax too high and revenues will fall. 

If a banana costs a dollar to produce and you sell it for a dollar your profit is zero.  Sell it for fifty cents and you run a deficit.  Sell it for 2 dollars and you are revenue positive.  Sell it for ten dollars and you end up with unsold rotten bananas.

Point being, raising taxes is not always a revenue producer and lowering them can increase revenues, or vice versa.  Taxes need to be adjusted periodically just as produce prices are adjusted based on varying factors.

RAISING OR LOWERING TAXES IS NOT A REPUBLICAN OR DEMOCRAT POSITION.  EITHER IS SOMETIMES VERY SMART AND SOMETIMES VERY STUPID.  IT SHOULD DEPEND ON AN ECONOMIC ENVIRONMENT, NOT A POLITICAL IDEOLOGY!!!

To make my point let’s set taxes at ridiculous rates:

Tax the rich 99% of income and give the poor a tax rebate for zero income that reduces as income rises.  I don’t believe any thinking person would say this a good idea.

Tax the rich nothing, and tax the middle class 99% of their income.  I don’t believe any thinking person would say this a good idea.

Clearly any tax rate should be set somewhere in between these ridiculous examples, if only it were not politicians to make that decision.

Perhaps the most powerful economic stimulus is incentive and the biggest incentive crushers in the economy are high taxes and low competition.

We used to have one telephone company in the country.  There was no competition and government decided what prices were fair for that company to charge.  In sixty years, innovations in the phone industry was from operator assisted calls, to a rotary dial system and at its peak, push button dialing.

Better phones would not increase revenues, why develop them?  Improved service would not improve the bottom line, and lower costs would lower prices that government set.  The result was in sixty years we had pretty much the same telephone service; mediocre and fairly expensive.

When the telephone company was broken up and competition allowed, we had an explosion of technology and phone service.  People went from one phone homes to multiple phone homes and currently a cell phone for almost every person.  Long distance calls used to be prohibitively expensive.  You talked to great aunt Tilly for maybe a minute and then had to hang up or go broke.  Does the term long distance call even exist today?

The tax code is a major determiner of incentive.  It should be designed to be as high as possible or needed while low enough to stimulate incentive for investment and greater profits. 

Maximum revenue while maintaining incentive for investment and profits should be the goal that will be best for all, the rich, the poor, and the middle.

Unfortunately, politics will dictate the direction of any tax code changes.
The preceding was the opinion of a cranky old man and not necessarily that of management…Mrs. Cranky.    

Happy Anniversary ATM

Happy Anniversary ATM
Apparently, the ATM machine recently celebrated its 50th anniversary.  It first appeared in 1967 in London England, so I don’t remember those early machines.  I remember first seeing ATM machines in the 1980’s.  I didn’t use one until 1987.  It was with great trepidation that I trusted this modern marvel to correctly distribute my cash.

When the machine belched out a few twenties, I felt as if I had hit triple cherries, or whatever it is that pays off in Vegas.  I still didn’t trust the machine.  I had heard stories, and if it jammed or something, what do you do, especially when you use one after the bank is closed. 
I am a little leery of new technology.  It’s like a new restaurant where food can be mediocre, and service sometimes poor; I want to wait a bit to see what others say, and to let the staff work out any kinks.  So for another few years, I wasted half of every other Saturday morning at the bank to cash my pay check and take out the cash I would need to survive the next two weeks.
Occasionally, I might need a little cash and I would trust the ATM for maybe $20 (there was no charge to use the ATM.) When I moved to a little town with a bank just around the corner from me I gained trust in the ATM and had my check deposited automatically and used the ATM as needed.
I only had one bad experience.
The day of my daughter’s wedding I needed money.  We needed to leave early for a 2-hour drive, so I walked to the bank and withdrew $300 from the ATM.  Except I withdrew a receipt for $300, no money came out of the machine.
Fortunately, the bank was open.  Unfortunately, the bank was busy.  The clock was ticking on my leaving for the wedding, and my impatient, anxiety ridden and unpredictable wife was waiting at home.  I was a block from home, but did not want to leave the bank until I had my money.  I did not have a cell phone in those days so I could not call my wife.  Could I have used a bank phone?  Probably, I didn’t even think of it.
It took a half hour for the bank to check the machine, confirm it owed me $300, and give me the cash.
When I got home, I caught holy Hell and took a wicked tongue lashing for being late.  We made it to the wedding on time, but it was a most unpleasant drive to say the least.  Of course, when we arrived, Mrs. Hyde turned into Dr. Jekyll.  No one knew the trouble I’d seen.
Anyway, that has been my only issue with an ATM.  Today it is hard to believe that I used to stand in line and wander through the bank maze every other Saturday to get cash.
Happy Anniversary ATM.

Wednesday, September 20, 2017

Why Post?

Why Post?
Gotta post, gotta post, gotta nothing…DAMN!
Why do I feel I need to post something?  Do I have to post every day? No…and yet I must, it is a compulsive thing.  I must post something, but I do have some standards. I don’t want to just post crap, or at least worse crap than my usual crap, however, I have nothing.
Hmmm…Politics?  No, I’m not ready for that yet.
Sports?  I could go on about golf.  My game is slowly improving, one step forward, three quarters of a step back.  I could tell how my pull hook has improved to straight and then I added a slight fade to follow the contours of my course, and how that fade is now an out of control slice…no, most people hate golf.
Football?  It looks like my Giants are going to disappoint “big league” this year (see, the phrase is “Big League” meaning big time, it is not bigly and Trump has never said bigly…OK, I snuck a little politics in there, please no comments) and my Jets as usual will break their fans hearts.  Besides people hate football more and more these days.
Baseball?  How about those Yankees? I can’t get excited, I see them as a wild card and losing the one playoff game.
I could post on TV.  I watch a lot of TV.  No; done that, and many people think TV is for cretins. I don’t even watch it any more, I now only read Biographies, the New York Times and listen to Public Radio.  I am also selling a very popular bridge in Brooklyn.
I could make fun of Mrs. C, but most of my readers always side with her and turn on me.
You know what?  Screw it! I’m going to be the “Blog Nazi” today.

No post for you!