Michael Choate Associates CPA

We Still Believe in Free Enterprise — Part III

(Not Big Government)

As 2011 thankfully comes to an end, many Americans have become weary of continuous bad economic and financial news – high unemployment, low GDP growth, trillion $ Federal deficits and debt, sluggish real estate sales, restrictive banking and a roller coaster stock market. The forecast for 2012 is not any rosier. President Obama’s plan unbelievably is as follows:

  1. RAISE TAXES on families and individuals earning over $250,000. Repeal the Bush tax cuts on this group too, which will increase the tax rate on capital gains and dividends from 15% to 39.5%.

    There are also additional taxes coming for this group in the Obama care health plan. Not to mention payroll taxes, state and local income taxes, real estate taxes, business property taxes and occupational license taxes. Enough with the tax increases! This is a bad idea on so many levels its unreal!

    First, the top 1% of taxpayers who have an adjusted gross income of $364,657 or more, pay 39% of all federal income taxes. The top 5% of taxpayers who have adjusted gross income of $145,283 or more, pay 86% of all federal income taxes and the top 25% of taxpayers who have adjusted gross income of $62,068 or more, pay 97% of all federal income taxes! (Source: IRS 2005 analysis) Who is not paying their fair share? The "Occupy Wall Street" protestors should get a job. . . any job and go to work.

    The last thing you want to do in a sluggish, anemic economy is raise taxes. It hurts economic growth and everyone should know this by now. So, why tax or punish job creators? Moreover, increasing taxes on the $250,000 and above crowd will do almost nothing to reduce the deficit. Bad idea.

  2. SPEND MORE MONEY on Federal Stimulus Programs. Is the idea here to combat out of control spending by just spending more? Federal budget deficits are projected at $1.5 trillion for the next 10 consecutive years. The accumulated debt is about $15 trillion now but who's counting?

    President Obama set up a Congressional super committee to study the deficit and surprise... They came up with NO PLAN. They could not reduce the deficit by $1 trillion over 10 years... =a 1/15 reduction. So lets tax and spend and hope and dream some more!

  3. IMPLEMENT OBAMA HEALTHCARE PLAN while granting exemptions to preferred groups and companies.

    This is an expensive, government based plan that most Americans will learn to hate. Nancy Pelosi's famous quote will haunt us "We'll find out what's in the plan after it is passed."

  4. INCREASE FEDERAL REGULATIONS on oil and gas exploration and also harass coal and nuclear plants. "Cap and Trade" is still a change the Obama administration dreams about and they hope to implement parts of it thru EPA regulations.

The Good News

The Congressional midterm elections in November 2010 were a good indication of the mood of the country. The GOP picked up a net gain in the House of Representatives of 63 seats. . . the biggest midterm loss for a sitting President since 1938. The Tea Party movement inspired and motivated many of these elections. Their platform was basically a return to the idea of smaller government… and less taxes and less spending. Nothing has changed since then to help President Obama get re-elected. His approval rating at this time is below 50% in the Gallop Poll. His plans are not helping the majority.

As we close 2011, Congress has agreed to Obama's request to extend a 2% payroll tax holiday for two additional months. Two months is silly on its face and causes accounting nightmares for payroll companies and employers. Ironically, the payroll tax holiday directly cuts funding for Social Security. - An idea the Democrats are historically opposed to. Does it no longer matter? The GOP has the majority in Congress and can block most of Obama's agenda. However, President Obama has the power to veto most of the Republican ideas for improving the economy. The result is gridlock for most of 2012.

I predict a new President will be elected in November 2012 who believes in free enterprise and the economic engine of the private sector. All of the negative rhetoric about successful people and businesses being greedy and business growth and profits as evil will stop. This group should be praised, encouraged and studied . . . how do they do it? If you work hard, play by the rules and use your talents, you will be successful. This is the American Dream. Federal Government should be greatly reduced in terms of spending and deficits. The plan should be to cut or at least freeze federal spending and grow the economy! Motivate all the job creators to expand. How? Declare that taxes will remain the same for the foreseeable future, with low interest rates available to finance growth. Reduce the endless lists of government regulations and red tape. Clearly and evenly enforce the laws and rules that are on the books now. Prosecute individual wrongdoers but don't condemn entire industries (banks, investors, brokers, Fortune 500 companies). Loosen bank credit to qualified borrowers.

Unleash qualified real estate investors to buy foreclosed properties. Expand drilling and build pipelines and power plants. Throw cold water on environmental extremists and promote and celebrate technology innovation.

Free Enterprise Works. It is what makes America unique and great. Get out of the way and watch what happens. Let Freedom Ring!!