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Citigroup Inc. Message Board

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  • longpickuptruck longpickuptruck Aug 28, 2010 9:37 AM Flag

    Will higher taxes drive consumption and

    Think about your statement, Will higher taxes drive consumption?
    How in the world can I consume more if I must give my hard earned money to the gov't to waste.
    Giving my money to the gov't leaves me nothing to invest.
    We must get rid of all of our elected city, county, state and federal officials that promote waste.
    As an ex state/county/federal employee I know waste runs rampant through all agencies.
    Reduce the waste and our taxes could go down 30%.

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    • Many states and cities are having trouble maintaining basic public services from budget shortfalls. If schools can't keep enough teachers, if the police can't keep a practical force on the streets, the resulting social climate begins to effect the economic status of a place.

      Taxes support an environment for foster economic and social stability and security. The roads need to work, the water needs to be clean, medical services have to be reliable. People have to believe it is safe to step out the door. What is the real price of that?

    • I did think about it. With no short term investment opportunities because of shallow returns or other, spending cash seems more logical than saving it.

      Most do not have a long term investment strategy. What constitutes long term strategy for most is investing in mutual funds expecting more or a lot more at retirement. This benign active involvement in investing is dead. If people committed capital for longer durations (minimum 5 years) they may find they actually have a better chance of influence a positive outcome of their investment. The point: if you are not willing to commit to a longer term investment, the better use of the cash at this time would be to spend it.

      Taxes should be structured to reward a 5 year commitment and not reward situations that create volatility and capital uncertainty. The same tax strategy could be applied to interest and dividend payments. For example a CD with a 5 year term, the interest would be taxed at say 15%. Interest on a 3 year at ordinary income.

 
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