Wednesday, April 21, 2010
Here we go again... state income taxes
Bill Gates senior (Bill's dad) wants to propose a state income tax on everyone making over $200K. Now as you know I'm not against taxes. I realize they pay for all our important things like police, fire, roads and such, but I also realize that taxes are like cocroaches. Once they get in you'll never get rid of them. I recall states like Pa. and Mass. letting in the tax roaches only to watch as a simple 1% here 2% there keep growing until you had something that would scare an Orkin man.
My take on this. It started out simple enough with the state setting a 1% income tax on those making $200K. This paid for many things and gave government coffers a needed boost. But something happens along the way. With a new source of income the state starts to spend to the level of their income. We all know how that works. It's why you see somebody with massive assets and not a nickle in savings. Also known as asset rich and cash poor. But the wealthy aren't worried because they can afford accountants and lawyers to lessen their tax blow. They can always get a state legislator to slip in this deduction or that. But then a down turn comes the cash flow slows and then it's a race to find ways of cutting expenses and raising revenue. Oops we'll need to drop that $200K figure down to (pick any figure below it). Then you have the cities feeling the pinch and maybe they'd like to tax everybody"s income as well so they start their own little 1040 revenue plan. And before you the taxpayer knows it they're spending a goodly part of their days filling out tax forms.
I've seen these income tax proposals happen six times over the last many years here and every time they've failed. I'd suspect the same to happen this year if this makes it to the ballot for a vote.
The real solution would be to raise federal income taxes on the top 1%. They were the ones who footing the bill for the last many years and we didn't see any results of the trickle down theory that even Bush senior called "voodoo economics". Throw a tax on those derivative trades as well.