[Rhodes22-list] 2007 Tax Return

[DCLewis1 at aol.com]

Brad,
 
Regarding getting rid of tax breaks for muni’s and Treas bonds - the third  
largest expense in the budget is interest on the national debt, and your  
proposal will make borrowing to refinance that debt and to add to it nominally  20% 
more expensive (i.e. the govt would have to offer market competitive  
interest rates).  Does requiring muni's and Treasuries to pay  competitive (i.e. 
higher) interest rates really make sense?
 
Regarding changes in the tax code: Be careful what you wish for.  We  went 
down this road more than 10 years ago when the tax code was  “rationalized”.  
Many deductions were eliminated and the net level of  taxation for many 
decreased somewhat.  We also got the AMT.  Ten years  after the fact many of the 
deductions, and new deductions, had crept back into  the code, but tax rates 
stayed low.  The result is the current tax  does not generate sufficient revenue 
for current spending - and hasn’t for more  than a decade.  If you’re a liberal 
who thinks income should balance your  spending, it doesn’t work.  On the 
other hand if you’re a conservative  Republican that has never balanced a 
checkbook, it’s not a problem.  It  depends on how responsible you are and whether or 
not you think the current  level of indebtedness is going to bring the nation 
to grief.
 
In the meantime, I think a principle reason our interest rates are as high  
as they are - certainly compared to Europe and Japan - is that lenders have to  
be paid more to accept and deal with US dollars.  Lenders need the  
inducement of higher interest rates, otherwise, they have more than enough  
depreciating USDs thank you.  And those high interest rates affect you  daily with your 
mortgage, business, credit cards, a zillion different ways  - this debt has 
adverse consequences that you face daily.  The prime rate  in the US is 8%, the 
prime rate in Japan is 1.38%, Europe is 2%  ( see 
_www.money-rates.com/keyrates.htm_ (http://www.money-rates.com/keyrates.htm) )  - how would your life be 
different if the prime rate were 1.38% to 2%?   Mortgage? Business loans? Credit 
cards? New acquisitions? Investments?   You’re dealing with a lot of forgone 
opportunities as a result of our relatively  high interest rates, which are at 
least in part a consequence of our huge  deficits and consequent debt and our 
inflationary monetary  policy.  
 
JMO.
 
Off sailing tomorrow and Sun, can't wait.  
 
Dave