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alstry (36.32)

9.09... TAX Stock Holdings and 401K Time?

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July 16, 2009 – Comments (8)

As we have seen this week, earnings to our major corporations are evaporating.  It is these earnings that were major drivers for taxes last year. 

In addition, earnings are evaporating AFTER millions of workers have been fired.  Not only have millions been fired and still unemployed, Tens of Millions have suffered MASSIVE WAGE CUTS!!!!  Many of these workers are paying no taxes or a fraction of taxes they paid last year.

In addition to earnings, sales are predictably shrinking as well, so sales taxes are contracting materially.  And as house prices crash and foreclosures keep reaching record highs, property taxes are now starting to decrease dramatically.

 

ALL OF THE ABOVE IS OCURRING WHILE THE SPENDING NEEDS ON GOVERNMENT IS GROWING DUE TO A GREATER NUMBER OF PEOPLE NEEDING UNEMPLOYMENT CHECKS, WELFARE, AND MEDICARE AND MEDICAID ASSISTANCE....NOT TO MENTION SOCIAL SECURITY.

AND DUE TO THE CONTINUED CONTRACTION, WE ARE NOW HEARING RUMBLINGS OF ANOTHER STIMULOUS PACKAGE.

The problem is if Obama tries to print TRILLIONS of dollars with little in the way of tax revenues coming in, our dollar will collapse, interest rates will skyrocket, and America will go broke at an accellerated rate.

His only choices are cut spending or raise taxes.   Any spending cut spending will need to be large.....which will drive our economy into an immediate DEPRESSION as government spend is now responsible for OVER 50% of GDP.

The other choice is raise taxes.  And since fewer and fewer are earning incomes anymore, and our government's need for money is growing, really the only place left to tax is our assets.  Since home prices are crashing, and so is commercial real estate, really the only place left to tax is our stock holdings and retirement accounts.

Based on my current estimates, it appears that Federal, State, and Local Deficits will materially EXCEED $3 Trillion dollars next year.  Since half of America does not really pay income tax, the other half will have to shoulder the burden.  And since the top 10% of tax payers pay about 80% of the tax, we will have to raise over $2.4 Trillion dollars from about 10,000,000 families....or about $200,000 per family.

Since the many families in the top 10% of taxpayers don't earn $200K, and need income to live on, the only way to raise the much needed money is to tax stock portfolios and retirement accounts.

As revenues decline, earnings evaporate, jobs are lost, wages cut, and demands on governments grow....soon you Fools will learn that there are not many choices left to keep this game going......money is running out and there is too much debt to serice.....9.09 still looks to be fine.

 

8 Comments – Post Your Own

#1) On July 16, 2009 at 11:03 AM, Entrepreneur58 (37.01) wrote:

Without a doubt, taxes are going to go up.  Feigning poverty will be a very smart stategy in the future.  Poor is the new rich.

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#2) On July 16, 2009 at 11:07 AM, alstry (36.32) wrote:

Ent....

The problem is after a couple years, government will have to tax practically all of the assets of EVERY SINGLE American........and at that point, there will be nothing left to tax.

That is what Alstrynomics and Zombulation is all about.

The math was pretty clear a few years ago.....

Just watch the earnings and revenues of the companies reporting over the next few weeks.

After backing out government spend, you will observe we have very little economy left.

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#3) On July 16, 2009 at 11:21 AM, davejh23 (< 20) wrote:

Would a tax on assets be your MOAP?  I don't know how anyone could believe that we could possibly run a surplus going forward large enough to pay down the national debt in even 100 years...without true hyperinflation.  Foreign governments are already losing faith in the US, and will, in time, refuse to purchase our Treasuries at any rate. 

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#4) On July 16, 2009 at 11:26 AM, alstry (36.32) wrote:

BINGO!!!!!

It is one....war, pandemic, currency collapse are viable contenders as well.

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#5) On July 16, 2009 at 11:38 AM, alexpaz (29.11) wrote:

Alstry, can you explain how you think interest rates will go...I agree with the rest

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#6) On July 16, 2009 at 11:41 AM, alstry (36.32) wrote:

Easy....alex,

If Obama keeps spending without increasing revenues.....then America becomes a greater credit risk.....as a result, lenders will demand higher interest to compensate for the higher risk.

The same thing happens in the private sector.....the higher the credit risk, the higher the payment(i.e. subprime)

 

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#7) On July 16, 2009 at 12:08 PM, alexpaz (29.11) wrote:

Thanks Alstry, I see that many CAPs players have green thumbed TBT (ultra short long treasury's)....Are you saying they will be wrong?

 

I am bearish on TBT and bullish on TLT.

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#8) On July 16, 2009 at 12:10 PM, alstry (36.32) wrote:

I am saying it could go either way.....the dollar could collapse, interest rates skyrocket,  and we all go broke.....or the dollar get stronger, interest rates decline, and only most of us go broke.

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