CHANGE IS COMING: HIGHER TAXES

Here are some of the confiscatory tax increases Obama has thrown around (I feel like I’m in the twilight zone while writing this):

1) Foreign Income Tax Credit: I saw on the news today that Obama wants to eliminate the foreign income tax credit for multi-national businesses…doing away with this credit is essentially a tax increase on multi-national corporations…currently, if an American business has income from foreign-based operations, a tax credit in the amount of the overseas income tax paid can be taken on the U.S. tax return…the current practice is good for business, as companies currently don't pay tax twice on revenues earned overseas.

To my knowledge, under Obama, foreign income tax would be paid to the foreign country AND the foreign income would be taxed AGAIN in the U.S. when the income is reported on the U.S. tax return...this sucks! This is a HUGE deal for multi-national firms…being taxed twice on foreign income means less incentive to expand international operations, less money to hire new employees, and lower overall corporate profits. It’s just another example of how Obama's tax plan will kill American jobs by increasing the cost of doing business.

Just wait, I predict Obama will publicly say that he will not increase federal corporate income taxes…”Keep ‘em at 35%”, he’ll say. This will be the headline in the liberal media. However, most folks will not understand the effect of repealing the foreign income tax credit. Keeping the corporate income tax the same will pacify the uninformed…the Dems love to keep their own constituents in the dark on the facts, so it's wise to keep the repeal of the foreign tax credit in mind when the Dems come out w/ their 'gracious' 35% corporate income tax non-decision. And yes, they'll expect thanks from all of us for not raising this corporate income tax rate...just wait and see.


2) Cap & Trade Penalty – this is basically penalizing industries that create carbon emissions (i.e., coal industry and the like). Obama has said he would essentially institute penalties on the coal industry (in his own words, he said he’d bankrupt these companies!!) in an effort to pump more money into other more favorable energy industries of his choosing, such as solar…I’m not making this stuff up...Obama’s on the record w/ a San Francisco newspaper. In my view, Obama wants to penalize one industry in order to create an entirely new industry…this is government picking winners and losers again…we saw how well this worked with Lehman Brothers.

How is Obama going to pick winners and losers in different industries with our trading partners? Is this even possible?? China is causing more global pollution problems than anyone else with its coal plants…is Obama going to penalize China as well? Where does his approach stop? The markets have no idea, and we can see them price in the uncertainty on this issue and other issues as well.

Since coal is the #1 resource that provides electricity in America, expect energy bills to go up A LOT for most Americans if the coal industry is penalized to the max as Obama has suggested.

But, hey, if you believe that global temperatures will go down by .7 degrees over the next 100 years (maybe) if we punish the coal industry, then you’ll appreciate this selfish approach to government intervention. This is just one example of how the environmentalists are ruining the country. These folks are completely brainwashed and will stop at nothing to get what they want.
Meanwhile, folks who disagree with this approach will have to pay higher taxes to make the dream a reality. When are the majority of folks going to get a clue?

3) Obama wants to increase cap gains tax to 20%

Gee, this will help investment, won’t it? Not at all. In a tough market, this additional 5% means a lot to an individual investor, particularly when there aren't a lot of stocks moving to the upside.


4) Obama wants to increase taxes for single folks making over $200K and increase taxes for couples making over $250K…the upper cap on these federal income tax increases are close to 40%...of course, this % does not include Obama’s increases in payroll taxes and social security taxes…we could see effective tax rates at over 60% for the ‘rich’.

Why increase taxes on anyone right now? If you tax rich people more, they’ll simply hold on to their money, find more creative ways to save, or simply won’t invest as much. Also, you'll have more under-the-table illegal activity increase as a result of the new tax climate.

Chicago-style politics, here we come...

v/r,
FMC